“A Textbook Case in How to Screw Up a Procurement” A Navy investigation of a contract for security barriers to protect U.S. warships uncovered alleged criminal fraud, conflicts of interest and an unlawful 8(a) pass-through contract. Yet after more than four years, no one has been prosecuted, the head of the Naval Criminal Investigative Service told a congressional subcommittee. The contract for boat security barriers grew out of the terrorist attack on the destroyer U.S.S. Cole in Yemen on Oct.12, 2000. It was canceled in 2003 after the GSA inspector general uncovered evidence of irregularities. (SAA, 1/23/2004) The House Armed Services Committee’s seapower and expeditionary forces subcommittee held a hearing June 6 after the Washington Post reported on the contract. The subcommittee’s ranking Republican, Roscoe Bartlett of Maryland, declared, “I think this could become a textbook study in how to screw up a procurement.” After a suicide bomber aboard a small boat attacked the U.S.S. Cole, killing 17 sailors, the Naval Criminal Investigative Service moved to install large floating barriers to protect ships from smaller craft. NCIS Director Thomas Betro testified that the Navy chose barriers manufactured by Dunlop, a British company that had supplied them to the British Royal Navy. To expedite the procurement, NCIS officials used GSA’s 8(a) FAST governmentwide acquisition contract to award a sole-source contract to Northern NEF Inc. of Colorado Springs in September 2001. Betro said NEF was directed to use an Alexandria, VA, consultant, P-Con, as a middleman in buying the Dunlop barriers. He said one of the Navy contracting officials had a prior relationship with P-Con’s principal, identified in other documents as Philip Condon. GSA’s inspector general found NEF, an information technology company, had no experience with boat barriers and passed through 100% of the work to subcontractors. Furthermore, the procurement was outside the scope of the GSA FAST contract, an IT vehicle. The NEF contract was worth about $53 million, but investigators found the company was awarded a series of task orders of just under $3 million each, the limit for an 8(a) sole-source award. Rep. Bartlett said this was “an obvious ruse to get around the regulations.” Betro said Northern NEF was paid $2.6 million in fees and P-Con received about $1.1 million. “For apparently doing nothing,” said subcommittee Chairman Gene Taylor, a Mississippi Democrat. After GSA’s IG questioned irregularities in the contract, NCIS began a criminal investigation, Betro said. Two NCIS officials involved in the procurement have resigned. He declined to identify them because they are subjects of an ongoing investigation. Betro said NCIS referred its findings to the U.S. Attorney’s offices in Maryland and Virginia for possible prosecution. Both offices declined to prosecute, but suggested the case should be brought in Kansas City, MO, where GSA’s regional office awarded the contract. Instead, Betro said the case has been referred to the U.S. Attorney for the District of Columbia, which is considering it. “Apparently there has been criminal wrongdoing, the taxpayers are out a lot of money, and nobody is doing anything about it,” Rep. Taylor said. The boat barrier contract was one catalyst for GSA’s “Get It Right” campaign, which focused on compliance with procurement regulations. Jim Williams, commissioner of GSA’s Federal Acquisition Service, said the agency “took quick action to fix it” after the IG’s report. Betro said the actions of NCIS personnel in steering the contract to favored vendors were “clearly improper.” But the GSA contracting officer bore ultimate responsibility to ensure that proper procedures were followed, said Cathy Riddick-Brown, an NCIS acquisition official. As for the barriers, “Navy officials advised us that the barriers were prone to leaks, can deflate completely, and that defects caused barrier gates to remain open,” the GSA IG said in a 2004 report.