Dec. 3 (Bloomberg) -- The Army’s procurement fraud unit has proposed prohibiting federal contracts to a Republican member of New Jersey’s state legislature on allegations his company didn’t pay money it owed an Afghan subcontractor and failed to deliver an aircraft maintenance shelter for U.S. forces in Afghanistan.
The Army Procurement Fraud Branch is seeking debarment of Assemblyman Robert Schroeder, a deputy Republican whip of the New Jersey General Assembly, and his closely held company, All Points International Distributors Inc. of Hillside, New Jersey. Schroeder already is facing state criminal charges of writing bad checks to company investors.
The Army fraud branch’s action, taken on Nov. 28, is significant because the company “is a poster child for contractors who fail to meet their obligations to pay Afghan subcontractors,” John Sopko, the special inspector for Afghanistan reconstruction, said in an e-mailed statement. “This is a pervasive problem that undermines the trust between the Afghan people and coalition forces.”
Information from the inspector general prompted the Army inquiry and “was among the evidence considered,” the Army fraud office said in an e-mail.
Schroeder was charged by the New Jersey attorney general in August with writing almost $400,000 in bad checks to investors in All Points International, which manufacturers portable shelters, canopies, aircraft hangars and multipurpose tents.
The Republican told the Record of Bergen County in August that he didn’t knowingly write bad checks and that his company was having trouble because U.S. “business has been in decline during the Obama administration.”
Schroeder, 52, has served in the General Assembly since 2010 and represents portions of Bergen and Passaic counties. He sits on the Labor and Homeland Security and State Preparedness committees.
Sopko said in his Oct. 30 quarterly status report on Afghanistan that his office made “multiple requests to API to meet it obligations to no avail before referring it” to the Army.
Schroeder’s Washington attorney, Jeff Ifrah, said in an e-mail that his client “not only promptly acknowledged” the inspector general’s requests “but proposed solutions” that Sopko’s office approved.
“We are very disappointed that the Army will continue to seek debarment of API and believe API will ultimately be vindicated,” Ifrah said.
The Army temporarily suspended the company and Schroeder in September pending a fuller review. Instead of lifting the suspension, the fraud branch Wednesday pressed ahead with a proposed debarment of Schroeder and his company.
The proposed debarment “maintains the ineligibility of Mr. Schroeder and his companies” to receive federal contracts “and is the initial step in a debarment proceeding,” the fraud office said in an e-mail.
Schroeder “has the opportunity to present matters in opposition to the proposed debarment, in writing or in person, on behalf of himself and/or his companies,” according to the e-mail.
The Army will render a decision that “could include debarment for a specified period, termination of the proposed debarment, or entry into an administrative agreement in lieu of debarment,” the fraud office said.
“The proposed debarment wasn’t based on just one thing, but a preponderance of evidence, including what was outlined” by the inspector general, Army spokesman Matthew Bourke said in an e-mail.
All Points International had yet to pay an Afghan subcontractor $158,692 of $204,692 owed for installing shelter tents and generators at a forward operating base and Bagram Airfield, according to the three-page summary of a document the inspector general sent to the Army recommending debarment.
The company had received U.S. payments of $617,357.50 under this contract, according to the document.
All Points International “failed to follow through on at least six payment schedules” it had proposed from November to May, according to the summary.
Ifrah said that while the company “ultimately fell behind on its repayments due to a loss of revenue related to the reduction in defense spending, it should be clear that this was due to circumstances beyond its control and not for lack of cooperation” with the inspector general.
The company was paid $247,500 in December and January by another Afghan contractor on behalf of the U.S. military to deliver a “large area maintenance shelter” for the Combined Joint Special Operations Task Force.
The Afghan contractor in April filed a complaint with Sopko’s office because the shelter wasn’t delivered, according to the summary.
All Points International “was so derelict in delivering this structure that the government ultimately changed the terms of the contract and canceled” its requirement, the inspector general’s summary found.
While the shelter’s delivery was delayed because of circumstances caused by Hurricane Irene “it was eventually shipped but” the Afghan contractor “refused to accept the late delivery,” Ifrah said.
Sopko said in his quarterly report that his investigators are “actively cooperating with the New Jersey State Police to provide prosecutors with materials that could be used to support the criminal case against Schroeder” on the bad-check charge.
Ifrah said in the e-mail that “the material will yield no support for their criminal case.”
To contact the reporter on this story: Tony Capaccio in Washington at firstname.lastname@example.org
To contact the editor responsible for this story: John Walcott at email@example.com