June 21, 2007Members of a House subcommittee expressed serious concern during a hearing Thursday that financial instability at contract guard companies could put federal facilities at risk.
The hearing before the House Transportation and Infrastructure Subcommittee on Economic Development, Public Buildings and Emergency Management addressed a recent situation in which hundreds of contract security guards at federal buildings in the Washington region had not been paid in six weeks or received benefits for up to a year.
The majority of these guards, employed by Systems Training and Research Technologies (STARTECH), a private security guard firm under contract with the Federal Protective Service, continued to work despite not being paid, but members of the subcommittee worried that this would not always be the case.
"These people are there for a purpose, to protect us from terrorists and criminals," said Del. Eleanor Holmes Norton, D-D.C., chairwoman of the subcommittee. "If they're not there, we're not protected. If they're not paid, we have no assurance that we're protected."
While FPS exercised significant oversight of the guards, that oversight was focused primarily on ensuring that they were at their assigned posts and had valid, up-to-date documentation. FPS Director Gary Schenkel said contracts state that the guards must be paid, but the timing of the payment is up to the individual guards and the contracting company.
"This was a serious security failing at the top," Norton said, addressing Schenkel. "You behaved like a government bureaucrat when you should act like a police chief whose post is left uncovered."
Ashley Lewis, director of the Office of Acquisition Policy and Oversight at the Immigration and Customs Enforcement bureau, FPS' parent agency, said ICE hopes to increase its ability to determine if contractors are in financial distress.
"We're considering putting requirements in our contracts to notify us if corporate officers change or if companies have missed payroll or if there is any other indication of instability," Lewis said after the hearing.
Making oversight of contract security guards more effective is especially relevant given an anticipated FPS restructuring, which would cut about 250 agency officers and concentrate remaining employees in high-risk areas.
The Labor Department is holding $1.8 million owed by DHS to STARTECH for recently received invoices and will distribute that money to former STARTECH employees still owed for time worked.
"The Department of Labor will hold [the payments] while they investigate what the employees are entitled to," Lewis said. "We don't want that money to go to the corporation and disappear."
While Weldon Waites, vice president of business development for STARTECH, testified that DHS' failure to pay the company in a timely manner "drove him into financial ruin," other witnesses insisted that it was Waites' financial mismanagement, not that of DHS, which led to the company's inability to pay its employees.
"There were no late payments pending to STARTECH; we had nothing to do with the fact that he did not make payroll," Lewis said.
Ann Marie Messner, former chief operating officer and general manager of STARTECH, placed full blame on Waites.
"My theory of the demise of STARTECH is in stark contrast to any attempt to blame late payments from DHS or anyone else," Messner said. "It is my considered opinion that STARTECH died at the hands of its controlling owner, Mr. Weldon Waites. Weldon Waites sacrificed his company, his employees and your security on the altar of his greed."
Waites was convicted of 29 felony counts of conspiracy, bank fraud and money laundering and served almost five years in jail before becoming the insurance adviser for STARTECH. His felon status did not come to the attention of FPS during the contracting process because while the Waites family owns 75 percent of STARTECH shares, the ownership listed was under the name Sharon Waites, Weldon's wife. Though the testimony indicated that DHS was not directly responsible for STARTECH's demise, Lewis, Schenkel and DHS Inspector General Richard Skinner agreed with lawmakers that the government must take responsibility for monitoring contract guard companies in the future.
"Even if Waites is directly responsible, the government is primarily responsible," Norton said.
June 21, 2007