By Scott Higham and Robert O'Harrow Jr., Washington Post, February 16, 2007
17 Feb 2007 // The U.S. General Services Administration has responded to a congressional inquiry by saying its chief, Lurita Alexis Doan, did nothing improper last summer when she tried to arrange for a study by a company run by a woman with whom she had a "close professional relationship."
In a Feb. 2 response to Rep. Henry A. Waxman (D-Calif.), the agency said Doan was trying to promote diversity when she signed a "service order" for the $20,000 project. That July 25 document was intended to authorize a company, Diversity Best Practices, run by Edie Fraser, to write a 24-page report and analysis concerning the GSA's use of businesses owned by minorities or women.
At the time, GSA contracts worth more than $2,500 had to be competitively bid. The proposed project was terminated in August because it "did not meet government contract requirements," the agency said in its six-page response.
In the response, GSA Associate Administrator Kevin Messner rejected "the implication that her intentions were improper" and said the project was stopped before any money changed hands.
"A procedural mistake was made, discovered and corrected," Messner wrote. "In an initial attempt as new Administrator to champion the cause of small minority, women, and disabled veteran-owned businesses, the Administrator recognized and took responsibility for the mistake."
Waxman, chairman of the House Government Reform Committee, which oversees the GSA, sent a letter to the agency raising questions about the events following a Jan. 19 story in The Washington Post. Waxman asked the agency to produce e-mails and other documents relating to the no-bid order and disputes between Doan and her inspector general's office.
A spokeswoman for Waxman said the committee is reviewing the GSA's response and declined to comment further.
Shortly after she became GSA administrator in May, Doan clashed with the agency's inspector general over budget matters. Last year, the inspector general's office launched its own investigation of the attempted project with Diversity Best Practices.
Doan told The Post in a taped interview last month that she took over the agency in a time of falling revenue and morale. In its response to Waxman, the GSA noted that Doan wanted the inspector general's office to rely on its $43 million budget appropriated by Congress and no longer depend on an extra $5 million that came from other GSA divisions. That additional money had been mandated by the White House Office of Management and Budget to help bolster contract audits in 2003.
"What started out as yesterday's benefit to help them out with their budget has turned into today's entitlement," Doan said in the interview.
The GSA's response said that the inspector general refused to identify any areas for possible cuts in its budget, despite an agency-wide push by Doan to reduce spending. Instead, the inspector general's office "demanded a substantial increase in spending" in its budget, according to the response. The $5 million in extra funding is included in the 2008 budget submitted by President Bush, along with an increase of about $4 million for the inspector general's overall budget.
In September, the inspector general's office notified Doan and Fraser of its investigation into the circumstances surrounding the $20,000 no-bid project, issuing subpoenas for e-mails and other documents.
The budget dispute drew a questioning letter on Oct. 20 from Sen. Charles E. Grassley (R-Iowa), then chairman of the Senate Finance Committee. He urged Doan to maintain the inspector general's independence. He said money used to fund contract audits had "saved the taxpayers more than $1 billion over the past two years." Grassley sent a letter yesterday to the Senate Appropriations Committee requesting that money to fund contract audits become a permanent part of the inspector general's budget.
The GSA released a statement yesterday: "The Administrator has only opposed unaccountable and undisciplined spending, not increased oversight. Any characterization of pre-decisional budget discussions that suggests otherwise is simply inaccurate."
After the Post story about the diversity study, Waxman sent Doan a letter requesting further information about possible "procurement irregularities." In its response to Waxman, the GSA said The Post's article was "characterized by inaccuracy and prejudice" and a "mischaracterization of the facts."
A lawyer hired by Doan, John J. Walsh, said in a Feb. 5 letter to The Post that Doan has been a victim of a "push back" by the inspector general's office against her attempt to "reduce wasteful spending throughout the agency, including the OIG."
The GSA called Fraser "the recognized leader" in the diversity field and said Doan reached out to Fraser about the "need for a very short and inexpensive report." Doan said in the interview that she authorized the report to promote GSA's diversity initiatives at the request of Felipe Mendoza, who runs the agency's Office of Small Business Utilization.
The GSA's response said that Doan signed a service order to authorize the work but that no contract was "ever executed."
Walsh said Doan was not "sidestepping" procurement rules but instead had submitted the no-bid order "into the contracting process."
Doan told The Post: "I handed this off, and then that was the last that I worried about it."
GSA staff, including legal counsel, determined that the arrangement did not comply with federal contracting rules.
On Aug. 4, GSA contracting officer Donna C. Hughes wrote to Fraser: "The U.S. General Services Administration (GSA) hereby notifies you that the contract, evidenced by the enclosed Confirmation of Service Order Prepared for GSA, signed and dated July 25, 2006, is terminated in its entirety."
Fraser is president and chief executive of Public Affairs Group Inc., the umbrella company of Business Women's Network and Diversity Best Practices, the division that was to have written the report. At the time of the proposal, Public Affairs Group was owned by iVillage Inc., a subsidiary of NBC Universal Inc.
The GSA response said Doan has a "close professional relationship" but "no personal contractual arrangement with Edie Fraser or Diversity Best Practices of any kind."
The GSA also responded to a question about whether Doan had intervened in the suspension process involving five large government contractors who had paid $66 million to settle fraud allegations that they kept travel rebates that should have gone back to the GSA.
The Post reported that a GSA official had issued letters to the five firms asking them to explain why they should not be suspended or debarred. Under the process, companies can avoid being suspended from government work by accepting responsibility, paying restitution and putting in place remediation plans.
Doan said in the interview that she had not been briefed on what she viewed as an important issue. Doan wrote in a Nov. 10 e-mail to top GSA officials: "If these letters can be stopped until cooler heads can prevail and discuss what the appropriate mechanism is to obtain the information that CAO [chief acquisition officer] requires, that would be best."
The GSA said that Doan was told that a decision had already been made to debar the firms. The GSA said Doan requested a briefing and took no further action.
"It is a distortion to equate a desire to be informed promptly when such decisions are pending with interference in this process," the GSA said in its response to Waxman.
The companies eventually avoided suspension or debarment by agreeing to return travel rebates in the future.
In addition to Walsh, Doan has personally retained Washington lawyer Reginald J. Brown and media consultant Mark Corallo. A third lawyer for Doan, retired Maj. Gen. Michael J. Nardotti Jr., has requested that the President's Council on Integrity and Efficiency open an investigation into whether the GSA inspector general's office leaked confidential information and documents.
A spokesman for the GSA's inspector general's office declined to comment yesterday.