> > View timeline of Alphonso Jackson's Political Journey.

Did program users and American taxpayers get their money’s worth from the $6.9 billion in contracts the Department of Housing and Urban Development (HUD) awarded to 1,694 contractors in the last seven years?

Definitely not, according to dozens of interviews with current and former HUD executives and a careful reading of the findings of several federal investigations. On the contrary, Affordable Housing Finance’s research showed that the contracting process is badly managed, many contractors are chosen by sole-source procurement methods and have questionable qualifications, and HUD does not adequately monitor their performance.

AHF’s research also revealed evidence that HUD Secretary Alphonso Jackson manipulated the contracting process based on personal and political loyalties. It revealed that HUD program managers are concerned about the fairness and effectiveness of contracting decisions but are afraid to or unable to play an active role in choosing or evaluating contractors.

HUD officials have been questioned repeatedly since President George W. Bush took office in January 2001 about contracting decisions, including hundreds of millions of dollars per year in contracts awarded for information technology (IT) systems. HUD also has been criticized by the Government Accountability Office (GAO) for lax oversight of contractors.

Now AHF has learned that the problems with HUD contracting go deeper. Jackson’s involvement appears to be more extensive than has been previously reported, and concerns about the ethics and effectiveness of the contracting process are some of the reasons given privately by a number of high-level HUD employees for leaving the agency. AHF also has learned that Jackson became particularly concerned about the political affiliation of contractors in 2006, and that Congress is investigating whether White House Political Director Karl Rove had enlisted HUD’s help to win re-election for vulnerable House Republicans.

The latest round of questions about HUD’s practices were raised after Jackson spoke to the Real Estate Executive Council on April 28, 2006, in Dallas. The secretary said he encountered the head of a firm that just had landed a HUD contract who told Jackson he did not like President Bush. Jackson claimed that in the end, the man did not get the contract, adding, “Why should I reward someone who doesn’t like the president so they can use funds to campaign against the president? Logic says they don’t get the contract. That’s the way I believe.” (Jackson was quoted in the Dallas Business Journal in a May 5, 2006, story by Christine Perez and Chad Eric Watt.)

The statement prompted an investigation by HUD Inspector General (IG) Kenneth Donohue. A team of investigators from the IG’s Criminal Investigation Division led by Agent-in-Charge Anthony Medici interviewed 55 people under oath. Although the team’s report was released last September, much of the evidence it generated is being reported publicly for the first time in this article.

Two senior people at HUD told the IG that Jackson’s Dallas remarks about considering politics in contracting were consistent with his private instructions to assistant secretaries in 2006. There is clear evidence that Jackson tried to cancel at least one contract because of one firm’s politics, and may have tried to unilaterally cancel, award, or renew others for questionable reasons.

The IG report only hints at the full extent of Jackson’s involvement, partly because Medici’s team only interviewed a handful of the staff people most directly involved in managing specific contracts and evaluating contractor performance.

Even then, Donohue found that, “while most staff stated they were not pressured to award contracts to specific companies, some did allege that they, or others, were unduly pressured to award contracts to certain companies. The staff was not certain of the reasons for the alleged influence, but some thought it could be originating with senior management. Further, some staff believed political influence, friendships, or other relationships could be involved.”

Jackson told the IG, “I’ve never touched a contract, I don’t mess with it ... my story was clearly false, and I shouldn’t have said it.” He added, “I lied, and I regret having done that.”

The IG’s final report said, “None of the staff provided sufficient evidence for us to conclude that any interference, political or otherwise, occurred.”

HUD Deputy Secretary Roy Bernardi (to whom the IG report was addressed) concluded that no further action was needed.

But with Democrats in control of Congress, Jackson may soon face questions about his activities from officials who, unlike Donohue, are not appointed by President Bush.

In April, after revelations that political appointees at the General Services Administration had met with White House political staff to discuss ways to help Republican candidates last year, House Government Operations Committee Chairman Rep. Henry A. Waxman (D-Calif.) asked for details on all communications between White House political boss Karl Rove’s staff and federal agencies, including HUD.

The rest of the story

The legal implications of the apparent role of politics in HUD contracting are very serious, but in terms of how HUD operates and runs its programs, it’s only a recent and fairly small part of the story. To understand how the process got to the point of scandal and criminal investigations, one has to look at the bigger picture.