Transcom Inc. of Germantown, Md., got the largest of three awards made under the contract, which was bid out by Homeland Security after scrutiny from lawmakers on the previous contractor, Alexandria, Va.-based Shirlington Limousine and Taxi.

But Transcom has no license from the Washington Metropolitan Area Transit Commission and has been fined for operating without one, according to legal documents and a letter from a GOP congressman.

Affidavits from two employees seen by United Press International also allege that the company was not paying its staff in line with federal contract requirements.

Another company awarded a $3.9 million piece of the contract, U.S. Trans Logistics Inc., "has a prior history of poor performance as a government contractor, and was recently replaced on a contract to provide similar services to the State Department," reads the letter from Rep. Roscoe Bartlett, R-Md.

Neither company responded to requests for comment.

Bartlett wrote to Homeland Security Secretary Michael Chertoff as co-chairman of a group of lawmakers concerned with the Historically Under-utilized Business Zone, or HUB-Zone, program -- a set-aside for small businesses in economically disadvantaged neighborhoods.

Shirlington won the transportation contract in April 2004 when it ended up the only qualified bidder after the work was set aside under the HUB-Zone program. Shirlington ran shuttle bus services between the various legacy office sites in the Washington area where Homeland Security staff worked and provided drivers for the sedans in which senior officials traveled. The contract eventually grew to a $4 million-a-year business.

But Shirlington, and its owner Chris Baker, came under scrutiny in April 2006 after the firm was reported to have driven prostitutes to parties thrown by corrupt defense contractors.

After hearings on the topic held by the House Homeland Security Committee at which members lambasted the department's procurement staff and procedures, the transportation contract was re-bid in a revised form earlier this year and Shirlington -- after its proposal had been disqualified -- lost to Transcom, U.S. Trans Logistics and a third company, RHG Group Inc.

"It has come to our attention," wrote Bartlett on behalf of the HUB-Zone Caucus, "that the issuance of these contracts was not done in a manner consistent with the spirit and intent of the HUB-Zone regulations."

Bartlett complained that, by deciding to switch the new contract award out of the HUB-Zone program, Chertoff's department had set "a dangerous precedent that endangers the viability of this program."

Homeland Security officials pointed out that Shirlington had already sought to challenge the award in court and lost.

The department "conducted a fair and open competition consistent with the requirements of the acquisition regulations," spokesman Larry Orluskie said in a statement. He said officials were "clear on the methodology and processes used to conduct the evaluation and select that company that provides the best value to the government."

"We considered all of the appropriate factors in our evaluation and found no reason that would preclude the award of the contracts," he concluded.

House Homeland Security Chairman Rep. Bennie Thompson, D-Miss., warned the department he would be watching them.

"This committee has repeatedly told the department that it must conduct due diligence," Thompson told UPI in a statement. If officials "unwittingly awarded a contract to a company that was fired for a history of documented poor performance or knowingly awarded a contract to such a company, the department has once again failed to ask the right questions and wait for the correct answers."

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