OMAHA, Neb. (AP) — Federal officials are saying little about how they chose a Nebraska startup to build an $11 million section of border wall in California, including whether they knew of the company’s connections to a construction firm flagged in a government audit for “many potential fraud indicators.”
The top Democrat on the House Committee on National Security is seeking answers from the Department of Homeland Security on what vetting was used last year to select SWF Contractors of Omaha for the job. The company, founded last year with only one employee, is an offshoot of Edgewood, New York-based Coastal Environmental Group, which has been repeatedly sued for underpaying or failing to pay subcontractors.
“It seems DHS has awarded a contract to a brand new company with questionable connections and without the proper prior performance,” Mississippi Rep. Bennie Thompson said in a letter to Homeland Security Secretary Kirstjen Nielsen. “In the rush to build President (Donald) Trump’s wall, a portion of it may be built by a company with a history of mismanaging and wasting taxpayer funds.”
Thompson’s office said it had not received a reply to its request by Friday.
A wall along the Mexico-U.S. border was a central promise of Trump’s campaign. The contract with SWF is for just a fraction of the larger project, about 2 miles (3.2 kilometers) of post-style barriers at the border at Calexico, California.
A 2016 Interior Department internal audit report obtained by The Associated Press through a Freedom of Information Act request found that Coastal had cash flow problems and violated federal requirements to promptly pay workers. Those problems were cited even before it was hired in 2013 by the U.S. Fish and Wildlife Service to clean up two wildlife refuges following Superstorm Sandy.
If government officials had identified some of those issues, the report said, “it likely would not have contracted with (Coastal), thereby avoiding the numerous problems that occurred on these contracts.”
The report also noted that the U.S. Army Corps of Engineers had flagged Coastal Environmental as a problem company on an earlier Superstorm Sandy cleanup contract, including underpaying or failing to pay some of 400 workers. A Corps contracting officer interviewed for the report told auditors “his advice was to never contract with (Coastal).”
The U.S. Army Corps of Engineers in Fort Worth, which bid the border wall project and hired SWF, said in written responses to questions from the AP that “performance and relevant experience were considered in making the selection.” But it declined to answer questions about how performance and relevant experience were applied to a company created only nine months before it was selected, saying that information is “procurement sensitive information and not releasable.”
The Corps used the same language in refusing to answer questions about how many other firms bid for the project and whether any offered a lower-cost bid than SWF. It said it has revisited its documentation on the contract “which confirms the awardee’s status as a responsible offeror.”
Coastal has been sued in federal court a dozen times, and at least three times by the federal government for failing to pay subcontractors on government jobs. The Interior Department’s audit found $2 million in questionable spending by Coastal in the Sandy cleanup. The company later agreed to repay $200,000 to the government.
Coastal has an office in Omaha — a repurposed house in an industrial district south of downtown, the same address listed on federal documents for SWF Constructors. While a Coastal sign appears on the building, there is no sign indicating it is home to SWF Constructors.
The president of Coastal and main contact for SWF, Richard Silva, has not returned repeated phone and email messages seeking comment.
By MARGERY A. BECK