Probe of remarks by HUD secretary raises more questions

A recent investigation into remarks by Housing and Urban Development Secretary Alphonso Jackson raises as many questions as it answers, with conflicting accounts on how political affiliations may have played into contract award decisions at the agency.

The inspector general investigation was requested by several members of Congress in May after a news story in the Dallas Business Journal that Jackson told participants at a minority business conference that he had personally scuttled the contract of a man who said he did not support President Bush. Shortly after the news account, Jackson released a statement saying the story he had shared was made up.

Investigators concluded that the substance of Jackson's remarks was partly true. But they did not unearth conclusive evidence that would implicate the HUD chief for unethical or illegal contracting practices.

Rather, the report presented page after page of sworn testimony by Jackson and senior staff members -- some of it conflicting -- on procurement practices at the department and Jackson's involvement in contracts since he joined the agency in June 2001.

Assistant Deputy Secretary Aronetta "Jo" Baylor recounted an incident in which she and Jackson ran into Brian Maillian of Whitestone Capital Group in the HUD lobby. Her account of that meeting partly mirrors the anecdote Jackson told the business group -- that Maillian thanked the secretary for a contract he had struggled for years to win, and said he did not support the president.

But Baylor said Jackson said nothing to the man on the spot, instead complaining privately to her afterward "that people [expletive] dog-out the president but still want contracts and money from the administration."

Maillian told investigators that he did not recall such a meeting, and Maillian's contract with HUD has since been extended.

Investigators also heard from two senior staff members -- Chief of Staff Camille Pierce and Deputy Secretary Roy Bernardi -- that Jackson told political appointees at a staff meeting that it was important "to consider presidential supporters" in the award of "discretionary" contracts. Other officials said they had not heard Jackson make that remark.

Another official, General Counsel Keith Gottfried, said he had heard rumors that Jackson tries to help his friends win contracts, though he said he had never heard of contracts being rescinded or terminated as a result of the secretary's actions.

Joseph Neurauter, the department's chief procurement officer, explained to investigators how the pre-award process could be subject to gaming for political purposes.

If a company has a friend in the agency, that friend could use disadvantaged business preferences like those provided by the 8(a) program, or for women-owned businesses, to create contract requirements that are unique, Neurauter said.

"They could pick out this company, maybe it's a small, maybe it's an 8(a) … Small Business Office says, okay, it's a small, it helps to meet our goal and requirements. It comes to [the Office of the Chief Procurement Officer], we look at it.…And so all the rules could fit, all of the stars could align, and we would say, sure, this seems appropriate, we'll make the award, when all along you could argue that the original motivation behind this was improper, because this company happens to be a big contributor to whatever party."

But Neurauter told investigators Jackson's statement that "during my tenure, no contract has ever been awarded, rejected or rescinded due to the personal or political beliefs of the recipient," was true to the best of his knowledge.

The investigators' report delves into several specific contracts that were handled questionably. One of those was a contract with Abt Associates, a company that many officials recalled the secretary disliked. According to Pierce, his chief of staff, "There was a question about the Abt award, and he said the quality of Abt work is inferior, and besides, they are a Democratic organization. No, no, he didn't -- he said he believed that they would take their money, the HUD money, and contribute it to the Democratic Party or something."

That award eventually was signed, Pierce recounted, when Jackson learned Congress already had been notified of the award recipient.

In his own testimony to investigators, Jackson strongly maintained that political affiliations are not a factor. "Many of the contractors that are referred to us by the Congressional Black Caucus probably would never do work if [there was an anti-Democratic policy]. They come in and we treat them the same way as anyone else," he said.

"Did I make a mistake? Did I look pretty stupid? Yes. And I shouldn't have done it, but I regret it, and that's the end of it," Jackson said. "I don't recall ever telling anyone to do anything on a partisan basis, Republican or Democrat. Because I think in the end, if the president believed that I did that, he would be on [my case] unbelievable."

The investigators' report, prepared by Anthony Medici, special agent in charge of the HUD inspector general office's criminal investigations division, has not been publicly released but has been distributed to those members of Congress who requested it. A congressional staffer with access to the report said the department considers it to have the same protections as a personnel file, and thus, to be subject to the Privacy Act. Mike Zerega, spokesman for the IG's office, would not comment on the reasons for not publishing it.

The executive summary of the 340-page report has been leaked online, and a staffer said Democratic senators likely would call for hearings and further investigations after a rush of last-minute business this week.