FDA Takes End Run to Award Contract to PR Firm

By Robert O'Harrow Jr.
Washington Post Staff Writer
Thursday, October 2, 2008

The U.S. Food and Drug Administration had an image problem. For months last year the agency had been pummeled by Congress for poor inspections of tainted vegetables, drugs and other products.

FDA leaders decided to hire a contractor for a public relations campaign that would "create and foster a lasting positive public image of the agency for the American public," according to agency documents.

A competition, as prescribed by government policy, was not held to get the lowest bid for the $300,000 contract. Instead, FDA officials came up with a plan to ensure the work would go to a Washington public relations firm with ties to the FDA official arranging the deal, according to an examination by The Washington Post.

The plan used a circuitous route around the standard government contracting procedures. The contract was awarded in July to Alaska Newspapers Inc., a firm owned by an Alaska Native corporation that does not have to compete for federal work because it qualifies for special set-asides. The idea was for ANI to hand over the work to Qorvis Communications, the Washington firm, documents show.

After being made aware of The Post's findings, FDA deputy commissioner John Dyer said this week that he had suspended the contract and ordered an independent investigation.

"Whatever the findings are on this one contract, the FDA has full confidence in the integrity of its contracting procedures as verified by independent third-party reviews conducted several times a year," Dyer said in a statement Monday.

ANI and its parent company, Calista Corp., did not return repeated phone calls seeking comment.

The story behind the FDA's public relations deal, drawn from interviews and dozens of e-mails obtained by The Post, offers insight into how contract competition requirements designed to get the best deals for taxpayers have often been subverted in recent years for the sake of convenience or to serve narrow interests, according to a congressional study and contracting specialists.

With unusual candor, people involved in the FDA deal discussed the fact that ANI was brought in so the FDA could work with Qorvis, e-mails show.

While the deal was being formulated last October, James Dunn, a private consultant who had dealings with ANI, sent the following e-mail to a Qorvis executive, who forwarded it to an FDA official: "ANI will gladly serve as a prime for Qorvis on the FDA deal, knowing that the agency would intend to direct them to you as a subcontractor to perform all the work."

Steven Schooner, co-director of the government procurement law program at George Washington University, said he has rarely seen such a detailed example of officials and contractors working to avoid competition.

"The story line is as bad as anything I've ever heard," he said. "It's not transparent. It's not competitive. It's not arm's length."

Rep. John D. Dingell (D-Mich.), chairman of the Committee on Energy and Commerce, which oversees the FDA, said his panel also would investigate the contract.

"The agency chose to use its limited resources to save face instead of saving the public health," said Dingell, whose committee has led the oversight of the FDA. "This sham of a contract calls into question the integrity of federal contracts awarded to small businesses and Alaska Native corporations."

The FDA has struggled for years to fulfill its consumer safety mandates, including repeatedly failing to identify the produce responsible for salmonella outbreaks. Lawmakers have held more than a dozen hearings on FDA operations since 2006 and two congressmen alleged that the "mismanagement of its resources has been staggering."

One FDA response was to ask for more money from Congress -- $275 million. Another was to launch a public relations campaign to "inform the American public about the good work that FDA is doing for them."

Tasked with the public relations job was Mildred Cooper, a temporary FDA consultant hired on a two-year contract to advise FDA Commissioner Andrew C. von Eschenbach and other officials. Hired in March, Cooper became an FDA civil servant.

Cooper, who had worked on Capitol Hill and in public affairs for the Federal Emergency Management Agency and Defense Department, called a friend at Qorvis, which specializes in corporate communications.

Before she joined the FDA, Cooper had worked with Qorvis as a public affairs executive at Luna Innovations, a company that sells medical devices and other products and whose clients include the Defense Department.

"I had experience with Qorvis," she said in an interview. "We thought they could help with our communications effort. . . . It was a matter of efficiency."

She was referred to Don Goldberg, who helps lead Qorvis's crisis communications practice and had once served as part of President Clinton's crisis management team.

Goldberg told The Post in an interview that he and Cooper talked about improving the FDA's image. He thought the job could lead to more work with the FDA and enhance the firm's credibility in the health-care industry; Qorvis also represents PhRMA, the drugmakers trade group.

He and Cooper also discussed speechwriting and media training for von Eschenbach and other agency leaders.

"My impression was she was working closely with the commissioner and chief of staff," Goldberg said. "My recollection was they wanted to hire Qorvis. It was not appropriate to hire Qorvis directly."

Goldberg discussed the project with Dunn, a business consultant working with Qorvis, e-mails show. They decided to arrange for Qorvis to come into the project through ANI, the Alaska newspaper company, which runs several weeklies and a small public relations office.

Dunn, who works for a firm called Red Team Consulting, told The Post he had experience with the set-aside rules for Alaska Native corporations because he had worked for one as chief operating officer. Dunn, Qorvis and ANI had all worked on a $29 million Army National Guard marketing contract in 2007.

"They're a go if you like," Dunn wrote to Goldberg in an Oct. 18 e-mail that was forwarded to Cooper. "I have a call with ANI on other [matters] in a few minutes. I'll call you right afterward."

Cooper asked Goldberg the next day: "Could you please tell me what ANI stands for or what the Web site is?"

That same day, Cooper sent a note to Jane Peterson, an administrator in the FDA chief of staff's office: "It is possible that Qorvis Communications can execute the program as a sub-contractor to Alaska Newspapers Inc. -- which would be the primary contractor."

Peterson declined to be interviewed by The Post.

Other e-mails show that Cooper apparently allowed Qorvis to tailor terms of the contract known as the scope of work.

On Dec. 6, Cooper e-mailed Goldberg: "I am working on a draft scope of work that would be helpful for you to review." After Cooper sent the draft to Goldberg, he edited it and added details. "Mildred -- take a look at the deliverables I added to the end of the document and see what you think," he wrote.

Goldberg also e-mailed two memos to Cooper "essentially setting out the process for making this award to ANI and Qorvis." The memos cited federal regulations and exemptions that might allow the FDA to give the contract to ANI and then direct the work to Qorvis.

Two weeks later, Cooper forwarded the memos to Peterson. "I know you are swamped with emails but just want to keep this on the radar screen," Cooper wrote, signing off with ":-)."

Up to then, no one from ANI appeared to be a part of the contract discussions, according to the e-mails. On Feb. 13, Goldberg forwarded a note to Cooper from "the ANI team contact." That day, the contact, Washington public relations veteran Aaron Guiterman, wrote to Goldberg, Qorvis and ANI that "the most likely next step with the FDA is for ANI to submit a proposal."

In a brief interview, Guiterman said he was not permitted to speak about the contract.

Goldberg said he did nothing wrong in pursuing the contract and left the details to Cooper.

"I assumed this was all what Mildred was working out with them," Goldberg said. "I never talked to the contracting officers and would never say to Mildred, 'Deceive your contracting officers.' "

Dunn also said he would never advise clients to do anything that might violate federal regulations.

On July 23, after more deliberation, the FDA issued a $300,000 purchase order for the public awareness campaign, with ANI listed as the contractor. An FDA official said ANI had pledged in writing to do more than half the work.

The FDA said this week that it had suspended the contract before any money changed hands.

Dyer said he does not believe von Eschenbach or other senior officials knew what Cooper was doing. "From what I can tell, it was Mildred trying to drive it," he said. "Whatever she did with Qorvis does not represent the agency."

Cooper said she was only trying to help the agency.

"My role was to assist with that very important effort," Cooper said. "If anything improper was done, it was done unknowingly."

Staff researcher Lucy Shackelford contributed to this report.

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