Stimulus Contracts Go to Companies Under Criminal Investigation

After spending most of my adult life around the Air Force, I would love to believe that this is not true but after the last six months spent on looking into another area, I believe every word of the article. Today's contracting officers have a tendency not to look very hard and just do what they are told with no questions asked.

We figured there was going to be a lot of misuse of our tax dollars with the stimulus but didn't figure it would be from Air Force and or any of the Service's contracting groups. Guess when you have an organization that doesn't observe simple procurement rules on solicitations and stiff arms contractors, this should not be a shock.

Would bet there will be more to come until finally the Congress will have to launch an investigation into how the services are spending our tax dollars.

Stimulus Contracts Go to Companies Under Criminal Investigation
by Michael Grabell,

ProPublica - October 25, 2009 10:30 pm EDT

A version of this story was co-published with USA Today.

The Department of Defense awarded nearly $30 million in stimulus contracts to six companies while they were under federal criminal investigation on suspicion of defrauding the government.

According to Air Force documents, the companies claimed to be small, minority-owned businesses, which allowed them to gain special preference in bidding for government contracts. But investigators found that they were all part of a larger minority-owned enterprise in Southern California, making them ineligible for the contracts.

The Air Force and the Army awarded the companies 112 stimulus projects at U.S. military bases, federal contracting records show [2] (27MB Microsoft Excel File). It wasn’t until Sept. 23 – more than a year after the criminal investigation started – that the Air Force suspended the firms from receiving new government contracts.
Federal rules allow agencies to terminate contracts when it’s in the government’s interest. But neither military branch plans to terminate the stimulus contracts awarded to the suspended companies as long as they are performing satisfactorily, said Air Force spokeswoman Lt. Col. Ann Stefanek and Army spokesman Maj. Jimmie Cummings.

According to the Air Force, the companies were controlled by Craig Jackson, an African-American businessman whose firm, Sanders Engineering, has won awards from the Small Business Administration.

Jackson did not return calls seeking comment. But an attorney for his firm, Tony Franco, said the company would “vigorously contest” the suspension. He said Jackson has been praised as “someone who has helped small businesses and we believe the facts will bear out that he continues doing so.”

Allegations about one of the firms, APM LLC, became public a year ago, when an SBA audit [3] led to the firm’s suspension from the small-business program and prompted the Defense Department’s criminal probe. That such a warning could go unheeded exposes a gap in the government’s contracting process, said Scott Amey, general counsel for the nonprofit Project on Government Oversight, which tracks contractor misconduct [4].

“The big problem I have – was there any disclosure of the contractors’ missteps prior to them receiving the stimulus money?” said Amey, when told of the suspended companies. “That’s the type of information you would hope government officials would have in front of them when making responsibility determinations.”

Stefanek said the projects were awarded independently by contracting officers at military bases who wouldn’t have spotted problems unless the contractors were suspended or debarred. The Air Force didn’t suspend the firms until Sept. 23 because it wasn’t officially notified by the Defense Criminal Investigative Service, which is conducting the investigation, until late August.

Gary Comerford, spokesman for the investigative service, said a criminal investigation isn’t enough to suspend a firm “because there is a presumption of innocence until proven guilty.”

Records show that on Sept. 24, a day after the Air Force suspensions, Scott Air Force Base in Illinois awarded two more projects worth $423,000 to APM. Stefanek said the contracting officer at Scott didn’t notice the suspension and that the awards have been rescinded.

To spend the stimulus money quickly, many of the projects to improve military facilities were added to existing contracts. Although those contracts had been competitively bid in the past, none of the new stimulus work the companies received was open to competition.

In addition to APM, based in Yorba Linda, Calif., the suspended contractors that won stimulus projects include 1CI Inc., of Gaithersburg, Md.; All Cities Enterprises of Ontario, Calif; Cherokee Chainlink and Construction of Hemet, Calif.; Chung and Associates of Anaheim, Calif.; and Coleman Construction in Los Angeles.
John Brewer, president of Cherokee Chainlink, said Jackson had no control over his company.

“I’m just a client,” Brewer said. “His company does my accounting. He doesn’t run my company and never has.” Brewer called the contracting suspension unfair, saying federal officials “just threw out a big net and grabbed everybody up.”
Managers of the other firms did not return calls or declined to comment.
The suspensions are temporary pending completion of the DOD criminal investigation, and none of the companies has been charged with a crime.

The stimulus projects assigned to the suspended companies include repairing hangars and installing energy-efficient windows at Andrews Air Force Base in Maryland; replacing fencing and renovating the dining hall at Wright-Patterson Air Force Base in Ohio; renovating a child-development center in Fort Knox, Ky.; repairing the airfield electrical system at Moody Air Force Base in Georgia; and stabilizing a landslide area in Colorado Springs, Colo.

$700 million in contested contracts

Small businesses and minority contracting have gained new attention under the $787 billion economic stimulus. Noting the role of small businesses in creating jobs, the White House directed agencies to take advantage of small-business set-asides even if they conflict with another stimulus goal, open competition.

Excerpt: Full article at ProPublica.Org