Base engineer formed contracting company before retirement

Government ethics requirements

U.S. Department of Defense ethics rules, intended to promote impartiality in handling official duties, state that employees may not do government work on a matter that will affect the financial interest of the employee, a spouse or children. Those rules also direct employees not to participate in a matter likely to affect the financial interest of “a relative with whom you’re close” when “a reasonable person with knowledge of the relevant facts could question your impartiality.”

WRIGHT-PATTERSON AIR FORCE BASE — While still a civil engineering employee at Wright-Patterson Air Force Base, David N. Price formed his own outside company to pursue contract work for the federal government.

He apparently didn’t tell his supervisors. Base civil engineering officials told the Dayton Daily News that Price never informed them that he had formed the company.

But even though Price formed that company months before leaving government service, he doesn’t appear to have violated U.S. Department of Defense ethics rules. Those rules require employees such as Price, who file financial disclosure reports, to obtain a supervisor’s written approval before engaging in “business activity or employment” with “any organization doing or seeking to do business” with the Department of Defense. However, there is no evidence Price did any government work for the company before his November 2009 retirement.

Price, 61, of New Madison declined to comment.

Contracts at Wright-Patterson represent a major prize for the region’s companies as a source of steady and well-funded work, and Price started competing for federal contracts soon after retiring from his civilian job at the base. His company, PDW Inc. (Patriots Doing Work), won two small projects in 2010 at Wright-Patterson renovating a water-damaged band building and doing electrical work in a commissary. The company also was awarded work with the U.S. Department of Veterans Affairs.

Plenty of people have used knowledge they gained during government service for careers afterward, but forming an outside company while still with the government and not informing supervisors raises ethical concerns, said Rushworth M. Kidder, president and founder of the Institute for Global Ethics.

“The concern certainly is the perception,” Kidder said Friday. “The reason this matters is because we want people in government who are ethical, not merely compliant.”

Price registered PDW Inc. with the Ohio secretary of state’s office in April 2009 and with a federal contracting business registry in June 2009. He ended his 26-year Air Force career in November 2009.

Had Price sought government work through his outside company while still working for the Air Force, that would have raised serious ethics issues, said Jeffrey Seglin, an Emerson College associate professor in Boston who teaches and writes about business ethics.

According to government records of PDW’s registrations, Price founded the company with Scott Day, an executive of Daytep Construction Co., a major subcontractor of Arctic Pipe & Materials (APM) LLC, a former Wright-Patterson base infrastructure contractor that heavily used Daytep as a base construction subcontractor.

Price wrote evaluations of APM’s project performance for the base’s civil engineering office.

In 2009, the Air Force suspended California-based APM and 19 other companies from any new federal contracting, as part of a fraud investigation into whether the companies misrepresented themselves and improperly participated in a program that sets aside government contracts for economically disadvantaged, minority-owned companies. Last year, the Air Force stiffened that punishment by adding a three-year contracting ban for APM and more than a dozen other companies and individuals that held contracts at Wright-Patterson or other military bases.

The Defense Criminal Investigative Service and its counterpart investigative units at the Air Force, Army, Navy and Small Business Administration are still investigating, along with Justice Department prosecutors. No charges have been filed as a result of the nearly two-year probe.

PDW’s structure reflects the close relationships of some current and former employees of companies that do millions of dollars in construction and renovation work for Wright-Patterson.

Scott Day is an executive of both PDW and Daytep. Price rents PDW’s office space within the offices of Daytep at 1715 Springfield St., Riverside. Price’s late brother formerly was an owner of Daytep.

Base records show that personnel from APM’s predecessor, All Cities Enterprises, worked for All Cities and then APM. Among those employees is Donald Fosnight, a former project manager for APM at Wright-Patterson.

Fosnight now works for Daytep, which formed a joint venture with Custom Mechanical Systems Corp. of Bargersville, Ind., a minority-owned small business. In July 2010, Fosnight’s new firm was awarded a one-year, $10 million construction contract to succeed APM. Fosnight told the Daily News he wouldn’t discuss APM, now that he works for Daytep.

Before Price’s retirement, Wright-Patterson officials allowed him to evaluate APM’s performance on high-visibility projects while APM employed as a primary subcontractor Daytep, then co-owned by Price’s brother, the late Terry E. Price, 56. Terry Price, of Arcanum, died in an August 2009 midair collision of light aircraft.

Base officials said a review by Air Force lawyers concluded there was no ethical obstacle to David Price’s participation in evaluating APM because the government didn’t choose APM’s subcontractors, and because conflict-of-interest concerns would apply directly only to the spouse or children of a Defense Department employee.

Seglin, the ethics expert, said he still questioned why the Air Force allowed David Price’s participation in evaluating APM, given that it employed his brother’s company.

“They made an ethical choice,” Seglin said. “It’s a curious one, but they made it.”

Although APM is barred from new federal contracts, the Air Force is allowing it to finish projects it had been awarded under the old contract. U.S. Sen. Tom Coburn, R-Okla., has questioned that arrangement, arguing that contractors barred for misconduct shouldn’t be allowed to continue receiving taxpayers’ dollars.

APM recently completed a $455,300 demolition of an old, vacant building at Wright-Patterson. The government authorized an $81,000 payment for that work in December 2010.

Contact this reporter at (937) 225-2242 or jnolan@DaytonDailyNews.com.