The suspension means that APM will complete its current contracts but no new contracts will be awarded to the company, the Air Force said.
The $20 million that the Air Force already has paid or committed to California-based APM this year includes about $12 million in economic stimulus funds distributed under the American Recovery and Reinvestment Act of 2009, according to base records. The $20 million far exceeds the contract’s stated annual maximum spending limit of $12 million for each year of the five-year agreement.
From 2004 through mid-2008, APM was awarded more than $383 million in Defense Department construction and maintenance contracts at various U.S. military installations across the United States, including Wright-Patterson, the Air Force said.
“At present, it is estimated that the suspended companies received more than $700 million in government contracts to which they may not have been legally entitled,” according to the directive signed by Steven A. Shaw, an Air Force deputy general counsel responsible for overseeing companies that work for the government under contracts.
According to the Air Force, a federal audit and criminal investigation has found that APM, its chief executive officer and his brother “conspired to hide” APM’s ineligibility for a U.S. Small Business Administration set-aside program restricted to minority-owned companies bidding for federal contracts.
The brothers appear to have concealed relationships between APM and the other companies, through ownership or management, that would have made APM ineligible for the SBA’s 8(a) minority contracting program and would make the other companies ineligible for programs they may try to compete for, the Air Force said in the directive that suspended the companies from working for the government.
The brothers, Craig and Townsend Jackson, appear to have used the companies to commit “fraud or criminal offenses in connection with obtaining, attempting to obtain, and performing public contracts or subcontracts through the 8(a) program,” according to the Air Force directive.
The federal investigation has found evidence that the two brothers, through the companies, falsified records and made false statements to the government, Shaw wrote.
Craig Jackson controls the suspended companies and has received earnings from them, according to the Air Force.
“Craig Jackson engaged in a pattern and practice of establishing various small businesses owned by friends and family, but managed and, in effect, controlled by either Craig Jackson or companies controlled by Craig Jackson, including the suspended companies,” Shaw wrote. “The various small businesses then applied for inclusion into the 8(a) program to benefit from sole-source contracting, and diverted significant percentages of their earnings back to Craig Jackson and/or companies owned or controlled by Craig Jackson and/or his family.
“Had the suspended companies disclosed their ownership and management structure, they would have been deemed affiliates under the SBA rules and been ineligible for the 8(a) program,” Shaw wrote.
Craig Jackson held daily management responsibility for APM as its then-CEO while the company applied for and was accepted into the 8(a) program in December 2003, the Air Force lawyer wrote.
Craig Jackson then acquired a 45 percent ownership interest in APM, violating SBA rules which limited him to a maximum of 20 percent ownership, and did not disclose that change in ownership to the SBA, Shaw wrote.
Craig Jackson also provided APM with a $1.9 million loan, Shaw wrote. He and APM submitted a false promissory note to the SBA to hide his supply of the loan, and APM falsely identified the source of the loan in other documents filed with the SBA to remain in the 8(a) program, Shaw wrote.
The criminal investigation is ongoing and may lead to criminal proceedings, according to the Air Force. The government also could seek to debar the companies from the privilege of competing for future federal contracts.
Among the companies the Air Force suspended is All Cities Enterprises, of Ontario, Calif., APM’s predecessor on the Wright-Patterson base infrastructure contract. All Cities and APM teamed to bid on the current contract, according to records on file with the 88th Contracting Squadron, the base contracting unit at Wright-Patterson.
The Air Force identified the other suspended companies as 1CI-All Cities JV; 1CI Inc. (doing business as 1st Cousins Inc.); Advanced Business Management Services Inc.; All Cities Information Technologies; APM Construction Management Inc.; APM LLC of Alaska; Butler Marketing and Consulting Group Inc. (also known as Butler Management Services); Cherokee Chainlink & Construction Inc.; Chung & Associates; Coleman Construction Inc.; Homerun Construction Inc.; S.M. Partnership; SMS Co. Inc.; Sanders Construction Inc.; Sanders Engineering Co. Inc.; Sanders Management Services (doing business as SMS), and Sanders Management Services Co. Inc.
It is under the government’s minority contracting set-aside program , that APM won the five-year contract under which it manages or subcontracts a wide range of renovation and repair programs for the Air Force at Wright-Patterson.
APM has held the contract since January 2007. The company, based near Los Angeles in Yorba Linda, Calif., has a local office in a trailer at Wright-Patterson.
It is not APM’s first problem with the government. In August 2008, the U.S. Small Business Administration — which administers the minority contracting program — suspended APM from the program. The SBA’s inspector general said it concluded the suspension was necessary because APM demonstrated “repeated non-compliance with program participation agreements, and ongoing refusal to provide truthful and complete information.”
APM then voluntarily terminated itself from the 8(a) program, according to government records. But the SBA told Wright-Patterson contracting officials that APM was to be allowed to finish the contract that it had won prior to being suspended.
So, Wright-Patterson has continued to spend heavily with APM, including about $12 million in federal economic stimulus money that might have been spent instead through competitive contract bidding that could have been opened to other contractors.
Lt. Col. Matthew Stevens, commander of the 88th Contracting Squadron at Wright-Patterson, and Barbara O’Brien, of the base’s civil engineer directorate, told the Dayton Daily News in a Sept. 10 interview that the stimulus-funded projects were run through APM’s contract in an attempt to get the stimulus money spent quickly in line with Washington’s direction. But APM is so glutted with work that $4 million of federal money that the government has reported spent is actually listed as “suspended” in base records.
Stevens told the Dayton Daily News that those delays are at the base’s direction, in order to coordinate projects with base agencies and other priorities.
The Air Force’s order also suspended four individuals including APM’s chief executive officer, Townsend Jackson; his brother, Craig Jackson; Craig Jackson’s wife, Sandra Jackson, and Arnette J. Butler, sister of the Jackson brothers.
Craig and Townsend Jackson did not return telephone messages Tuesday requesting a response to the Air Force’s memo. Sandra Jackson was said to be away from her office and unavailable. No telephone number was available for Butler.
The action was prompted by an audit by the Small Business Administration’s inspector general and a resulting criminal investigation, according to the Air Force memo.
Shaw wrote that the investigation found that companies related to APM, by ownership or management, rendered those companies collectively ineligible for the government’s contract set-aside program for minority-owned companies. APM had won the Wright-Patterson contract in a competitive bidding that was restricted to minority-controlled companies through the 8(a) program.
“I find that protection of the government’s business interests requires the immediate suspension of the suspended individuals and the suspended companies pending the completion of the criminal investigations of the (government’s) investigative team and any ensuing criminal proceedings,” Shaw wrote.
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