District Dodges Spending Laws

Gandhi has complained about the direct payments, but his office uses them as well. In one case, the method was used to pay computer consultant Thomas F. Cosgrove III, who received more than $1 million from 2000 through 2002. That work was covered by a contract, except for a three-month period during which city officials neglected to write a new contract or seek approval for the funding. When Cosgrove submitted bills that totaled $125,000 for that period, the office paid him through a direct voucher. Pompa, Gandhi's head of accounting, said he mistakenly thought someone else had written the contract.

Inventive Avoidance

City agencies sometimes find creative ways to avoid competition.

The Lottery and Charitable Games Control Board, for example, wanted to hire GTech Corp., a national company it had worked with for years, to run the network of terminals that sell lottery tickets across the District, records show. But the agency said it was too rushed to put the contract out to bid. The fastest way to hire GTech was to add it as a subcontractor to an existing contract held by a company that has since been bought by Lockheed Martin Corp.

Contract records specified that GTech would do the work, and the prime contractor would get $626,000 as a fee over the five-year agreement. With other management and oversight fees, the extra charges amounted to $900,000, or one-third higher than the average paid by other states, according to the lottery agency's survey of comparative prices.

The network was plagued by slow performance and frequent outages, according to lottery agency documents. "Retailer satisfaction is extremely low," lottery officials wrote in a memo.

GTech spokesman Robert Vincent said, "We have not been made aware of any substantial complaints."

The Lockheed Martin arrangement expired last year, but the city kept GTech, paying it more than $1 million since then, without writing a contract or requiring competition.

The same method -- using one company as a pass-through to hire others -- is standard practice at the Office of the Chief Technology Officer, the city's computer department. Many of the pass-through contracts are granted without competition using the loophole adopted by the D.C. Council in 2002.

The biggest beneficiary has been DBTS Inc., a start-up company founded by Carrie-Ann Barrow, a 32-year-old entrepreneur from Northern Virginia. Barrow had been a $95,000-a-year consultant at the technology office when she decided to start a computer company in 2000.

The firm is now the agency's biggest local vendor and has received 146 no-bid contracts worth $13 million since 2003.

When the technology office wants to hire computer programmers, it notifies DBTS. The city sets the salary and the markup DBTS can charge. The firm then hires the programmers, although they work on agency projects in city offices. The process, which was described in interviews by Chief Technology Officer Suzanne J. Peck and contracting officer Bruce Witty, allowed the employees to work for the city without going through the normal hiring process or competitive bidding.

In one case, Peck's agency told the firm to hire the son of a city employee as a summer intern. The agency told DBTS that he should be put on the company's payroll, specifying that he would receive $12 an hour and the firm would be paid a $6-an-hour markup.