FEDERAL NO-BID CONTRACTS ON RISE

Use of Favored Firms a Common Shortcut

Under pressure from the White House and Congress to deliver a
long-delayed plan last year, officials at the Department of Homeland
Security's counter-narcotics office took a shortcut that has become
common at federal agencies: They hired help through a no-bid contract.

And the firm they hired showed them how to do it.

Scott Chronister, a senior official in the Office of Counternarcotics
Enforcement, reached out to a former colleague at a private
consulting firm for advice. The consultant suggested that
Chronister's office could avoid competition and get the work done
quickly under an arrangement in which the firm "approached the
government with a 'unique and innovative concept,' " documents and
interviews show.

A contract worth up to $579,000 was awarded to the consultant's firm
in September.

Though small by government standards, the counter-narcotics contract
illustrates the government's steady move away from relying on
competition to secure the best deals for products and services.

A recent congressional report estimated that federal spending on
contracts awarded without "full and open" competition has tripled, to
$207 billion, since 2000, with a $60 billion increase last year
alone. The category includes deals in which officials take advantage
of provisions allowing them to sidestep competition for speed and
convenience and cases in which the government sharply limits the
number of bidders or expands work under open-ended contracts.

Government auditors say the result is often higher prices for
taxpayers and an undue reliance on a limited number of contractors.

"The rapid growth in no-bid and limited-competition contracts has
made full and open competition the exception, not the rule,"
according to the report, by the House Oversight and Government Reform
Committee.

Keith Ashdown, chief investigator at Taxpayers for Common Sense, a
nonpartisan watchdog group, said that in many cases, officials are
simply choosing favored contractors as part of a "club mentality."

"Contracting officials are throwing out decades of work to develop
fair and sensible rules to promote competition," Ashdown said.
"Government officials are skirting the rules in favor of expediency
or their favored contractors."

In the case of the counter-narcotics office, a spokesman for the
Homeland Security Department said it was not unusual for a contractor
to tell agency officials how to arrange no-bid contracts because
contractors sometimes know federal procurement regulations better
than federal program managers.

Chronister and the former colleague, consultant Ron Simeone, declined
to be interviewed for this article. The director of the
counter-narcotics office, Uttam Dhillon, defended his office's
decision to use the consultants, saying ethics officials at the
Department of Homeland Security had been informed of the arrangements
and approved them, as long as Chronister did not supervise his former
colleagues.

Contracting officials at the department also determined that the
no-bid arrangement was okay because Simeone and his subcontractor
were uniquely qualified to do the work, in part because they intended
to replicate some work they had done for the White House drug office, he said.

"Every step of the way, we followed the advice and guidance of our
ethics officer," Dhillon said. "We did everything we're required to
do by law and then some."

Dhillon said he was comfortable hiring Simeone after Chronister and
another office official described the consultant as a
counter-narcotics expert. He said the firm performed well.

"My goal was to get this done as quickly and efficiently as
possible," he said. "He obviously had experience with this and was
knowledgeable about this."

Homeland Security's counter-narcotics office was formed in 2004 to
develop policies that unify various drug-enforcement programs. With
fewer than a dozen employees, the office has struggled with deadlines
for its budget, annual reports and the development of a system for
measuring the effectiveness of drug-control efforts, Dhillon said.

After Dhillon was confirmed as the office's director in May 2006, he
made the development of the measure system "one of my highest
priorities," he said. He said Congress and the White House had made
multiple requests for information that the office could not provide.

A senior manager at the counter-narcotics office had been assigned to
the task. But Dhillon said he "came to the conclusion the office was
not really in a position" to finish the work.

In July, Chronister asked Simeone for help in developing a system to
measure the impact of government interdiction efforts. Simeone in
turn decided to hire another consultant, John Carnevale, for help.

Chronister, Simeone and Carnevale had worked together over the years,
including at the White House's Office of National Drug Control Policy.

Chronister later worked as a senior policy analyst at Carnevale
Associates, a policy consulting firm owned by Carnevale, before
joining the counter-narcotics office.

Simeone, too, worked at Carnevale Associates. He is listed as chief
scientist, on the firm's Web site. At the same time, Simeone ran his
own company, Simeone Associates. Carnevale is listed on that
company's Web site as a senior associate.

Carnevale said Chronister sought the meeting with Simeone last July
"to explain the problems they were having related to pulling together
a performance-measurement system and asked him for advice."

"Simeone suggested an approach, which he turned into a sole-source
proposal," Carnevale said in an e-mail.

On Sept. 20, about a week before the contract was awarded, Chronister
was given responsibility for overseeing the work, according to an
e-mail obtained by The Washington Post.

That changed five days later, when Chronister first told Dhillon
about his ties to the consultants, Dhillon said in an interview. On
advice from ethics officials at the department, Dhillon told
Chronister not to work with Carnevale.

"Chronister was walled off from dealing with the contractor and
subcontractor before the contract was signed," Dhillon said. "We made
the decision with an abundance of caution."

But contact didn't cease between Chronister and the contractors.

Dhillon eased the prohibition on Chronister's contact with Simeone
when the office expanded the demands of the contract, and Dhillon
asked the contractor to also help prepare the office's annual report
to Congress, which was months overdue. He said an ethics official
approved the arrangement.

An Oct. 18 e-mail shows that Chronister was also included in
communication involving the original project and a planned conference
that included Simeone and Carnevale.

In November, the office organized a meeting with other drug
enforcement agencies to present an outline of its plan, called
"Performance Measures for United States Counternarcotics Enforcement
Efforts." Both Simeone Associates and Carnevale Associates are listed
on the documents.

Carnevale said he did not answer to Chronister for his work, which
focused on budget matters. "Technically and legally speaking, Simeone
was my supervisor," Carnevale said.

Chronister and Carnevale also maintained a close professional tie
outside the office: They are listed as the authors of a March 2007
paper, "An Assessment of the U.S. Drug Control Budget." Chronister is
listed on the paper as working at Carnevale Associates, and it
includes an e-mail address for him at the firm.

Carnevale said the paper was actually written in 2004. He said
Chronister was listed as a Carnevale employee because that was his
job at the time. Carnevale said Chronister is no longer a paid employee.