| Today's Feature Southwest Missouri
Veterans to Share their Story
JEFFERSON CITY – Senator
Gary Nodler, R-Joplin, announced that the
Missouri Veteran Stories project will be
scheduling interviews in Joplin. The state
project honors Missouri veterans by capturing
their stories on DVD to be preserved for future
generations. Veterans’ interviews are being
scheduled for Tuesday, Nov. 3 at VFW Post 534
located at 110 E. Veterans Way in Joplin.
"Recording and preserving
these stories gives future Missourians the
opportunity to learn about this country’s
history first-hand," said Sen. Nodler.
"At the same time, we are honoring our local
veterans and valuing their experiences during
their service. I am encouraging veterans in our
area to participate and share their
stories."
The Missouri Veteran Stories
project is open to all men and women currently
residing in Missouri who have served in any
branch of the U.S. military. Five- to
seven-minute fully edited stories will be
produced using interviews and conversations with
each veteran. These stories will become part of
the permanent Missouri Veteran Stories archive.
The archive is available through
www.missouriveteranstories.org and through
touch-screen consoles in the State Capitol.
To set an appointment for Nov.
3 or to nominate a veteran, log on to
http://www.missouriveteranstories.org or call
1-800-905-1536 for more information. For those
interested in participating, interviews will be
conducted in half-hour intervals throughout the
day.
Stimulus
Contracts Go to Companies Under Criminal
Investigation
by Michael Grabell, ProPublica
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. 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 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.
"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.
So far, small businesses have
won 26 percent of the $16 billion in federal
stimulus contracts, and minority contractors have
won 15 percent, contract data shows. Most of the
minority contracting money has gone to firms
owned by Native Americans. African-American-owned
firms received 2 percent of contracts and
Hispanic firms 3 percent.
The allegations against Jackson
involve the SBA 8(a) program, which was created
to help small businesses owned by African
Americans, Hispanics, Asian Americans and Native
Americans win government contracts by providing
several years of mentoring, training and
financial assistance. Such firms can also get a
leg up with contracts that only small,
minority-owned companies can bid on.
According to the Air Force,
Jackson established various small businesses
owned by friends and family – but in reality
managed and controlled by him or his companies.
After winning contracts set
aside for small, minority businesses, the
companies diverted a significant portion of their
earnings back to Jackson or one of his companies,
the Air Force said.
Jackson and his family
conspired to hide the connections between the
businesses by making false statements and
falsifying records, the suspension order alleged.
Over the years, 19 companies
controlled by Jackson – including the six
that won stimulus contracts – "received
more than $700 million in government contracts to
which they may not have been legally
entitled," according to the order.
In 2008 the SBA’s internal
watchdog audited one of those
firms—APM—after concerns arose that
some businesses owned by Alaska Native
Corporations might be serving as conduits for
larger firms.
APM is owned by Cape Fox
Corporation, formed under a 1970s federal law to
create business opportunities for Alaska natives
who had long subsisted on hunting and fishing.
Such Alaska Native Corporations have used
contract preferences to expand into tourism,
logging and reconstruction in Iraq.
Although the workers are not
usually Alaskan natives, a portion of the
companies’ earnings goes to shareholders in
remote Alaskan villages. Shareholders of Cape Fox
are Tlingit natives in Saxman, Alaska – a
village of 370 people outside Ketchikan, on the
southern tip of Alaska.
Cape Fox was among five owners
of APM when APM was accepted into the small
business program in 2003, according to the SBA
audit. Jackson, identified in the audit as
"Mr. A," negotiated a management
services agreement between APM and Sanders
Engineering in exchange for 2.75 percent of
APM’s contract billings.
Jackson bought out the four
other APM owners, and his brother replaced him as
manager in December 2004, the audit says. Jackson
then sold his interest to Cape Fox in January
2005, but the relationship didn’t end: The
native corporation entered into multiple
agreements that entitled other firms owned by
Jackson up to 7.5 percent of APM’s billings,
plus 45 percent of APM’s future net income.
Because Sanders Engineering
also graduated from the SBA program, Jackson is
prohibited from owning more than 20 percent of
any other company in the program.
In a formal response Friday to
the suspension, Sanders Engineering attorney
Franco said the Air Force had misunderstood SBA
rules. He said the SBA has always known of the
relationships and encouraged Sanders Engineering
to share its administrative expertise with other
small businesses.
Once an SBA success story
The scrutiny of Jackson and
Sanders Engineering marks a turnabout from 2001,
when Jackson was named second runner-up for
SBA’s minority small business graduate of
the year. That same year, he also won the
Entrepreneurial Success Award for the region.
The SBA news release on the
award said he transformed Sanders Engineering
from a company of five employees and annual
revenues of $300,000 into one with 200 employees
and $36 million in revenue. Jackson won
recognition for mentoring other small businesses
in accounting and human resources.
Robert McDonald, executive
director of the Black Chamber of Commerce of
Orange County, described Jackson as a hero to
other black entrepreneurs, not only for his
success, but for his generosity.
On the wall of McDonald’s
office hangs a photograph of himself with Jackson
and civil rights icon Rosa Parks, who came for an
inspirational visit at Jackson’s behest.
"That’s the kind of
individual I know," McDonald said.
According to a 2001 profile in
The Orange County Register, Sanders Engineering
was at the time the largest
African-American-owned mechanical contractor in
the United States. The article noted
Jackson’s careful selection process and
hands-on approach to mentoring minority-owned
firms.
"If they don’t want
to grow, they’re not a candidate for our
program," Jackson told the Register.
"It’s like a marriage; we want the
relationship to be seamless so clients can’t
tell where [the protégé] ends and we
begin."
The Recovery Accountability and
Transparency Board, which is charged with
stimulus oversight, regularly reviews contracts
for waste, fraud and abuse.
"We are aware of these
issues and have taken the appropriate
action," said Ed Pound, the board’s
spokesman. "We have no further comment
except to say that debarred or suspended
companies are a primary focus of our
efforts."
Adam Hughes, director of
federal fiscal policy for OMB Watch, a nonprofit
that has been monitoring the stimulus, said
canceling the contracts now could backfire.
"The problem with
that," he said, "is that it may end up
costing the government more money."
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