Concerns Surrounding Boarder Wall Contract

Last November, we learned that FEMA (Federal Emergency Management Agency) awarded a $300 million contract to a three-person firm from Whitefish Montana to restore electricity in Puerto Rico. That contract came under suspicion and was quickly terminated. Then, last month, we learned that FEMA awarded a $156 million contract to a one-person firm to provide 30 million emergency meals to Puerto Rico. That contract was terminated within three weeks when it became obvious the contractor had no hope of delivering that quantity.

Now, the AP is reporting a similar incident involving a tiny Nebraska startup (SWF Constructors) with one employee having been awarded an $11 million contract to replace two miles of a boarder wall between California and Mexico. The AP reported that its investigation left unclear why SWF was listed as the contractor rather than its parent, Coastal Environmental Group, its owner. But its really not too hard to figure out. Coastal has been sued repeatedly for failing to pay subcontractors and was also accused in a 2016 audit of shady billing practices. A lawyer who represented one of Coastal's subcontractors speculated that creating a new company to dodge scrutiny of past legal problems is a relatively common practice in construction projects.

The Interior department audit of Coastal's contracts with the U.S. Fish and Wildlife Service to clean up two wildlife refuges in the wake of Hurricane Sandy resulted in about $200 thousand in billings that were not supported. Coastal agreed to repay the Government that amount. But according to the Interior IG (Inspector General), that audit required the Interior Department to file a negative "past performance report" that would have flagged it to other Government agencies. That report was never filed.

The AP also reported that Coastal's new company, SWF, is not registered in Nebraska which is required for any company doing business within the state. Nebraska officials are investigating whether SWF violated state registration requirements.

Its a good time to be a small business Government contractor. You can get millions of dollars in contracts with seemingly no questions asked about past performance, cost estimates, or ability to perform.

You can read the full AP article here.