Hospital contract is a D.C. Council hot potato

January 31, 2013

Orange says he’s prepared to go to the mat to kill a controversial hospital contract. (Nikki Kahn/The Washington Post)

Another year, another D.C. Council contracting battle.

The latest flashpoint in the procurement wars concerns a $12.7 million, two-year award to Huron Consulting to undertake a turnaround of United Medical Center, the District-owned, money-losing hospital on Southern Avenue SE. Huron beat out three other bidders for the contract, which now must be approved by a majority of council members.

But that process has gotten messy.

Some background: The city politics rumor mill started buzzing last week that irregularities in the procurement process — including issues with Huron’s local “certified business enterprise” partner and an unusual second round of best-and-final offers — would lead to a protest of the award.

It would be an embarrassing setback for Mayor Vincent C. Gray (D), who has watched two other administration priorities — “smart” taxi meters and streetlight management — become waylaid by procurement issues.

But by last Friday, the final day of the 10-day post-award window during which an aggrieved bidder can protest to the Contract Appeals Board, none of the losing bidders had done so.

This week, questions about the contract hit the press via a pair of Washington Times articles laying out the questions about Huron’s CBE partner. Long, complicated story short: The company entered the bidding process with one partner, which failed to get the necessary city certification, and later swapped that partner out for one that is, in fact, certified. The delay caused by the second round of final offers appeared to help Huron get its properly certified partner in place in time for the award.

Enter D.C. Council member Vincent B. Orange (D-At Large), who told the Times Wednesday that he planned to introduce a resolution disapproving the contract — citing his belief that Huron violated the terms of the procurement and city law by not having a CBE partner in place at the outset of its bid.

Under new council rules, it takes three council members to file a contract disapproval. Orange said Thursday he had Muriel Bowser (D-Ward 4) and Yvette Alexander (D-Ward 7) in his corner, setting the stage for a Tuesday up-or-down vote on the contract.

The drama picks up from there.

On Wednesday night, Gray’s legislative affairs director, Janene Jackson, sent a text message to Orange: “CM Orange, please call me. Your disapproval changes the landscape on CBE and sound stage discussions.”

Orange said Thursday that he interpreted this as a threat from the mayor: “CBE” refers to an Orange-sponsored bill reforming the certified business enterprise program — one that Gray is under pressure from business interests to veto. As for “sound stage discussions,” at Orange’s behest, the city is set to perform a feasibility study of building a studio facility to lure major film and TV productions to the District. Orange said he interpreted Jackson’s text thusly: Approve the contract, or else.

Jackson denied making any threat. Rather, she said, she wanted to impress on Orange the importance of returning her calls. “Because he isn’t talking to the mayor about what’s important to him, the mayor may feel differently about what’s important to the council member,” she said Thursday.

The two did not meet until Thursday afternoon. And by that time, Alexander had changed her mind and decided not to join Orange’s disapproval push. Rather, as the chair of the council’s Health Committee, she filed an approval resolution. Orange said he was “shocked” at this development.

Alexander said Thursday she had a change of heart after hearing from various city officials who insisted it was OK for Huron to have bid without a duly certified CBE partner as long as it had one in place at the end of the award process. “I found some new information,” she said.

Jackson confirmed as much: “We have a different legal interpretation” than Orange on when a CBE needs to be in place, she said.

But Orange says he isn’t budging, and he’ll still take the fight to the council dais on Tuesday. (Bowser said Thursday she, too, is still opposing the contract.)

“The code clearly states you need to have a CBE” when bidding, Orange said. Owners of other CBEs have contacted him, he added, “bent out of shape” by the city’s position that contract bidders don’t necessarily need CBEs in place when submitting initial bids.

“You may have the best team, but if you find out they’ve been using steroids, don’t you get disqualified?” he said. “Isn’t this like Lance Armstrong?”

Meanwhile, other machinations have come to light.

At least one of the three losing companies underbid Huron, a fact that could further complicate council approval. Navigant Consulting, according to three persons familiar with the final proposals, came in with a final bid of $9.6 million, almost 25 percent under Huron’s eventual award. While the lowest bidder can be outscored on technical qualifications, Navigant backers also point out that the company has a significant local employment presence, unlike Chicago-based Huron.

Orange also said he’d make an issue out of Huron’s past business practices — in particular, its recent settlement with the Securities and Exchange Commission over an internal accounting scandal uncovered in 2009.

On the other side, officials who support the Huron award are questioning Orange’s ties to Navigant via a former campaign aide, Sean Metcalf.

Metcalf said Thursday he had “an association” with a subcontractor for the company but had no direct association with Navigant. “I have no dog in the fight,” he said. “I want local businesses to get work.”

As for Orange, he said he’s no johnny-come-lately and has been a longtime critic of procurement shenanigans: “We’re talking about the integrity and the credibility of the contracting system here.”

Mike DeBonis covers local politics and government for The Washington Post. He also writes a blog and a political analysis column that runs on Fridays.
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Mike DeBonis · January 31, 2013