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US: Playing Politics With Federal Contracts

OMB Watch
May 17th, 2006

Secretary of Housing and Urban Development (HUD) Alphonso Jackson suggested at a forum in Dallas that federal contracts would not be awarded to those who have political disagreements with President Bush. He described a meeting with a contractor that was about to receive federal money until the contractor expressed his disapproval of the president. Jackson has since told reporters that he made the story up and that federal contracts are not awarded on the basis of political ideology. Regardless of the veracity of the anecdote, however, it highlights the lack of transparency around the connections between politics and government contracts.

The Dallas Business Journal reported that on April 28,at a meeting of the Real Estate Executive Council, a national minority real estate consortium, Jackson told of an advertising contractor that was on the verge of receiving a federal contract from HUD. Jackson said the contractor was trying to get a HUD contract for 10 years, that he "made a heck of a proposal," and the company was on the approved list of contractors with the General Services Administration. "So we selected him."

But during a meeting planned in order to thank Jackson, the prospective contractor commented on his disagreement with President Bush's politics. According to Jackson: "I said, 'What do you mean?' He said, 'I don't like President Bush.' I thought to myself, 'Brother, you have a disconnect -- the president is elected, I was selected. You wouldn't be getting the contract unless I was sitting here. If you have a problem with the president, don't tell the secretary.'"

According to Jackson, the contract was rescinded, putting his explanation to the audience, "Why should I reward someone who doesn't like the president, so they can use funds to try to campaign against the president? Logic says they don't get the contract. That's the way I believe."

Following up with a reporter from the Dallas Business Journal, Jackson's spokesperson, Dustee Tucker, added that the contract Jackson was referring to in Dallas was "an advertising contract with a minority publication," though she could not provide the contract's value. In other reports, Tucker indicated that the contractor had been rude and that had been the main reason for denying the contract. For instance, she told the Dallas Morning News that the contractor had been "trashing, in a very aggressive way," the HUD secretary and the president.

Several legal experts immediately noted that Jackson's actions may have violated federal law. Under the Federal Acquisition Regulations, "Government business shall be conducted in a manner above reproach and, except as authorized by statute or regulation, with complete impartiality and with preferential treatment for none." The meeting itself is questionable, as it is highly unusual for political appointees to be meeting with contractors during the reviewing process.

Reactions to Jackson's cautionary tale were swift and severe. House Government Reform Committee Ranking Member Henry Waxman (D-CA) and Financial Services Committee Ranking Member Barney Frank (D-MA) immediately wrote to Jackson, requesting all documents relating to the contract and meeting in question, as well as documents related to any contracts personally overseen or reviewed by Jackson. A follow-up letter has since been sent by the representatives to Jackson, questioning the veracity of his statements and reiterating their request for documents. Sen. Frank Lautenberg (D-NJ) has called for Jackson's resignation.

HUD Inspector General Kenneth M. Donohue is apparently investigating Jackson's comments. "We have received a number of complaints from the public as well as from members of Congress," Michael Zerega, spokesperson for Donohue, told reporters. The spokesperson indicated, however, that "[t]here is no timetable for the inquiry."

Then, to the surprise of many, Jackson apologized for his comments and stated that he made the story up, and Bush has since given Jackson his full support. "Alphonso Jackson has admitted that what he said earlier was improper, that it was a mistake, and the president accepts that and still supports a man with whom he's had a long and close relationship," according to White House press secretary Tony Snow.

Not only is Jackson now claiming he made the story up, but Tucker, who seemed to know details about the incident, now claimes the story in the Dallas speech was purely "anecdotal."

"He was merely trying to explain to the audience how people in D.C., will say critical things about the secretary, will unfairly characterize the president and then turn around and ask you for money," Tucker told reporters. "He did not actually meet with someone and turn down a contract. He's not part of the contracting process."

The Washington Post summed up the concerns of many in a hard-hitting editorial on May 12, asking, "Which is worse, violating the law or pretending to have done so?"

Even if the story was made up, the Post went on to criticize the "veiled threats" it contained: "Either Mr. Jackson broke the law and then lied about it, or he lied that he had broken the law. Which of those actions makes him fit to be secretary of housing and urban development?"

Sunlight Foundation senior fellow Bill Allison went still further, pointing out Jackson's questionable behavior as a Texas state official and the role he played in the awarding of financial assistance.

Regardless of whether Jackson should resign or be fired for either his violation of contract awards rules or lying about it, the incident demonstrates the need for public interest groups and journalists to track connections between government contracts and political decisions. In theory, if contractors follow the same rules, all will have the same chance to prevail. By refusing to award contacts or grants based on political leanings or position, the administration appears to be attempting to silence public debate on important issues and ultimately chill the speech of its opposition.

One important step toward ensuring a level playing field for all contractors and grantees is through increased transparency. As previously reported in The Watcher, an amendment co-sponsored by Sens. Tom Coburn (R-OK) and Barack Obama (D-IL) would require the Office of Management and Budget to create a free online database that the public could search for contracts and grants by a number of criteria, including company, agency, dollar amount, and geographic region.

The Coburn-Obama amendment represents a comprehensive, uniform approach toward opening the spending habits of our government to public scrutiny. Given the recent HUD debacle, such oversight is long overdue.





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