Contract system in DC arouses concerns

The FDA's no-bid PR contract has put the capital's procurement process in the spotlight

For many outside of Washington, DC, and a few within, the federal contracting process appears to be a bureaucratic morass in which Beltway Bandits “game” the bidding process to win contracts.

Occasional reports of seemingly strange awards for PR and other types of work, like the infamous $500 hammers, appear to confirm people's suspicions. Most recently, the Federal Drug Administration (FDA) awarded a $300,000, no-bid PR contract to an obscure Alaska-based company called ANI, with DC-based Qorvis Communications as a subcontractor.

Since ANI is an 8(a) business, meaning it is “owned and controlled by one or more socially and economically disadvantaged individuals,” the FDA can negotiate with ANI, which has regularly subcontracted with Qorvis, directly.

Rep. John Dingell (D-MI), who chairs the House committee that oversees the FDA, has vowed to investigate the PR contract and whether federal rules were circumvented.

The FDA denies acting improperly, though it did suspended the contract to allow for an internal investigation. PR pros work-ing in Washington say despite appearances, the government is often trying to find the best firm for the job, but must navigate through arcane rules.

Qorvis partner Don Goldberg told PRWeek that the FDA liaison in charge of this particular contract came to Qorvis unsolicited to say the FDA already knew it wanted the firm because of its work and that it wanted to choose before the end of Bush's term, which limited the amount of time for a competitive bid.

RFPs sometimes appear that are written in a way that it is apparent the government agency already has a particular contractor in mind. But Goldberg says the contracts are approved and overseen by many layers of management, Congress, the General Accountability Office, and government agency inspectors general.

Dr. Steve Kelman, a professor at Harvard University's Kennedy School of Government and a former head of the Office of Federal Procurement Policy (OFPP), says while plenty of instances of fraud and abuse exist, the process is inherently fair.

“That's not to say there are no problems, but the system is overwhelmingly honest,” Kelman says.

However, Rob Burton, a former OFPP deputy administrator who is now a partner at the law firm Venable, says contract awards to small businesses are particularly vulnerable for abuse because of a lack of oversight over what constitutes as “small.” He notes that as federal procurement has increased from $200 billion to $500 billion annually since 9/11 and the Iraq War, the amount of fraud is bound to increase, just based on the law of averages.

Contrary to the belief that federal contracts are easy money, most executives roll their eyes when asked about bidding on government RFPs. Dan Baum, CEO and founder of DBC PR, says the emphasis on the lowest bid might actually prevent the best firm from being hired.

“If it's fairly commoditized work... that process may be fine,” Baum says. “But if the work calls for strategic counsel, then I'm not so sure.”

Debra Silimeo, SVP at Hager Sharp, says that bidding for government contracts is challenging. Some public affairs proposals that she helped put together were submitted in cardboard boxes due to the amount of paperwork. Yet, from what she has seen, contracts were always fairly awarded.

“It may be more challenging to work... through the government contracting process... but the [RFPs] I've been involved [with] have all been honest attempts to provide the best value for the dollars being spent,” Silimeo says.

Overall, though, Burton says the US is leading the way on government contracts. “Two years ago I chaired an international working group about procurement best practices, and there's no question that the rest of the world views it as a model,” he says.

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