AID inspector general finds fault with Iraq contract

The inspector general of the U.S. Agency for International Development has concluded that the agency did not comply with federal regulations in awarding a one-year, $62.6 million contract to Washington-based Creative Associates International to rebuild Iraq's educational system. The contract, which can be renewed for up to two more years, could ultimately be worth as much as $157 million.

AID has awarded seven contracts for reconstruction and development in Iraq worth a total of nearly $1 billion, and it is expected to award at least three more contracts.

The contracting process, however, has come under scrutiny by members of Congress who have questioned the agency's decision to waive normal procurement procedures in favor of an expedited process that limited competition.

The inspector general's report, which was issued late last week and sent to AID's top procurement official, Timothy Beans, and the agency's assistant administrator for Asia and the Near East, Wendy Chamberlin, found no fault with the agency's decision to expedite the granting of contracts earlier this spring. But the inspector general did find fault with the methods AID procurement officials used to identify the five contractors eventually offered the opportunity to bid for the education contract. Of those five, only Creative Associates eventually offered a bid. It included three of the other four solicited bidders as subcontractors.

In its report, the inspector general reported that AID procurement officers had not documented the methods used to narrow the list of potential contractors. Some of the officers told the inspector general that the procurement office did not conduct any research into potential contractors but had chosen the five potential bidders based on "institutional knowledge" built up over years working with educational development contractors. But the AID inspector general took issue with the procurement officials' reasoning, arguing that federal regulations require the agency to conduct market research and that "expecting that this process be documented and clearly explained is reasonable."

The IG also criticized AID for inviting a representative from Creative Associates to a November 2002 roundtable discussion with AID personnel and outside academics to share information and discuss the current state of the Iraqi educational system. None of the other solicited bidders were invited to participate in the roundtable discussion. AID opened the bidding process for the education contract in March 2003. Because of its participation in the November meeting, Creative Associates "was made aware of USAID's interest in a potential education program in Iraq . . . nearly four months before" other bidders, according to the IG's report.