State Department Admits No-Bid Contract 'Violates' Obama Campaign Pledges

P.J. Crowley resigned as assistant secretary of state Sunday after remarks about Defense Department treatment of WikiLeaks suspect Pfc. Bradley Manning. (FNC)

The recent awarding of a lucrative federal contract to a company owned by a financial contributor to the Obama presidential campaign -- without competitive bidding -- "violated" President Obama's many campaign pledges to crack down on the practice, a top State Department official told Fox News.

Assistant Secretary of State P.J. Crowley, familiar to many Americans from his erudite delivery of the State Department's daily press briefings, made the admission in a telephone interview Saturday night.

Reminded of Obama's many pledges during the 2008 campaign to crack down on the use of no-bid contracts, and of the memorandum the president signed last March instructing the Office of Management and Budget to curb the practice, Crowley said: "You make a valid point. If you want to say this violates the basis on which this administration came into office and campaigned, fair enough."

The contract in question, worth more than $24.6 million, was awarded on Jan. 4 by the U.S. Agency for International Development (USAID) to Checchi and Company Consulting, a Washington, D.C.-based firm owned by economist and Democratic Party donor Vincent Checchi. The deal called for Checchi's firm to train lawyers and judges in Afghanistan and thereby strengthen the "rule of law" in the war-torn country.

Crowley confirmed that the contract has been "terminated" because the circumstances under which it was awarded “violated the Competition in Contracting Act." Crowley said the contract was actually a renewal of a $44 million contract first awarded to Checchi and Company in October 2004 by the Bush administration -- after a competitive bidding process -- and will now be put out for competitive bids.

The existence of the Checchi contract was first publicly reported by Fox News on Jan. 25.

However, Crowley insisted the cancellation of the contract had nothing to do with Fox News' reporting but rather was the result of a protest lodged by ARD Inc., a Vermont-based competitor of Checchi and Company. Crowley said the contracting officer in Kabul decided to renew the contract to Checchi and Company on a no-bid basis without being aware of ARD's protest.

"What was missing here," Crowley said, "was a determination that there was an urgent and compelling reason" for the contracting officer to have arrived at that decision. Crowley added: "No one is saying that the performance by Checchi over the last five years has been anything but satisfactory.

Yet when USAID first responded to Fox News' questions about the Checchi deal, more than 72 hours after the agency was first contacted by a Fox News reporter, USAID Director of Public Information Joseph A. Fredericks made no mention of ARD's protest, nor of the decision to cancel the contract.

Instead Fredericks defended the no-bid process as proper in the circumstances. "As the incumbent," Fredericks told Fox News in a Jan. 25 e-mail, "Checchi was rewarded [sic] a renewed contract to allow for work on the ground to continue."

Moreover, some concerned parties have indeed been critical of Checchi's performance in the admittedly difficult circumstances in Afghanistan. Rep. Darrell Issa, R-Calif., ranking Republican on the House Oversight and Government Reform Committee, told Fox News, after learning about the contract renewal: "It's hard to say that [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 has written to USAID Administrator Rajiv Shah requesting that copies of all documents relating to the Checchi contract be submitted to the House committee on or before Feb. 5.

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, wants to know more about the circumstances surrounding the Checchi contract.

"She has posed questions to USAID about the situation and is pursuing full answers," said Maria Speiser, a spokeswoman for the senator. "If she doesn't get answers, she'll be ready to take action."

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.

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 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 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 his inauguration, 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.

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.