June 21, 2013

U.S. Attorney Ronald C. Machen Jr.’s declaration that former D.C. Council member Michael A. Brown “exploited a broken system” brings to mind the advice of Moms Mabley about crossing the street: “Don’t watch the lights; the lights never killed nobody. Watch the cars.”

People, in other words, are the problem. That’s certainly true in the District.

Millions of taxpayers’ dollars have been lost to fraud, waste and abuse because government managers and elected officials failed to effectively perform their jobs. They are responsible for ensuring the quality and integrity of the system. Their steadfast fidelity to the law in the face of criticism and risk is critical to good government and leadership.

But infidelity is at epidemic proportion in the D.C. government. Those who would prefer not to abide by local laws, especially well-liked individuals, often are protected and defended.

Consider the controversy surrounding the nearly $10 million lottery contract handled by Chief Financial Officer Natwar M. Gandhi and his staff. The agreement must be approved by the D.C. Council. Council member Jack Evans (D-Ward 2), chairman of the Committee on Finance and Revenue, has scheduled a public hearing for Thursday to discuss complaints about the process and allegations that the Gandhi and his staff ignored procurement laws.

No one expects much from the hearing, however. Evans, a mayoral candidate, has been the CFO’s frequent and dependable shield.

The trouble began last fall when Gandhi sought bidders for the new contract. Two responded: a joint venture and Scientific Games International. But neither satisfied a D.C. law mandating that bids for contracts of $250,000 or more include a plan subcontracting 35 percent of the value to certified local business enterprises.

Yes, that’s the same program that Brown attempted to manipulate to secure payments from undercover FBI agents. Don’t hate the policy, hate the violator.

The certified business enterprise (CBE) program is designed to provide opportunities for local companies. That could lead to more jobs for D.C. residents and more money in the government’s coffers.

For failing to provide a subcontracting plan, the joint venture was disqualified by Gandhi’s office. While Scientific Games only provided a “good-faith” statement and not the requisite plan, it was not kicked out. Local business owners became enraged. They accused the CFO of bias and circumventing the procurement laws.

You’d think lottery contracting would be flawless. After all, there’s an ongoing investigation of the city’s handling of the 2008 and 2009 lottery contracting process; the feds are trying to determine whether bribery or contract steering occurred.

Gandhi’s responses to the business owners’ complaints have gone from curious to curiouser. Tracking them over the past few months, as I have, has felt like a trip down the rabbit hole.

In April, the CFO requested a waiver to the 35 percent mandate from the Department of Small and Local Business — even though a similar application had been denied when the company sought to extend its existing contract. About this time, Scientific Games submitted a “revised” plan that provided for only 17.8 percent CBE subcontracting. In the filing, the company stated that, despite its “good-faith efforts,” it was unable to meet the mandate because making the tickets is a complex process that must be completed at specialized facilities outside the city. Further, it said, certain of its services and products were proprietary: ticket paper stock, printing ink and ticket printing, for example.

Really, I’m not making this up.

Notably, in those same documents, the company admitted that it didn’t consider any CBE subcontractors that could provide lottery equipment or management, because such enterprises would be in “direct competition” to the company and using them would “likely create a conflict of interest and competitive disadvantage for Scientific Games in D.C. and future business opportunities.”

Competition means a better price for the D.C. government and taxpayers, doesn’t it?

By June 4, Robert Summers, interim director of the Department of Small and Local Business Development, hadn’t replied to the CFO’s second waiver request. So, that day, the CFO’s staff performed what’s best described as a Mad Hatter management maneuver: The contracting official in Gandhi’s office who was handling the matter wrote a memo to his boss, Joseph Giddis, asking him to approve a modification to the agreement, which both had been involved in developing. Giddis signed off, relieving Scientific Games of the 35 percent requirement.

That was like looking in the mirror and asking yourself for permission to break the mirror. Who is going to say no?

The maneuver was justified by asserting that the CFO has the same authority as the Office of Contracting and Procurement. If that office can offer waivers, than so can the CFO. Of course there’s an important difference: Contracting and Procurement is acting as a third party for other agencies. Here, the action was wholly incestuous.

Instead of Evans stepping in to end this farce, he and other council members have supported Gandhi. In the past two weeks, they have echoed Gandhi’s independent-authority mantra.

Congress invested enormous powers in the CFO. It’s doubtful that overriding local laws was one of them.

Even before Brown’s guilty plea and these recent lottery shenanigans, Mayor Vincent C. Gray (D) and Council member Vincent Orange (D-At Large) were focused on reforming the CBE program. The most significant features of their proposals were enforcement and penalties.

But with the same people on the scene, a new law will mean only a new opportunity for business as usual.

jonetta@jonettarosebarras.com

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