U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

For sale by the Superintendent of Documents, U.S. Government Printing Office

Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800

Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001

36–684 PDF 2007

THE RESPONSIBILITY OF THE DEPARTMENT OF HOMELAND SECURITY

AND THE FEDERAL PROTECTIVE

SERVICE TO ENSURE CONTRACT

GUARDS PROTECT FEDERAL EMPLOYEES AND THEIR WORKPLACES

(110–53)

HEARING

BEFORE THE

SUBCOMMITTEE ON 

ECONOMIC DEVELOPMENT, PUBLIC BUILDINGS AND 

EMERGENCY MANAGEMENT

OF THE

COMMITTEE ON 

TRANSPORTATION AND 

INFRASTRUCTURE 

HOUSE OF REPRESENTATIVES

ONE HUNDRED TENTH CONGRESS

FIRST SESSION

JUNE 21, 2007

Printed for the use of the 

Committee on Transportation and Infrastructure

(

COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE 

JAMES L. OBERSTAR, Minnesota, Chairman 

NICK J. RAHALL, II, West Virginia 

PETER A. DEFAZIO, Oregon 

JERRY F. COSTELLO, Illinois 

ELEANOR HOLMES NORTON, District of 

Columbia 

JERROLD NADLER, New York 

CORRINE BROWN, Florida 

BOB FILNER, California 

EDDIE BERNICE JOHNSON, Texas 

GENE TAYLOR, Mississippi 

ELIJAH E. CUMMINGS, Maryland 

ELLEN O. TAUSCHER, California 

LEONARD L. BOSWELL, Iowa 

TIM HOLDEN, Pennsylvania 

BRIAN BAIRD, Washington 

RICK LARSEN, Washington 

MICHAEL E. CAPUANO, Massachusetts 

JULIA CARSON, Indiana 

TIMOTHY H. BISHOP, New York 

MICHAEL H. MICHAUD, Maine 

BRIAN HIGGINS, New York 

RUSS CARNAHAN, Missouri 

JOHN T. SALAZAR, Colorado 

GRACE F. NAPOLITANO, California 

DANIEL LIPINSKI, Illinois 

DORIS O. MATSUI, California 

NICK LAMPSON, Texas 

ZACHARY T. SPACE, Ohio 

MAZIE K. HIRONO, Hawaii 

BRUCE L. BRALEY, Iowa 

JASON ALTMIRE, Pennsylvania 

TIMOTHY J. WALZ, Minnesota 

HEATH SHULER, North Carolina 

MICHAEL A. ACURI, New York 

HARRY E. MITCHELL, Arizona 

CHRISTOPHER P. CARNEY, Pennsylvania 

JOHN J. HALL, New York 

STEVE KAGEN, Wisconsin 

STEVE COHEN, Tennessee 

JERRY MCNERNEY, California 

VACANCY 

JOHN L. MICA, Florida 

DON YOUNG, Alaska 

THOMAS E. PETRI, Wisconsin 

HOWARD COBLE, North Carolina 

JOHN J. DUNCAN, JR., Tennessee 

WAYNE T. GILCHREST, Maryland 

VERNON J. EHLERS, Michigan 

STEVEN C. LATOURETTE, Ohio 

RICHARD H. BAKER, Louisiana 

FRANK A. LOBIONDO, New Jersey 

JERRY MORAN, Kansas 

GARY G. MILLER, California 

ROBIN HAYES, North Carolina 

HENRY E. BROWN, JR., South Carolina 

TIMOTHY V. JOHNSON, Illinois 

TODD RUSSELL PLATTS, Pennsylvania 

SAM GRAVES, Missouri 

BILL SHUSTER, Pennsylvania 

JOHN BOOZMAN, Arkansas 

SHELLEY MOORE CAPITO, West Virginia 

JIM GERLACH, Pennsylvania 

MARIO DIAZ-BALART, Florida 

CHARLES W. DENT, Pennsylvania 

TED POE, Texas 

DAVID G. REICHERT, Washington 

CONNIE MACK, Florida 

JOHN R. ‘RANDY’ KUHL, JR., New York 

LYNN A WESTMORELAND, Georgia 

CHARLES W. BOUSTANY, JR., Louisiana 

JEAN SCHMIDT, Ohio 

CANDICE S. MILLER, Michigan 

THELMA D. DRAKE, Virginia 

MARY FALLIN, Oklahoma 

VERN BUCHANAN, Florida 

(II)

