Clinton seeks broader investigation of award fees

The company that received an improper $475 million contract from the Homeland Security Department also may have received an inappropriate financial bonus as part of the deal, Sen. Hillary Rodham Clinton (D-N.Y.), said today.

Alaska Native firm Chenega Technology Services Corp. was improperly awarded the sole-source screening equipment maintenance contract by the Customs and Border Protection Agency in 2003, according to a Nov. 20 report from DHS Inspector General Richard Skinner.

The agency used an incorrect industry code that allowed for exemptions from various restrictions on the contract, Skinner's report said. DHS did not comply with federal contracting regulations and as a result, the government did not receive the "best value" for the contract, he concluded.

Clinton called on Skinner to expand the investigation to determine whether Chenega also received questionable award fees as part of the contract and to evaluate whether DHS is paying other inappropriate award fees.

Under the Federal Acquisition Regulation, award fees may be made to reward excellent contractor performance. But Clinton said she is responding to several reports of such fees being paid without regard to performance.

Clinton, in a letter to Skinner, said the IG's staff informed her that award fees were paid to Chenega as part of its contract with the agency. Since those fees were not specifically reviewed in Skinner's report, Clinton requested details of the fees and further investigation of the fees.

Furthermore, Clinton noted a "troubling pattern" of reports of award fees at DHS and asked Skinner to investigate.

"In too many cases, DHS appears to be awarding bonuses despite poor performance, or worse, without even evaluating work," Clinton wrote. "Failing contractors should be rooted out, not rewarded. Given your report of what appears to be noncompliant federal contracting practices on the part of the DHS and a pattern of providing award fees to contractors without justification, I request that you expand your investigation into the practice of award fees by the Department, especially when it comes to no-bid contacts."

Clinton specifically asked Skinner to investigate and review the following:

• The Transportation Security Administration's alleged payment of award fees to Boeing Co. in connection with a contract for the installation and maintenance of explosive detection equipment at U.S. airports.
  
• TSA Passenger and Baggage Screening Pilot Program award fees paid without proper performance determinations, according to a previous IG report.
  
• Government Accountability Office findings of award fees paid for the Coast Guard's Deepwater contract despite documented problems in schedule, performance, cost control and contract administration.