Did Keystone XL Contractor Hide Its Conflict of Interest?

| Tue Apr. 9, 2013 6:30 PM EDT

The environmental consulting firm hired to evaluate the impacts of the Keystone XL pipeline should have been barred from working on the project, according to a group of environmentalists. On Monday, representatives from 13 environmental organizations asked State Department's Inspector General to investigate whether the firm's previous relationships with TransCanada should have qualified as a conflict of interest.

As my colleague Andy Kroll reported last month, three staff members employed by the environmental consulting firm hired to produce the report, Environmental Resources Management (ERM), had previously worked for TransCanada (the company that wants to build the 1,600-mile pipeline). Within the past three years, ERM has also worked for oil companies that could stand to benefit from the pipeline. The bios of those staffers had been redacted from the background documents posted online.

The organizations sent a letter to Secretary of State John Kerry and Harold Geisel, the deputy inspector general of the State Department, on Monday calling for an investigation into whether this constitutes a conflict of interest, and whether ERM was not transparent on that conflict. The letter's authors point to the conflict of interest statement that ERM provided in its supporting documents (see page 42 here), which asks the company, "Within the past three years, have you (or your organization) had a direct or indirect relationship (financial, organizational, contractual or otherwise) with any business entity that could be affected in any way by the proposed work?" ERM responds:

(X) No. ERM has no existing contract or working relationship with TransCanada.

The letter argues that this is misleading; the questions asks about the "past three years," while the response addresses a "current or working relationship." The groups write:

The State Department Contracting Officer should have flagged these inconsistencies on ERM's Organizational Conflict of Interest questionnaire, when he/she reviewed ERM’s proposal.
Because this was not flagged, we are calling for the State Department Inspector General to pursue an investigation into how the Contracting Officer overlooked these discrepancies on ERM’s documents, and given these incomplete statements, whether ERM is a "responsible party" under the Federal Acquisition Regulation.
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