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GSA Chief Scrutinized For Deal With Friend
Washington Post
By Scott Higham and Robert O'Harrow Jr.
Washington Post Staff Writers
Friday, January 19, 2007; Page A01

The chief of the U.S. General Services Administration attempted to give a no-bid contract to a company founded and operated by a longtime friend, sidestepping federal laws and regulations, according to interviews and documents obtained by The Washington Post.

Administrator Lurita Alexis Doan, a former government contractor appointed by President Bush, personally signed the deal to pay a division of her friend's public relations firm $20,000 for a 24-page report promoting the GSA's use of minority- and woman-owned businesses, the documents show.

The contract was terminated last summer after GSA lawyers and other agency officials pointed out possible procurement violations, including the failure to adequately justify the no-bid deal or have it reviewed in advance by trained procurement officers, officials said.

The GSA's Office of Inspector General has launched an investigation into the episode and briefed Justice Department lawyers, according to sources who said they were not authorized to speak publicly about the ongoing investigation. Officials at the inspector general's office and the Justice Department declined to comment.

In an interview Wednesday, Doan said she believed she was following proper procedures to hire the best firm available to quickly produce a report on diversity practices.

"I made a mistake," Doan said. "I thought I was moving this along. I was immediately informed that I wasn't necessarily moving it along in the way that was best for it. So at which point they canceled it, life went on, no money exchanged hands, no contract exchanged hands.

"I'm stunned, absolutely stunned by the amount of legs that this has taken, you know, how this has like kind of jumped up and run away with things."

The friend, public relations executive Edie Fraser, declined to comment.

"I can't," Fraser said. "I just admire her immensely."

Since assuming the helm of the GSA in May, Doan has repeatedly clashed with others within the agency over her intervention in matters that previous administrators delegated to subordinates, in part to avoid the appearance of political influence. The GSA is the largest broker of goods and services for the federal government, managing nearly $56 billion worth of contracts a year.

Last month, a dispute between Doan and her own inspector general's office became public when The Post reported that she had proposed curtailing the office's contract audits and had compared its enforcement efforts to "terrorism." Doan said she was interested in cutting wasteful spending by the agency and denied making the comparison.

Doan, 49, is a rising political star in the Republican Party who hit turbulence soon after she took over the GSA. She grew up in the downtrodden Ninth Ward section of New Orleans and was one of the first African American children to attend the city's private schools. She later went to Vassar College and obtained an advanced degree in Renaissance literature from the University of Tennessee at Knoxville.

Doan often speaks to groups about overcoming the struggles in her past and reminisces about how her great-grandmother fed the family by selling pralines on the docks in New Orleans. The family home was destroyed during Hurricane Katrina.

She was appointed to run the GSA after a 15-year career as owner of New Technology Management Inc. The Reston-based firm, which provides surveillance equipment for border security and other projects, was named in 2004 as one of the nation's fastest-growing small technology businesses.

During her business career, Doan developed close ties to the GOP. Between 1999 and 2006, she and her husband, Douglas, a former military intelligence officer and business liaison official at the Department of Homeland Security, donated nearly $226,000 to Republican campaigns and causes, documents show.

In 2004, Bush introduced Doan at a Commerce Department event for women who own small businesses. Later that year, Doan was invited to speak at the Republican National Convention in New York. In 2005, Doan sold her firm for an undisclosed sum to a group of investors and retired. At the time, New Technology Management had revenue of nearly $20 million and government contracts worth more than $200 million.

Last spring, the Bush administration asked Doan to take over the GSA, which had been shaken by scandal after lobbyist Jack Abramoff tried to obtain properties under GSA control. Abramoff took then-GSA chief of staff David H. Safavian and others on an all-expenses-paid golf trip to Scotland, and Safavian provided Abramoff with inside information about the properties. Both men have been convicted.

On April 6, Bush nominated Doan to be the first female administrator in GSA history. She pledged to make the agency operate more like a private business and to "restore GSA's leadership as the premier contracting and service provider."

On July 25, two months after taking office, Doan signed the no-bid contract with Public Affairs Group Inc. and two of its divisions, the Business Women's Network and Diversity Best Practices. The companies were founded and are operated by Fraser, the president and chief executive of Public Affairs Group and the president of Diversity Best Practices. The contract was signed on the letterhead of the two divisions, and Doan said Diversity Best Practices was to have done the work.

An online newsletter posted by Diversity Best Practices and the Business Women's Network in 2003 called Doan a "partner" and described her as "one of the nation's best and brightest women entrepreneurs."

Deneen Vaughn, a former vice president of Public Affairs Group, told The Post in an interview last week that Doan's company often sponsored programs arranged by the Business Women's Network and spoke at the group's events.

"She's been a longtime friend and business partner of Edie Fraser," said Vaughn, who left the organization in May. "She supported the growth and development of the company, and she mentors other members of our organization."

The companies run by Fraser routinely sponsor diversity-oriented events that attract such luminaries as Sen. Hillary Rodham Clinton (D-N.Y.), Sen. Ted Stevens (R-Alaska) and Fortune 500 executives.

Early in her career, Fraser worked as an Africa desk officer for the Peace Corps. She later started Edie Fraser Associates, a public relations firm that won a measure of notoriety in 1980 when it secured a $9,800 no-bid contract to study the Commerce Department's public relations office.

Then-Sen. William Proxmire (D-Wis.) gave the deal one of his famous "Golden Fleece" awards for the misuse of tax dollars, saying Commerce already had 112 public relations employees.

In the mid-1980s, Fraser turned her attention to helping female and minority entrepreneurs, producing a series of reports about their changing status in the U.S. economy.

