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FBI Investigating $50M Air Force Contract
By Mark Sherman
The Associated Press
Friday 19 May 2006
Washington - The FBI is investigating the award of a $50 million publicity
contract for the Air Force's Thunderbirds aerial stunt team to a company with
ties to a recently retired general, military and law enforcement officials said
Friday.
The Air Force canceled the contract with Strategic Message Solutions in February,
after two losing bidders complained that the company had an unfair advantage,
including its decision to make retired Gen. Hal M. Hornburg a partner, according
to a federal lawsuit over the contract.
Air Force Secretary Michael Wynne directed the Pentagon's inspector general
to review the contract award. The inspector general referred the matter to the
FBI to look into possible violations of federal contracting laws, a law enforcement
official said.
A senior defense official said the Inspector General's Defense Criminal Investigative
Service opened a criminal investigation into the matter around the end of February.
A short time later DCIS brought in the FBI.
Pentagon regulations require that any fraud investigations possibly involving
high-ranking military officials be referred to the bureau. The officials spoke
on condition of anonymity because the investigation is under way.
The Thunderbirds, an aerial demonstration team that flies F-16 fighter jets,
are based at Nellis Air Force Base, near Las Vegas.
David Staretz, a supervisory special agent and spokesman for the FBI office
in Las Vegas, would not discuss details of the investigation. "FBI headquarters
has confirmed there is an investigation," Staretz said. "We're not
going any farther than that."
Strategic Message Solutions, based in Plymouth Meeting, Pa., and its president,
Edward Shipley, sued the government in February, demanding that the contract
be reinstated. The suit says Hornburg had no involvement in obtaining the contract.
James E. Beasley, the company's lawyer, did not immediately return messages
left Friday by The Associated Press.
While lauding the company's services and Shipley's role in developing the publicity
package, the lawsuit describes an unusual chain of events that includes a purported
decision by Gen. T. Michael Moseley, the Air Force chief of staff, to provide
Shipley an immediate $8.5 million in federal funds in April 2005, without any
request for bids for the work.
At the time, Moseley was the Air Force's No. 2 officer.
Neither Moseley nor his predecessor, Gen. John Jumper, have been questioned
about the matter by investigators, said Air Force spokesman Capt. David Small.
The suit says Shipley, a pilot and air show enthusiast, disclosed Hornburg's
relationship to Moseley and other senior officers.
The work subsequently was put out for bids. Shipley's company initially was
awarded a five-year, $49.9 million contract to "provide audio, visual and
concert quality sound production presentation" on the Thunderbirds.
"The Thunderbirds Airshow Production Service contract was awarded through
a competitive procurement process at Air Combat Command," Small said.
In February, the Air Force announced the contract had been canceled. It has
not been rebid.
"A protest of the award was made to the Government Accountability Office
on Jan. 17. An Air Force review of the protest determined contract termination
was appropriate," the Air Force said in a statement in February.
Strategic Message Solutions was paid $1.9 million for work that had already
been done when the contract was terminated, Small said.
The Arizona Republic newspaper reported extensively on the controversy in March,
saying it had documents that showed Moseley steered the contract to Shipley.
Strategic Message Solution's bid was nearly twice that of a competing proposal,
the newspaper said.
ABC News first reported on the FBI investigation on Thursday.
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