Iraq: Questions Raised About Creative Associates Contract

The Washington firm awarded a government contract worth up to $157 million to rebuild Iraq's educational system may have helped shape the proposal it was then asked to bid on, according to a critical internal government review.

The inspector general's office at the U.S. Agency for International Development said Creative Associates International Inc. participated in a roundtable discussion with agency officials about
Iraq
's education system last November, four months before USAID invited it and four other companies to bid on the work. Creative Associates was the only firm to bid, and it listed three of the four competitors as possible subcontractors.

 

The June 6 memo from the inspector general's office said procurement officials kept such limited records of the meeting that it couldn't conclude whether Creative Associates "gained a resulting competitive advantage." But Bruce N. Crandlemire, assistant inspector general for audit, recommended further review

 

"Given the magnitude of the contract and the need for confidence in USAID's procurement process, we believe that additional review is in order," the report said.

 

Stephen A. Horblitt, spokesman for Creative Associates, declined to comment.

 

USAID has awarded eight initial contracts in the $1.7 billion
Iraq
reconstruction effort.

 

USAID Administrator Andrew S. Natsios asked the inspector general to review the first contracts after members of Congress complained about limited competition. The agency said it used limited bidding because of the need to get aid to
Iraq
quickly. Full competition for a contract normally takes about seven month to complete. The education contract was filled in less than a month.

 

In the other review completed so far, the inspector general found that the agency eliminated the security requirement it used to limit the group of eligible bidders on an initial $4 million seaport administration contract -- after discovering that the company it selected, Seattle-based Stevedoring Services of America, did not have the required clearance.

 

The General Accounting Office is conducting a separate investigation of the bidding. And both the House and Senate have passed measures requiring government agencies awarding
Iraq
contracts to explain the reasons they did not use an open and full competition. The shortened process is allowed by federal law, and the USAID's inspector general has said the agency met requirements for using it. Sen. Ron Wyden (D-Ore.), who sponsored legislation requiring more disclosure of the
Iraq
contract process, said USAID "needs to provide a full accounting -- not a partial one -- when it spends those dollars on anything but an open and competitive bidding process."

 

He said he agreed with the inspector general's recommendation for more review but added: "I don't agree that it should be done by USAID's Office of Procurement. With the IG already raising questions about the fairness of the process that was used, that review has to be done independent of USAID."

 

USAID spokeswoman Ellen M. Yount said the agency's procurement officials disagree with the IG's findings. "You cannot shut down contact with the outside world in terms of development of plans or discussions with outside experts on these issues," she said.

 

In inviting firms to bid on the education contract, USAID officials told the IG that they did not need to conduct "market research" required by acquisition rules because officials already knew enough to determine which companies to pick, according to the memo.

 

Among the other firms invited to bid were DevTech Systems Inc. of
Arlington
and RTI International of North Carolina. Both are subcontractors on Creative Associates' education contract. RTI, in turn, hired Creative Associates as a subcontractor after it won a contract worth up to $167.9 million to help reestablish local governance in
Iraq
.

 

AMP Section Name:War & Disaster Profiteering
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