Published January 25, 2010
Despite President Obama's long history of criticizing the Bush administration for "sweetheart deals" with favored contractors, the Obama administration this month awarded a $25 million federal contract for work in Afghanistan to a company owned by a Democratic campaign contributor without entertaining competitive bids, Fox News has learned.
The contract, awarded on Jan. 4 to Checchi & Company Consulting, Inc., a Washington-based firm owned by economist and Democratic donor Vincent V. Checchi, will pay the firm $24,673,427 to provide "rule of law stabilization services" in war-torn Afghanistan.
A synopsis of the contract published on the USAID Web site says Checchi & Company will "train the next generation of legal professionals" throughout the Afghan provinces and thereby "develop the capacity of Afghanistan's justice system to be accessible, reliable, and fair."
The legality of the arrangement as a "sole source," or no-bid, contract was made possible by virtue of a waiver signed by the USAID administrator. "They cancelled the open bid on this when they came to power earlier this year," a source familiar with the federal contracting process told Fox News.
"That's kind of weird," said another source, who has worked on "rule of law" issues in both Afghanistan and Iraq, about the no-bid contract to Checchi & Company. "There's lots of companies and non-governmental organizations that do this sort of work."
"I think the administration should explain what the decision was based on, and why a no-bid contract was given in this case, particularly given that Mr. Obama came in on a pledge of 'no more no-bid contracts,'" said Melanie Sloan, executive director of Citizens for Responsibility and Ethics in Washington.
"There's really no explanation of why they had to make an exception in this case. And based on the facts before us, it doesn't appear that there was a need for an exception. It's not as if this was something urgently needed today; they couldn't have taken the time to get the bids, and make sure that American people were getting the best value," she added.
Contacted by Fox News, Checchi confirmed that his company had indeed received the nearly $25 million contract but declined to say why it had been awarded on a no-bid basis, referring a reporter to USAID.
Asked if he or his firm had been aware that the contract was awarded without competitive bids, Checchi replied: "After it was awarded to us, sure. Before, we had no idea."
He declined to answer further questions, however, and again referred Fox News to USAID, saying: "I don't want to speak for the U.S. government."
Joseph A. Fredericks, director of public information at USAID, told Fox News the Checchi deal was actually a renewal of an existing contract, awarded in 2004 by the Bush administration after a competitive bid process. "As the incumbent," Fredericks wrote in an e-mail Monday, "Checchi was rewarded a renewed contract to allow for work on the ground to continue."
Rep. Darrell Issa, R-Calif., the ranking Republican on the House Oversight and Government Reform Committee, said Fox News' reporting on the no-bid contract in this case "disturbed" him.
Issa has written to USAID Administrator Rajiv Shah requesting that the agency "produce all documents related to the Checchi contract" on or before Feb. 5. Citing the waiver that enabled USAID to award the contract on a no-bid basis, Issa noted that the exemption was intended to speed up the provision of services in a crisis environment.
Yet "on its face," wrote Issa to Shah, "the consulting contract awarded to Checchi to support the Afghan justice system does not appear to be so urgent or attendant to an immediate need so as to justify such a waiver."
Presented with Fredericks's explanation -- that the Checchi contract was extended, this time on a no-bid basis, in order to "allow for work on the ground to continue" -- Issa was undeterred in his determination to investigate the matter.
"It's hard to say that this organization (Checchi and Company) has done such a great job of bringing the justice system in Afghanistan up to snuff that they should somehow not have to go through a competitive bidding process," Issa said.
Likewise, Sen. Claire McCaskill, D-Mo., who chairs the Senate Homeland Security and Governmental Affairs Committee's Subcommittee on Contracting Oversight, told Fox News she, too, is seeking answers about the Checchi contract. "Sen. McCaskill is actively looking into this situation," said Maria Speiser, a spokeswoman for the senator. "She has posed questions to USAID about the situation and is pursuing full answers. If she doesn't get answers, she'll be ready to take action."
Corporate rivals of Checchi were reluctant to speak on the record about the no-bid contract awarded to his firm because they feared possible retribution by the Obama administration in the awarding of future contracts.
