HUD chief says story on contract cancellation was not true

Alphonso Jackson, secretary of the Housing and Urban Development Department, told a Dallas audience last month that he personally canceled a minority businessman's contract award in response to negative comments about President Bush. But in a Wednesday press release, Jackson said the anecdote was apocryphal.

In his comments, first reported in the Dallas Business Journal last Friday, Jackson described how a contractor had been pursuing HUD work for 10 years. Finally, "He made a heck of a proposal and was on the [General Services Administration] list, so we selected him," Jackson reportedly said. "He came to see me and thank me for selecting him. Then he said something ... he said, 'I have a problem with your president,' " the secretary continued.

"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,' " Jackson told the audience, adding that the man did not get the contract.

"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," he concluded.

If the secretary had, in fact, rescinded a contract offer made to a previously selected company, such action would fly in the face of federal rules that strictly spell out what factors may be considered by agencies in contracting decisions and how those should be weighed. Those rules do not permit political leanings to influence contract awards.

But in a statement released late Wednesday, Jackson said, "I deeply regret the anecdotal remarks I made … and would like to reassure the public that all HUD contracts are awarded solely on a stringent merit-based process. During my tenure, no contract has ever been awarded, rejected or rescinded due to the personal or political beliefs of the recipient."

Asked whether the secretary had informed the audience that the story was not true, HUD spokesman Jereon Brown said, "I don't think he highlighted it."

Reports of Jackson's remarks drew considerable attention on Capitol Hill. Sen. Joseph Lieberman, D-Conn., ranking member of the Senate Homeland Security and Governmental Affairs Committee, on Tuesday asked HUD Inspector General Kenneth Donohue to investigate the matter.

"In order to assure the American people that our procurement laws and our government are not being administered in an arbitrary and capricious manner, I ask that you immediately look into this incident," Lieberman wrote.

Rep. Henry Waxman, D-Calif., ranking member on the House Government Reform Committee, and Rep. Barney Frank, D-Mass., ranking member on the House Financial Services Committee, also cried foul.

"The Bush administration has a track record of rewarding its friends and ignoring the rules," they wrote in a Tuesday letter to Jackson requesting an explanation of the reports. "The government has no right to blatantly withhold contracts simply because an American citizen dislikes the president," they wrote.

Helen Albert, HUD deputy inspector general for management and policy, indicated that the office had received "a number of complaints" from Congress and the public. "We are reviewing this matter, and will look to the facts and any applicable laws or requirements," she said.

Whether the anecdote Jackson recounted was based on fact or was a fable told to illustrate a larger point about the challenges of navigating Washington business and politics, it reflects poorly on a procurement system already reeling from corruption and fraud scandals, some observers say.

"If we were to step back into a system where procurement decisions were being based on politics, it would be a giant step backward for the procurement system," said Chris Yukins, co-director of the Government Procurement Law Program at The George Washington University.

He warned that an "invasion" of politics into the system would necessitate reducing the discretion available to contracting officials. "In a system like that -- like the systems we have in a developing nation where procurement officials have no discretion because they can't be trusted with that discretion -- consistently … governments make purchases that are not necessarily the best value," he said.

Based on his Dallas remarks, Jackson appeared well aware of the potential for individual gain from successful federal contracting. "Whether it's HUD or another agency, the opportunities are there," he was reported to have told the audience. "The most amazing thing I've ever seen is the amount of contracts we hand out every day. Just one contract can make you wealthy."

Steve Kelman, former head of the Office of Management and Budget's procurement policy shop and currently a Harvard professor and industry consultant, described Jackson's remarks as appalling. "HUD is not well known for being at the forefront of federal contracting excellence," Kelman said, speculating that Cabinet secretaries with larger contracting portfolios would not have made such a remark.

"Anyone whose view of the procurement system is that it should be used to reward political friends or punish political enemies, is ethically unfit to be a Cabinet secretary," Kelman said. "I mean, the defense of him is that he was lying."