Washington – An Army contract to privatize
maintenance at Walter Reed Medical Center was delayed more than
three years amid bureaucratic bickering and legal squabbles that led
to staff shortages and a hospital in disarray just as the number of
severely wounded soldiers from Iraq and Afghanistan was rising
rapidly.
Documents from the investigative and auditing arm of Congress map a
trail of bid, rebid, protests and appeals between 2003, when Walter
Reed was first selected for outsourcing, and 2006, when a five-year,
$120 million contract was finally awarded.
The disputes involved hospital management, the Pentagon, Congress
and IAP Worldwide Services Inc., a company with powerful political
connections and the only private bidder to handle maintenance,
security, public works and management of military personnel.
While medical care was not directly affected, needed repairs went
undone as the non-medical staff shrank from almost 300 to less than
50 in the last year and hospital officials were unable to find
enough skilled replacements.
An investigative series by The Washington Post last month sparked a
furor on Capitol Hill after it detailed subpar conditions at the
98-year-old hospital in northwest Washington and substandard
services for patients. Three top-ranking military officials,
including the secretary of the Army, were ousted in part for what
critics said was the Pentagons mismanaged effort to reduce costs
and improve efficiency at the Armys premier military hospital while
the nation was at war.
IAP is owned by a New York hedge fund whose board is chaired by
former Treasury Secretary John Snow, and it is led by former
executives of Kellogg, Brown and Root, the subsidiary spun off by
Texas-based Halliburton Inc., the oil services firm once run by Vice
President Dick Cheney.
IAP finally got the job in November 2006, but further delays caused
by the Army and Congress delayed work until Feb. 4, two weeks before
the Post series and two years after the number of patients at the
hospital hit a record 900.
“The Army unfortunately did not devote sufficient resources to the
upfront planning part of this, and when you do that, you suffer
every step of the way,” said Paul Denett, administrator for federal
procurement policy at the Office of Management and Budget, the White
House unit that prepares the presidents budget and oversees
government contracts.
The contract includes management of Building 18, which houses
soldiers with minor injuries and was highlighted in the Post series
as symptomatic of substandard conditions: black mold on the walls of
patient rooms, rodent and cockroach infestation, and shoddy
mattresses.
Those 54 rooms are now vacant. Interior work cannot be started
until a badly damaged roof is repaired, and that will need another
contract because its not covered in the IAP contract, Walter Reed
officials said.
“These rooms are exactly as they were left,” Sgt. Gary Rhett,
manager of Building 18, said Thursday. No changes have been made.”
The Army has confirmed the timing of the contract delays but
declined several requests for comment on why the protest and appeal
process took so long, even as more and more injured soldiers were
arriving.
The trail goes back to the end of the Clinton administration.
The Army began studying the cost benefits of privatization in 2000.
When President Bush took office, he mandated the competitive
outsourcing of 425,000 federal jobs. At the time, the Pentagon was
aggressively pushing for increased outsourcing, and in June 2003,
then-Defense Secretary Donald Rumsfeld told a Senate committee he
was considering outsourcing up to 320,000 nonmilitary support jobs.
That’s the same year that the Army asked for bids on Walter Reed
and, coincidentally, the same year the United States invaded Iraq.
One company responded: Johnson Controls World Services Inc., which
would be acquired by IAP in March 2005. It initially bid $132
million, but it and Walter Reed’s then-management agreed that the
Army was underestimating the cost.
By September 2004, the Army had decided it would be cheaper to
continue with current management, which said it could do the work
for $124.5 million. Johnson Controls filed a protest with the
Government Accountability Office.
The protest was dismissed in June 2005, but the Army agreed to
reopen bidding three months later to include additional costs for
services. In January 2006, after two rounds of protests by IAP and
two appeals by Walter Reed employees to the U.S. Army Medical
Command, IAP was named the winner, according to Steve Sanderson, a
Walter Reed spokesman.
Instead, in an unusual turn of events, the contract wasn’t awarded
for another 11 months, the GAO said. Walter Reed officials blame
several factors, including an additional protest to the GAO filed by
Deputy Garrison Commander Alan D. King, a separate appeal to the
U.S. Army Medical Command by Walter Reed’s public works director, at
least one intervention by Congress, and delays on required
congressional notifications about government employee dismissals.
IAP spokeswoman Arlene Mellinger said “it was up to the Army to
decide when to begin that contract.” The company was ready to start
at any time, she added.
In August 2006, led by Sen. Barbara Mikulski, D-Md., lawmakers
asked then-Army Secretary Francis J. Harvey to hold off on the
contract until Congress finished work on the fiscal 2007 defense
appropriations bill. Congress approved that bill Sept. 29.
The Army’s plan then was to eliminate 360 federal jobs at Walter
Reed in November and turn the work over to IAP, according to the
American Federation of Government Employees, a federal workers’
trade union. But the Army failed to notify Congress 45 days in
advance, as required by law, so the turnover was delayed until early
this year.
Then it was IAPs turn to have problems.
When work finally began at the hospital, IAP made an immediate
request, which the Army approved, to hire 87 temporary skilled
workers for up to four months “to ease the turbulence caused by
employees being placed into positions or other installations and
otherwise finding new jobs early,” said Sanderson, the Walter Reed
official.
However, a “tight” job market in the Washington area meant that
only 10 qualified temporary employees were found, he added.
Meanwhile, injured soldiers continue to arrive weekly to a
short-handed, deteriorated hospital, which the Army still plans to
close in 2011.
