
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: TUESDAY, April 17, 1990                   TAG: 9004170432
SECTION: NATIONAL/INTERNATIONAL                    PAGE: A2   EDITION: STATE 
SOURCE: Associated Press
DATELINE: WASHINGTON                                LENGTH: Medium

3 HUD NO-BID CONTRACTS NOT ILLEGAL, KEMP SAYS

Three no-bid contracts the director of a new housing agency gave to friends were legal and produced beneficial work but were awarded and monitored poorly, the inspector general of the Department of Housing and Urban Development said Monday.

HUD Secretary Jack Kemp, who had asked for the investigation of the Federal Housing Finance Board, said the report "puts to rest any suggestions that there was any inappropriate conduct."

Kemp said the woman he handpicked to lead the agency, Mary K. Bush, would immediately begin implementing ten recommendations HUD Inspector General Paul Adams said would improve the board's contracting procedures. In a memo to Bush, Kemp asked for weekly progress reports.

Kemp said that, while he was "not particularly pleased" with the possible appearance of impropriety raised by the no-bid contracts, he stood by Bush, who two weeks ago agreed to serve as the agency's director after being told she would not receive her promised appointment as the board chairwoman. She had been serving as acting director for the past seven months.

The agency, created as part of last year's savings and loan bailout legislation, oversees the 12 regional Federal Home Loan Banks and controls up to $100 million a year in housing funds.

Kemp, who in effect controls the new agency because he is its only named board member, conceded he was late in asking Adams to review the contracts, which Bush awarded to three friends with whom she served in the Reagan administration, including a man who also served for several months as Kemp's chief of staff at HUD.

"I admit that we should have jumped on this in February," Kemp said in a luncheon interview with The Associated Press. "Was I late? Yes."

When Kemp asked for the review in mid-March, aides said the housing secretary did so immediately after becoming aware of the no-bid contracts.

But an internal HUD memo obtained later by the AP showed that HUD Undersecretary Alfred A. DelliBovi was aware that one of the recipients of the no-bid contracts, Wendell Gunn, the former Kemp aide, was being paid by the agency in February. DelliBovi's memo mentioning payments to Gunn was sent to six Kemp aides, including his two top deputies.

Kemp said he called for the review after learning that one of the no-bid contracts went to attorney Margery Waxman, a former Treasury Department official who represented Charles Keating in his initially successful 1988 effort to convince regulators not to seize his California savings and loan.

by CNB