Fraser and Doan have appeared on the same panels and lavished praise and awards on each other at conferences. They also served together on the national advisory board of Enterprising Women, a magazine for female business owners. "Lurita Doan is precisely what this nation needs," the magazine quoted Fraser as saying, admiring Doan's business acumen, in 2003.

Last summer, two weeks before Doan signed the contract with the companies run by Fraser, she attended a star-studded gala sponsored by those companies called "Celebrating Diversity -- the Changing Demographics of America."

"It is so important, as women, to extend that helping hand to one another, that we help mentor each other and give us that extra break that we need to move our way to the top," Doan said, according to a copy of her remarks on an event Web page.

The contract Doan signed with the companies directed them to produce a report promoting GSA's "major achievements" in contracting with minority- and women-owned businesses. The contract called for producing a report that would be "approximately 24 pages." It would contain profiles of diversity success stories at the GSA and include "recommendations for how to use the report."

Doan said she did not use the GSA's public affairs division, which has about a dozen employees who develop information about the agency's programs, because she wanted to employ an expert in the diversity field.

"Diversity Best Practices is the industry leader in this area," she said. "They have won countless awards on diversity representation and issues."

The contract should have been competitively bid, according to procurement experts and officials familiar with the arrangement. Under federal regulations, contracts worth more than $2,500 at the time were to have been open to competition, unless there were extenuating circumstances. Those include disasters and instances in which the bidding process could cause "unacceptable delays in fulfilling the agency's requirements," according to the Federal Acquisition Regulation, which governs all federal contracting.

The general counsel of the GSA at the time, Alan R. Swendiman, advised Doan to terminate the contract. It was then terminated by a GSA contracting officer. Swendiman left the agency a short time later and is now a special assistant to the president and director of the White House Office of Administration. He declined to comment.

Contracting experts said Doan should have steered clear of the contract.

"Only contracting officers can sign federal contracts and obligate federal funds," said D. Kent Goodger, a federal contracting official for 38 years who now teaches federal procurement courses for the Agriculture Department and other agencies. "Anyone who assumes that they have that authority, like the administrator of GSA, is wrong."

Steven L. Schooner, a procurement specialist at George Washington University's law school, called Doan's involvement in the contract "highly irregular."

"One of the things you're trying to avoid is political favoritism," he said. "You don't want the process polluted or corrupted by political influence."

Doan has taken other steps that have raised questions inside the agency, according to internal memos and e-mails obtained by The Post and interviews with GSA officials.

Last September, Doan intervened in an effort to determine whether five major contractors should be suspended from doing business with the federal government after they had been accused of making fraudulent claims. The firms -- KPMG, Ernst & Young, PricewaterhouseCoopers, Booz Allen Hamilton and BearingPoint Inc. -- had paid the Justice Department more than $66 million to settle allegations that they kept travel rebates from airlines and hotels that should have gone to the GSA, according to agency officials.

The GSA's debarment office initiated "suspension actions" against the companies and issued "show-cause" letters, asking the firms to explain why they should not be suspended or debarred, according to a Sept. 7 e-mail obtained by The Post. Companies found to be engaged in fraud can be suspended or banned from doing business with the federal government.

"I would expect that the companies will respond to me by saying that they have acknowledged their sins, paid restitution and have put in place measures to prevent a recurrence of this activity," GSA debarment official George N. Barclay wrote in the e-mail. "Suspension determinations could be avoided upon such a showing."

Three days later, Doan wrote to several senior GSA officials: "I do not recall this issue EVER coming up in a single management meeting or any meeting for that matter." She asked that the show-cause process be "stopped until cooler heads can prevail."

But the show-cause letters had already been sent, and the companies later avoided suspension or debarment by agreeing to return travel rebates in the future.

Goodger, the former government contracting official, said Doan's involvement was unusual and "creates an appearance of impropriety."

Doan acknowledged that her intervention was unusual but said she did not do anything improper.

"As the head of this agency, I have an obligation to weigh in and say, 'What is this matter, do you know what this matter is?' " she said.

"I don't want to be a rubber-stamp kind of figurehead administrator of this agency. I do not want to participate in the old go-along-to-get-along kind of Washington two-step-type activity. This is not what I'm here for. So, yes, I am going to be involved."

Doan also generated consternation within her agency and on Capitol Hill with her proposals to curb the agency's contract audits and to cut the inspector general's budget by $5 million. The audits, which aim to ensure that the government is getting the best prices for goods and services, have saved taxpayers more than $1 billion over the past two years, the inspector general's office reported.

Doan's efforts prompted senators and congressmen from both parties to write to her, requesting that she halt her plans.

"You have not made a coherent case that explains how your proposal would benefit the taxpayer compared to the system now in place," said one letter signed by three members of Congress, including Rep. Henry A. Waxman (D-Calif.), the new chairman of the House Oversight and Government Reform Committee, which oversees the GSA.

Doan has said publicly that the proposed cuts were part of an effort to reduce wasteful spending across the agency. Privately, she complained that Inspector General Brian D. Miller and his staff were intimidating GSA employees and vendors. She accused Miller's staff members of leaking budget information and asked for an investigation.

Doan also demanded that Miller notify her of all ongoing criminal probes of GSA employees and provide her with a monthly report of his office's activities. Miller said disclosing the cases could jeopardize investigations, and he disregarded Doan's requests for a leak investigation and monthly reports, according to a Jan. 10 memo obtained by The Post.

Doan said she has been misunderstood and is trying to do the best job she can.

"I bring the sensibility of someone whose favorite song is the national anthem. I love this country," Doan said. "I was one of the chosen ones who has had a chance to really live all aspects of the American dream. I feel so blessed to have this opportunity to give back."

Research editor Alice Crites contributed to this report.

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