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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.