Government agency under fire for contract to director’s ex-firm

Government watchdogs are questioning the awarding of a Defense Advanced Research Projects Agency (DARPA) contract to the agency director’s former firm. An agency spokesman said nothing improper took place.

At issue is an early 2010 contract that DARPA awarded to RedXDefense, a pact largely unreported at the time. The contract was for $400,000 and was extended in August 2010.

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DARPA Director Regina Dugan founded RedXDefense in 2005 with her father and uncle, and served as its president and CEO.

When President Barack Obama tapped Dugan to be the DARPA’s first woman director, her father took over as CEO of RedXDefense. Dugan’s sister also is a top company official.

RedXDefense does work on explosives detection and threat screening systems. The firm has done work for DARPA before.

Dugan was herself familiar with the federal agency from more than a business standpoint, having been a DARPA program manager from 1996 until 2000.

David Wallechinsky of AllGov.com, an online government watchdog, called the situation “a moral conundrum.”

“Even if Dugan did not participate in the dealings between the agency she leads and the company run by her father,” he wrote on the AllGov website, “it surely must have come as a pleasant surprise to learn that DARPA’s contract management office had chosen the company she founded to do work for DARPA.”

During a recent telephone conversation, Wallechinsky also said the agency’s contracting staff likely saw a chance to score points with the boss.

Dugan had no involvement in the decision-making process leading up to the 2010 contract, Kaigham Gabriel, DARPA’s deputy director, told The Hill on Friday.

That contract was awarded to RedXDefense along with 13 other companies, as part of a broader program, Gabril said.

Program managers and their “office directors” decide which industry technologies get funding under the agency’s unique funding process, Gabriel said. Program and funding decisions “never” reach the level of the director or the deputy director, he added.

“This is a $3 billion-a-year agency,” Gabriel said. “Our work would grind to a halt if the director and the deputy director were making programmatic decisions.”

Moreover, upon taking office, each DARPA employee goes through a multi-step process that walls them off from decisions relating to any company with which they have a relationship. Dugan went through that process and had no role in the decision to fund RedXDefense, Gabriel said.

After AllGov recently approached DARPA about the RedXDefense contract, Gabriel asked the agency’s general counsel to review “all the documents and the process.” No wrongdoing was found, he said.

A mass-contract award like the one in question is not uncommon for the agency. Because DARPA has no laboratories, it relies heavily on industry research and development work to help it develop cutting-edge defense systems, Gabriel said.

A top federal government watchdog group has joined AllGov in criticizing the decision to award RedXDefense the contract.

“It's examples like these that erode the public's trust in government,” Joe Newman, a spokesman for the Project on Government Oversight (POGO) said Friday. “Even though President Obama upon taking office made significant strides in addressing the revolving door, this shows there are still problems with the system.”

Like Wallechinsky, Newman questioned why DARPA’s program managers and contracting staff saw no red flags.

“Does her procurement team live under a rock?” Newman said. “Obviously, her staff was well aware of her connections to RedXDefense and you have to wonder how that affected their evaluations.”

POGO also questioned whether the Obama administration erred in selecting Dugan, due to her industry ties.