"We don't want to be blackballed," said the managing partner of a consulting firm that has won similar contracts. "You've got to be careful. We're dealing here with people and offices that we depend on for our business."
Still, the rival executive confirmed that open bidding on USAID's lucrative Afghanistan "rule of law" contract was abruptly revoked by the agency earlier this year.
"It's a mystery to us," the managing partner said. "We were going to bid on it. The solicitation (for bids) got pulled back, and we do not know why. We may never know why. These are things that we, as companies doing business with the government, have to put up with."
As a candidate for president in 2008, then-Sen. Obama frequently derided the Bush administration for the awarding of federal contracts without competitive bidding.
"I will finally end the abuse of no-bid contracts once and for all," the senator told a Grand Rapids audience on Oct. 2. "The days of sweetheart deals for Halliburton and the like will be over when I'm in the White House."
Those remarks echoed an earlier occasion, during a candidates' debate in Austin, Texas on Feb. 21, when Mr. Obama vowed to upgrade the government's online databases listing federal contracts.
"If (the American people) see a bridge to nowhere being built, they know where it's going and who sponsored it," he said to audience laughter, "and if they see a no-bid contract going to Halliburton, they can check that out too."
Less than two months after he was sworn into office, President Obama signed a memorandum that he claimed would "dramatically reform the way we do business on contracts across the entire government."
Flanked by aides and lawmakers at the Dwight D. Eisenhower Executive Office Building on March 4, Obama vowed to "end unnecessary no-bid and cost-plus contracts," adding: "In some cases, contracts are awarded without competition....And that's completely unacceptable."
The March 4 memorandum directed the Office of Management and Budget to "maximize the use of full and open competition" in the awarding of federal contracts.
Federal campaign records show Checchi has been a frequent contributor to liberal and Democratic causes and candidates in recent years, including to Obama's presidential campaign.
The records show Checchi has given at least $4,400 to Obama dating back to March 2007, close to the maximum amount allowed. The contractor has also made donations to various arms of the Democratic National Committee, to liberal activist groups like MoveOn.org and ActBlue, and to other party politicians like Sen. John F. Kerry, former presidential candidate John Edwards and former Connecticut Senate candidate Ned Lamont.
Sources confirmed to Fox News that Checchi & Company is but one of a number of private firms capable of performing the work in Afghanistan for which USAID retained it.
For example, DPK Consulting, based in San Francisco and with offices in Washington, D.C. and elsewhere, states on its website that it has contracted with USAID and other federal agencies on more than 600 projects involving "governance and institutional development" across five continents.
Among DPK's most recent projects are the establishment of a new public prosecutor's office in Jenin, in the troubled West Bank area of the Palestinian Authority, and the improvement of court facilities in the Kyrgyz Republic in Central Asia. Similarly, BlueLaw International, based in Virginia, was awarded a $100 million contract by the State Department in April 2008 to strengthen the "rule of law" in Iraq.
Although Obama suggested in his remarks on March 4 that he hoped particularly to address problems associated with defense contracting, an Associated Press analysis last July found that the Defense Department frequently awards no-bid contracts under the aegis of the $787 billion stimulus program, and often at higher expense to U.S. taxpayers.
According to The AP, more than $242 million in federal contracts, or roughly a quarter of the Pentagon's contract stimulus spending, was awarded through no-bid contracts. And while procurement officers say competitive bidding can actually cost the taxpayers more -- because it involves delays and can thereby subject pricing for services and equipment to inflation -- the AP analysis found that defense-related stimulus contracts awarded after competitive bidding saved the Pentagon $34 million, compared with $4.4 million when no bidding was involved.
Figures kept by OMB Watch, a non-profit research and advocacy group that tracks federal spending, show that no-bid contracts have been common under administrations controlled by both parties.
During fiscal years 2000 and 2001, for example, when Bill Clinton was president, as much as $139.2 billion in federal contracts was awarded without competitive bidding. The OMB Watch figures show that the practice appears to have accelerated sharply during the Bush administration, but the figures are not adjusted for inflation.