FCW Analysis: Kundra's job is now in question

Updated: March 16, 2009 at 1:50 p.m.

Just Thursday morning, Vivek Kundra was the ascending rock star of the government technology world. In his public speaking debut as President Barack Obama’s new chief information officer, Kundra mesmerized a standing-room only crowd at the FOSE trade show in downtown Washington with his spirited talk of adapting Web 2.0 social-networking tools to bring transparency and accountability to the federal procurement system.

By the end of the day, Kundra's future had become murky. After the FBI arrested one of his former employees on allegations involving contract kickbacks, Kundra, 34, agreed to take a leave of absence for an unspecified time. The White House confirmed his leave Friday, only days after Obama, with great fanfare, had appointed Kundra to be the first governmentwide federal CIO.

Former government officials from the Clinton and George W. Bush administrations, speaking on background, say Kundra’s ability to serve as overseer of U.S. government technology policy and practices is in question. The fact that Kundra himself is not accused of any wrongdoing is beside the point, they said. As the District of Columbia’s chief technology officer since 2007, he was responsible for the actions of his 300 employees.

The federal CIO’s role, as defined by Obama, includes bringing transparency and oversight to massive federal acquisition programs and the formulation of policy. Although Kundra has committed no crime and apparently is not a target of the FBI investigation into his former D.C. government office, it does look as though he may have not noticed a scheme in his office that involved contract kickbacks and paychecks for nonexistent workers, according to the FBI’s charges.

The White House has not indicated any intent to revoke Kundra's appointment. However, Obama has had trouble filling key appointments. Tom Daschle, his choice for Health and Human Services secretary, withdrew in early February after it came to light that he had been delinquent in paying some income taxes. Then Nancy Killefer, Obama’s pick for chief performance officer, withdrew due to her own past tax problems, even though they had been resolved years ago. Charles Freeman, who was to become director of the National Intelligence Council, withdrew last week following allegations that he had questionable ties to Middle Eastern nations. Also last week, lawyer H. Rodgin Cohen, the leading candidate to become deputy treasury secretary, withdrew for unstated reasons. Several other candidates for various administration positions have also been forced to pull out during the vetting process.

D.C. city officials have survived scandal before. After a tax scandal came to light in 2007 that cost the city an estimated $50 million in lost tax revenues, D.C. Mayor Adrian Fenty expressed support for Chief Financial Officer Natwar Gandhi, who remains in the position today.

However, Kundra’s office has been under scrutiny for some time. The District’s Office of Inspector General was investigating contracting problems in 2008, according to the office’s report on its 2008 activities.

The report states: "Contracting problems experienced by the District continue to be exacerbated by the structural deficiencies and ineffective methodologies used to award and administer contracts. An absence of basic systems for contract records management and data retrieval present formidable challenges for managing procurement functions spread over 80-plus agencies, and for planning procurements, fostering competition among prospective bidders, and ultimately obtaining best value in terms of price and quality."

The investigation into the Office of the Chief Technology Officer was expected to continue into 2009, according to the report, but it was not clear what has happened since or whether the IG probe was related to the FBI arrests.

Last summer, Kundra implemented a program called Information Technology Staff Augmentation to improve transparency and accountability in the city’s contracting, according to a Washington Post report. “Kundra hired a company to help the city weed out unqualified résumés, established a central online database to advertise contracts and disclose who won each one, and posted video solicitations for jobs online,” the Post reported.

Last week, the FBI arrested Yusuf Acar, an information security specialist who worked for Kundra, and charged him with bribery, conspiracy, money laundering and conflict of interest. The FBI also arrested Sushil Bansal, president and chief executive officer of Advanced Integrated Technologies Corp., on charges of bribery and money laundering.

AITC has done more than $13 million in contract work for D.C. since 2004, according to a report in Computerworld. Although Kundra joined the office in 2007, at least one AITC contract was awarded in 2008, according to the report.

It’s possible, however, that all the alleged illegal activity happened before Kundra took the leadership role, said Gary Bass, executive director of watchdog group OMBWatch. If that’s the case, his appointment to Obama’s administration shouldn’t suffer, he said.

Even if did not all predate Kundra, “It’s very hard for an administrator to review the detailed work of every staff person,” Bass said. “That’s why you have an audit process and why you have whistlebolower protections, which is apparently what brought this case to light. Now if there are systemic problems, that’s different. That’s an administrator’s problem.”

If Kundra is not in any way under suspicion, the authorities should make that clear, but the FBI rarely issues statements to say that someone is not a target of an investigation, Bass said. That leaves Kundra “in a very nasty limbo, where he’s not a target, but it’s not clear that he can go back to work.”

Bass said he hopes Kundra will stay in this new federal role. “I think in the short time he has been on the job at the federal level, he has really shaken things up, in a good way,” he said.