USAID ignored rule in Iraq contracts
April 28, 2003 | WASHINGTON (AP) -- The government ignored its own rule requiring security clearances for companies seeking Iraq rebuilding contracts, an internal investigation found Monday, awarding a seaport project to a firm without such a clearance.
The US Agency for International Development deleted the requirement from the contract of Seattle-based Stevedoring Services of America, after learning the firm lacked the clearance. USAID justified the change by declaring the clearance no longer was needed once the war started.
Some members of Congress sharply criticized the agency for awarding contracts under a limited, invitation bidding process. USAID justified the procedure by saying it needed experienced firms that could begin work quickly and had the necessary security clearances.
Next time, the agency should make its decision to change the requirement before selecting a contractor, recommended Bruce Crandlemire, assistant inspector general for audit.
The inspector general's finding only increased the skepticism.
"After discovering it had awarded a contract to a company without a security clearance, the agency changed the requirement," said Sen. Joseph Lieberman, D-Conn. and ranking Democrat on the Governmental Affairs Committee. "I'm left wondering if these contracting procedures result in the best value for the American taxpayer."
USAID spokeswoman Ellen Yount said the requirement was changed because "the circumstances on the ground had changed significantly enough that the security clearance was no longer warranted."
The $4.8 million award was announced March 24, the first USAID reconstruction contract for Iraq. Four contracts have been awarded since then and at least four others are awaiting a final decision.
Stevedoring Services is the largest marine terminal operator in the United States. Between 1999 and 2002, the company made nearly $24,000 in political contributions -- about 80 percent to Republicans, according to the Center for Responsive Politics.
The Center, which tracks political contributions, said the donations include money given to individual candidates and political parties.
The inspector general said the formal request for bids was sent to only three companies who met several criteria, including the need for the security clearance. Two of the companies submitted proposals and one declined.
Stevedoring Services will manage the Umm Qasr port, considered critical to Iraq's economic recovery and shipment of humanitarian aid.
The company also is responsible for port pilots who will guide ships to the channel and manage access of trucking companies to the port.