IG says GSA chief may have broken ethics, contracting rules

General Services Administration chief Lurita Doan may have violated federal ethics and procurement rules when she awarded a contract to a friend, the agency's inspector general concluded in a recent investigation.

Investigators found that Doan signed a no-bid contract to pay $20,000 to Public Affairs Group Inc., a company headed by her longtime business associate and friend Edie Fraser. Doan has acknowledged that she tried to issue the contract but was stopped by GSA contract and legal experts, who let her know that the award would be improper. "Doan's conduct in this matter may indicate possible violations of federal ethics regulations for failing to act impartially and creating the appearance of providing preferential treatment," the report stated. "Her conduct also may indicate possible violations of federal procurement regulations requiring competition in the award of contracts."

In the report, the IG office concluded that Doan bound the agency to pay the contract when she signed a two-page document that concluded, "By signing this Confirmation of Service Order, you agree to pay our fee for the services described above within thirty (30) days of receiving an invoice(s)."

GSA later terminated the contract "for convenience," and investigators found no evidence that any funds had been paid.

It was unclear, from the IG accounts of interviews with Doan, Fraser and several others involved with the case, whether the two women knew the document was legally binding.

Doan told investigators that she did not have contract authority and that the document was a draft proposal intended to kick-start the formal contracting process. She said GSA issued termination documents because it appeared that Fraser believed a contract had been awarded, and the paperwork would clear up that perception.

From the investigators' account of their interview with Fraser, it was not clear whether she understood her contract to be binding, but in a fax to Doan she indicated that GSA would follow up with a purchase order. Sandra Strzyzewski, a senior vice president with Fraser's group who handled contracts, said she knew that government contracts typically required documentation beyond what Doan had signed, and said it was her practice not to bill a government client without a signed purchase order.

The IG found that several GSA officials put in a lot of time after the contract was signed, trying to find a way to justify it as a sole-source acquisition under federal contracting rules. Those would generally require that there be an urgent need to use a sole-source contract or that there be only one source that would meet the government's needs.

The officials ultimately could not identify a justification for using the noncompetitive contract, which led to its termination. Some sections of the report where redactions had been made appeared to address whether it would be improper to make a sole-source justification after the contract had already been issued.

Fraser and Strzyzewski told investigators that Doan did not promise to reissue the contract under better circumstances after its termination, but an e-mail message from Doan and testimony by a contracting official showed that the administrator looked for a way to justify a new award.

Fraser resigned from Public Affairs Group in March, according to the report, which also noted that in July 2006, the company came under the ownership of NBC Universal.

In a January statement responding to initial news reports of the contract, GSA officials said, "As the longtime career attorney who reviewed this matter explained to The Washington Post, this incident has already been reviewed and no improprieties have been found."

An agency spokeswoman had no comment on the IG's findings. A White House spokeswoman said, "We're in the process of reviewing the report of the IG," and declined to say whether the president continues to support Doan.

Congress and the Office of Special Counsel are also investigating allegations that a January meeting at GSA headquarters that Doan attended may have violated the Hatch Act, which prohibits partisan activity in the federal workplace. Six attendees have said Doan asked all present to consider how GSA could "help our candidates'" in 2008; the administrator has said she does not remember that.