DHS Reviews Claims Of Contract Conflicts

By Spencer S. Hsu
Washington Post Staff Writer
Monday, October 2, 2006

The Homeland Security Department is reviewing whether managers with ties to Oak Ridge National Laboratory improperly influenced the decision to give $20 million to the laboratory since 2004 to help develop a list of the nation's top potential terrorist targets, according to DHS officials.

Officials are examining the roles played by two former Energy Department employees who were working for DHS as well as an Idaho National Laboratory employee who was on assignment to the department, said Undersecretary for Preparedness George W. Foresman.

Among Homeland Security's concerns is whether the men's relationships with the Energy Department inappropriately influenced funding decisions. There is little in the way of records to show how funding decisions were made, officials said.

The national labs are owned by the Energy Department and independently managed.

One of the staffers has been reassigned, nearly $40 million more destined for the lab has been placed on hold, and a team was sent Sept. 15 to Oak Ridge, Tenn., to scrutinize its work and determine whether to refocus its efforts, department officials said.

Foresman said the department is acting in an abundance of caution because of recent complaints by Congress and watchdog groups about potential conflicts of interest among DHS contractors awarding research to their home institutions. In June, the DHS inspector general issued a sharply critical review of the target list program.

"There is no indication of any type of misconduct, but this is very much about making sure in the context of everything that we're doing we reflect the highest ethical standards," Foresman said.

The department created the target list, formally known as the National Asset Database, in 2003 and named Oak Ridge to host it, with little or no paperwork. A Congressional Research Service report this month warned that the 77,000-item list remains incomplete and is of limited value.

The scrutiny comes during infighting over poor financial management and budget cuts at Homeland Security's infrastructure protection office, which oversees the database, and which Secretary Michael Chertoff recently reorganized. The unit has been criticized for being slow to complete priorities such as securing chemical plants, helping first responders prevent bomb attacks and finalizing industry plans to protect vital facilities.

At least twice in the past nine months, critics have warned of potential ethical lapses in how DHS awards research grants. Congressional auditors reported in December that such grants lacked adequate documentation and could pose conflicts of interest.

Short of staff after its troubled 2003 launch, DHS placed employees loaned by the national laboratories in charge of five of 16 research programs. Auditors found that in 2004, 23 percent of DHS's $761 million science and technology directorate's research budget went to national laboratories.

James F. McDonnell, former head of the DHS risk management division and one of the former Energy Department employees under scrutiny, said the actions he and others took "were perfectly appropriate."

The department faced an urgent need to identify targets and lacked the computer capacity to do the job, said McDonnell, a career officer in the Navy and now a senior fellow at George Washington University's Homeland Security Policy Institute. McDonnell said he approached Oak Ridge National Laboratory and asked "if they would take it on and we would fund them to do it, and they said, 'Sure.' "

DHS can award work to national labs as if they are part of the department, skipping formal contracting requirements, McDonnell said, and the lab produced high-quality classified work. But private vendors have long wanted a bigger share of federal research, Foresman said.

Frank H. Akers Jr., a retired Army brigadier general and Oak Ridge associate lab director for national security, said, "We have followed federal guidelines for securing these work contracts."

The shuffle comes amid tension at the department's infrastructure protection and information system's unit, headed by Assistant Secretary Robert B. Stephan since April 2005 and placed under Foresman last fall.

The Homeland Security inspector general in June castigated the division's slow progress at identifying critical facilities and producing a national plan to secure them despite two presidential security directives since 1998. The database has grown from 160 items in 2003 to nearly 80,000 today, but it contains such entries as petting zoos and popcorn stands, doughnut shops, small-town parades and rural bean festivals. DHS officials said the list is only a reference source for a more selective list of 600 critical assets.

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