Senators to FBI: Get a VCF refund

Proposal would pit bureau against SAIC over failure

The Senate’s draft of the appropriations bill for the Justice Department and the FBI would order the bureau to use “all means necessary” to try to recover funds from the vendor of its failed Virtual Case File project.

In an unusual action, according to several sources, the draft legislation—known as HR 5672, the Departments of Commerce and Justice, Science and Related Agencies appropriations bill—directs the bureau to retrieve as much as $104 million from the defaulted VCF contract.

The FBI hired Science Applications International Corp. of San Diego in 2001 to build VCF, which was intended to create an investigative case management system. The FBI pulled the plug in 2005 after realizing the system would not work.

A key sentence in the Senate report language for HR 5672 reads: “In addition, the Committee expects the FBI to use all means necessary, including legal action, to recover all erroneous charges from the VCF contractor ... .”

The Senate’s reference to “the VCF contractor” especially singles out SAIC.

The FBI and SAIC both declined to comment on the legislation and related VCF matters.

If the FBI could recover funds, the bill would direct the bureau to use the money it would potentially recover from the VCF contractors on its current case management project, known as Sentinel.

The House version of the bill does not include a similar provision—meaning if the full Senate passes the bill with the language intact, it still could be stripped out during the conference committee session between the two bodies.

If the FBI were to try to take legal action to recover the VCF funds, it would be stepping into a legal and political minefield, sources close to the project said.

For one thing, even after the FBI had decided to scuttle the investigative case management system, SAIC recommended that the bureau should deploy VCF and made detailed technical proposals on how it could be salvaged.

Another critical problem is that the bureau has accepted some responsibility for the demise of the VCF project [, Quickfind 714]. Sources close to the project said that some of the senior officials in place during the VCF fiasco—including director Robert Mueller—still hold powerful jobs in the bureau, and their reputations could suffer if a public lawsuit or civil trial unveiled the details of their roles.

The Senate Appropriations Committee itself acknowledged the bureau’s role in bungling VCF, in report language attached to HR 5672: “The Committee understands that the FBI shares much of the burden for past IT failures.”

One federal official involved in the VCF incident noted that federal contract law requires an agency that has cancelled a project because of contractor default to attempt to recover the funds from the contractor. “The FBI did not carry out that obligation because it never punishes its own,” the official said.

“The real issue is why didn’t they [seek to get the money back from SAIC],” the official said. “The world’s greatest investigative body slowed this down. The answer is culpability of the FBI officials who are still there. Mueller says he takes the responsibility. I still think there is accountability and culpability.”

A prominent federal procurement law attorney noted, “In general, when it terminates for default, the government has the same rights as a private party would in the event of a breach of contract [to recover misused funds].

“However, what the government usually does is to assess ‘excess reprocurement costs,’ ” the attorney said. “In other words, it buys the same thing from someone else, and if it costs more, it charges the difference to the defaulted contractor.”

The procurement attorney cautioned that he had not studied the specific details of the FBI’s pact with SAIC, so he could not comment on how the general principles of federal contract law would apply to that specific matter.

The FBI and SAIC both declined to comment on the legislation and related VCF matters.

Legislative analysts said the VCF fund recovery language was inserted at the behest of Sen. Judd Gregg (R-N.H.), who is the second most senior Republican member of the Appropriations Subcommittee on Commerce, Justice and Science. Gregg’s office did not respond to a detailed inquiry on the matter.

The full name of HR 5672 is the Departments of Commerce and Justice, Science and Related Agencies Appropriations Bill, [fiscal] 2007.

In addition to requiring the FBI to get back the money it paid to SAIC, the bill imposed other restrictions on the bureau that reflected the committee’s skepticism that the agency is capable of managing large software projects.

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