Report: DHS Erred With Limo Contract

By Justin Rood

May 15, 2007 2:11pm

The Department of Homeland Security violated government regulations by awarding a multi-million-dollar contract to a limousine company with ties to the Duke Cunningham scandal, a recent investigation concluded. The finding contrasts sharply with statements made by DHS officials that "the contract solicitation and award was completely up-and-up in accordance" with federal contracting rules. Instead, investigators from the department’s Office of Inspector General found that DHS officials quietly shared with the Shirlington Limousine company details about their upcoming transportation needs months before they made the information available to other bidders, said the report, which was first reported by The Hill newspaper. Before he was caught, tried and sentenced for bribery and corruption, disgraced former Congressman Randy "Duke" Cunningham wrote a letter of recommendation to DHS on behalf of Shirlington’s owner, who he said "was of service" to him and other members of Congress. According to the new report, DHS employees "promoted" Shirlington within the agency and worked to find ways to award the contract to Shirlington without any competition. First, they pushed to award Shirlington the contract on a no-bid basis, barring other companies from competing for the work, the report said. The department’s Office of Asset Management (OAM), which investigators believe was the largest proponent of Shirlington, "appears to have focused exclusively on doing business with Shirlington for transportation services," the report concluded. When another DHS office rejected the no-bid idea, the report said OAM officials opted to make the contract part of a program known as "HUBZone" designed to aid businesses in impoverished areas.  When DHS announced the contract in April, it gave other companies just five days to prepare and submit their bids.  It ultimately rejected everyone but Shirlington because they did not qualify under the HUBZone program. That was a violation of federal regulations, according to the inspector general report. DHS officials should have confirmed they would receive at least two valid offers from HUBZone-qualified companies before requiring bidders to meet HUBZone criteria. What’s more, the inspector general’s report determined that DHS failed to conduct due diligence on Shirlington to ensure they could fulfill the terms of the contract, which required the company to run several shuttle buses for DHS employees and provide drivers and dispatchers for a fleet of government cars. Shortly after Shirlington got the contract, it told DHS it did not have buses for the agency, according to the report. It said it did not have the money to buy new buses and asked for a cash advance from the department to help buy new ones, investigators found. DHS declined the request. It took several weeks for Shirlington to lease new buses to ferry department employees to and from work, according to the report. Last October, the department extended its contract with Shirlington Limousine but opted to end it earlier this year. Shirlington’s owner, Christopher Baker, has sued to hold on to the $25 million contract, alleging that "DHS crafted a procurement strategy around Shirlington so as to preclude it from competition." That wasn’t the only time Baker’s company saw its name in court documents. Earlier this year, federal prosecutors noted the company’s role in ferrying Duke Cunningham around Washington on behalf of accused felon and one-time defense contractor Brent Wilkes.  Prosecutors have charged Wilkes of bribing Cunningham with more than $700,000 in gifts and lavish meals. A call to Shirlington Limousine was not immediately returned.

A department spokesman declined to comment to ABC News, noting Baker’s lawsuit. In a letter response to the report, DHS wrote that its procurement office was understaffed and conceded that "normal more detailed procurement procedures were not followed."

From Capitol Hill, congressional investigators had examined the Shirlington contract award and concluded there were irregularities. Those conclusions "have been validated" by the inspector general’s findings, said House Homeland Security Committee Chairman Bennie Thompson, D-Miss., who had requested the agency probe. Read the full report.

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