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Funds in Health Contract Shifted to Pay Consultants

By Dan Keating and David S. Fallis
Washington Post Staff Writers
Sunday, November 27, 2005

In fall 2000, the D.C. Maternal and Child Health Administration awarded a $688,000 contract to an Alexandria firm to set up an automated telephone help line for low-income families seeking services.

The agency promotes health programs to low-income mothers, including prenatal care and efforts to reduce infant mortality with its 1-800-MOM-BABY line. Some time after the contract was awarded, however, the agency scrapped the system, deciding there were too few calls.

But the contract, which had gone to Advanced Resources Technology Inc., was not canceled. Instead, agency officials treated the funds like an open checkbook, records show. On the city's books, the spending looked like it was related to work for the phone system and database. But in fact it was covering the costs of a variety of consultants and services. The contract would last for four years and grow to $2.1 million.

Within days of signing the contract with ARTI, the city told the firm to hire Memphis consultant Alnita Trawick McClure, the college friend of an agency employee. In other instances, the agency hired temporary workers and once again passed the bills along to ARTI, which listed the $41,810 cost on its invoice as "equipment/misc."

Two former city employees received payments under that category: Jacqueline Watson and her company were paid $47,000 for consulting on the school health program, and Barbara Hatcher was paid $15,300 for writing two grant applications.

Hatcher said she was unhappy about the process and had complained when the agency told her she had to be paid through a third party. Watson said she consulted for the agency frequently and cannot remember those specific payments.

The arrangement allowed the agency to spend money without competitive bidding or seeking proper approval. Instead, agency officials simply sent the consultants' bills to ARTI, which added them to its District tab. The firm collected more than $200,000 as a service charge for passing on the bills.

ARTI executive Charles Johnson said the firm did not know what services the consultants had performed and paid them because the city asked it to do so. His company's work on the phone and database added up to just 15 percent of the contract total, invoices show.

McClure, the Memphis consultant, became the biggest recipient of payments under the ARTI contract. Her first bill was for $35,760 to prepare a presentation with agency head Marilyn Seabrooks Myrdal at a conference in Boston, including 30 hours to debrief Myrdal at $100 an hour.

Myrdal vouched for the work. "I don't think the hours are excessive," she said.

In the end, much of McClure's work was for projects that the agency dropped. She hired a film crew and created a video that was never shown. She planned town hall-style meetings that were not held, crafted a public-health presentation the department did not use and prepared a women's health data book that was not published.

"Even when things did not result in something, the process produced information that was useful," McClure said.

Before McClure was hired under the ARTI contract, she had been working for the Maternal and Child Health agency for several months. She said the agency had sought her out based on her friend's recommendation, and she never was required to compete for the work.

McClure ended up working simultaneously as a direct consultant for the agency and as a subcontractor under ARTI for more than two years, through spring 2003. She billed $663,000 for work on agency initiatives, conferences and publications.

The spending problems at the small agency within the Department of Health went beyond the ARTI contract.

The city-issued travel and credit cards in Myrdal's name had been charged more than $1.1 million since 2001, making them among the most heavily used cards at any city agency. The credit card was intended for small incidentals needed at the agency, but it was used for balloons, artwork and a Sharper Image Sleek 3-CD Stereo. The card was used to buy 13 computers, a violation of the rules.

After The Post had requested some of her credit card records, the city took away the card for abuse in the spring, citing a $200 rental fee for a portable toilet at a going-away party for an employee in fall 2004.

The agency could produce no receipts for tens of thousands of dollars charged to the card. Myrdal said the card is widely used by other employees in her department.

Records were also missing or spotty for $300,000 in supplies the agency purchased through contractor Richard Evans.

Evans, a former massage therapist, opened an office-supply business out of his home in 2001. The business, New Columbia Solutions, has no warehouse or inventory, but it landed a series of blanket purchase agreements to provide Maternal and Child Health with promotional key chains, magnets and other handouts.

But in addition to those items, he billed the city for food, office supplies, computer equipment, furniture, televisions and other electronics, spending documents show.

But neither Evans nor the agency can produce records of how he was awarded the contract or any showing that the goods were delivered. Evans's invoices lack the detail standard on government records and list only broad categories, such as $7,000 for "various paper supplies." Evans said the supplies were delivered but he threw away the city's orders and records showing that he had purchased the items. He said he also deleted e-mails and other computer records.

Bryan Cheseman, the agency financial officer who oversaw the orders, said the goods had been received, and he said he was surprised when his staff couldn't find inventory records showing that. "I assumed they were keeping those," he said.

"This is not a banana republic," said agency spokeswoman Leila Abrar. "There has to be some paperwork, or someone should lose their job."

Deloras A. Shepherd, the deputy chief financial officer who oversees the D.C. Health Department, reviewed the invoices and said they should not have been paid because "they should have been purchasing only those items" in the promotional list.

The Health Department launched an investigation into spending at the agency after inquiries by The Post.

Myrdal, the head of the agency, said she was a "victim" of the financial problems because she "put too much trust" in Cheseman.

He pointed back at her, saying she had directed everything.

"The buck stops at her desk," Cheseman said. "I don't have that kind of power or control over how money is spent."

Staff researcher Bobbye Pratt contributed to this report.

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