tly withdrew late Friday night amid questions from Congress about his work as a defense contractor.

The nominee, Maj. Gen. Robert A. Harding, a retired Army intelligence officer, pulled out of contention for director of the agency, the Transportation Security Administration, just two and a half weeks after Mr. Obama submitted his nomination. Mr. Obama’s first pick for the position also withdrew under fire this year, and the administration has not announced a third choice.

The agency is facing a range of policy questions about potential changes, including the deployment of full-body scanners at security checkpoints and whether to allow its work force to unionize. Paul Rosenzweig, a former policy adviser to the Homeland Security Department in the Bush administration, said the lack of stable leadership at the top would make it harder to achieve goals.

“The lack of a confirmed leader disables the ability of any administration to effect the type of change that it wants to,” Mr. Rosenzweig said. “Change comes slow to the federal government. It’s a bureaucracy, and it’s impossible to achieve change without concerted leadership.”

General Harding’s bid for the job fell apart after reports that his company had collected more federal money than it was entitled to for providing interrogators in Iraq.

“I felt that I could bring some leadership, vision and intelligence expertise” to the transportation security post, General Harding said in a statement issued late Friday. “However, I feel that the distractions caused by my work as a defense contractor would not be good for this administration.”

One administration official, speaking on condition of anonymity, said General Harding had raised the issue of withdrawing earlier in the week, saying he was frustrated by the scrutiny of the Senate confirmation process.

The president’s first nominee for the position, Erroll G. Southers, a former F.B.I. agent and counterterrorism supervisor for the Los Angeles airport police, withdrew his nomination in January after giving conflicting answers about conducting police background checks on a man his estranged wife was seeing.

General Harding had extensive experience in military intelligence before retiring in 2001. Among other positions, he served as head of operations at the Defense Intelligence Agency, intelligence director for the military command overseeing Latin America and commander of the 902nd Military Intelligence Group. But it was his work after the military that drew scrutiny. His company, Harding Security Associates, provided intelligence debriefers in Iraq, but after the government ended a $49.2 million contract early in 2004, an audit found that the company had received an overpayment and collected more money for termination costs than it should have.

The audit questioned $2.4 million of the $6 million paid to the firm, said Senator Susan Collins of Maine, the senior Republican on the homeland security committee. In the end, General Harding told the committee Thursday, his company was forced to refund $1.8 million in a negotiated settlement in 2008.

“I’m convinced that I made a mistake,” General Harding testified. He added, “I lost sight of the fact that I also had to be cognizant of what was going on in my back room, in the accounting shop.”

In addition, a Washington Post report published on Saturday raised questions about a nearly $100 million contract Harding Security won in 2008 to perform administrative support and technical consulting about biometrics work at Fort Belvoir.

Government documents show the contract was awarded as part of a “set-aside” program for businesses owned by service-disabled veterans. The Post reported that the disability General Harding claimed was sleep apnea, a disorder in which breathing is disrupted.

The White House expressed regret about the withdrawal. “The president is disappointed in this outcome but remains confident in the solid team of professionals at T.S.A.,” Nick Shapiro, a spokesman, said.

March 27, 2010