SUBCOMMITTEE ON ECONOMIC DEVELOPMENT, PUBLIC BUILDINGS AND EMERGENCY

MANAGEMENT

ELEANOR HOLMES NORTON, District of Columbia, Chairwoman 

MICHAEL H. MICHAUD, Maine 

JASON ALTMIRE, Pennsylvania 

MICHAEL A. ARCURI, New York 

CHRISTOPHER P. CARNEY, Pennsylvania 

TIMOTHY J. WALZ, Minnesota 

STEVE COHEN, Tennessee 

JAMES L. OBERSTAR, Minnesota 

(Ex Officio) 

SAM GRAVES, Missouri 

BILL SHUSTER, Pennsylvania 

SHELLEY MOORE CAPITO, West Virginia 

CHARLES W. DENT, Pennsylvania 

JOHN R. ‘RANDY’ KUHL, JR., New York 

JOHN L. MICA, Florida 

(Ex Officio) 

(III)

(V)

CONTENTS Page

Summary of Subject Matter .................................................................................... vi 

TESTIMONY 

Carney, James D., Acting President, United Government Security Officers 

of America ............................................................................................................. 35

Faye, Assane B., Washington, D.C. District Director, Security, Police and 

Fire Professionals of America International Union ........................................... 35

Lewis, Ashley J., Director, Office of Acquisition Policy and Oversight, U.S. 

Immigration and Customs Enforcement, U.S. Department of Homeland Security ..................................................................................................................... 58

Messner, Ann Marie, Former Chief Operating Officer and General Manager, 

Startech International Security .......................................................................... 5

Montgomery, Latanya, Former Startech International Security Guard ............. 35

Schenkel, Gary W., Director, Federal Protective Service, U.S. Department 

of Homeland Security .......................................................................................... 58

Skinner, Hon. Richard L., Inspector General, U.S. Department of Homeland 

Security ................................................................................................................. 58

Smith, Brian, Former Startech International Security Guard ............................ 35

Waites, Weldon, Vice President for Business Development, Startech International Security .................................................................................................. 5

PREPARED STATEMENT SUBMITTED BY MEMBERS OF CONGRESS 

Norton, Hon. Eleanor Holmes, of the District of Columbia ................................. 67

Oberstar, Hon. James L., of Minnesota ................................................................. 69

Walz, Hon. Timothy J., of Minnesota ..................................................................... 73

PREPARED STATEMENTS SUBMITTED BY WITNESSES 

Carney, James D. ..................................................................................................... 74

Faye, Assane ............................................................................................................ 100

Lewis, Ashley J. ....................................................................................................... 106

Messner, Ann Marie ................................................................................................ 111

Montgomery, Latanya ............................................................................................. 125

Schenkel, Gary W. ................................................................................................... 129

Skinner, Richard L. ................................................................................................. 167

Smith, Brian ............................................................................................................. 182

Waites, Weldon D. ................................................................................................... 185

SUBMISSIONS FOR THE RECORD 

Schenkel, Gary W., Director, Federal Protective Service, U.S. Department 

of Homeland Security, response to questions from the Subcommittee ............ 138

Skinner, Hon. Richard L., Inspector General, U.S. Department of Homeland 

Security, response to questions from the Subcommittee .................................. 174

Waites, Weldon, Vice President for Business Development, Startech International Security, response to questions from the Subcommittee ................... 188

ADDITIONS TO THE RECORD 

National Association of Special Police and Security Officers, Caleb A. GrayBurriss, written testimony .................................................................................. 194

vi


36684.001
vii


36684.002
viii


36684.003
ix


36684.004
x


36684.005
xi


36684.006
xii


36684.007
xiii


36684.008
(1)

HEARING ON THE RESPONSIBILITY OF THE 

DEPARTMENT OF HOMELAND SECURITY 

AND THE FEDERAL PROTECTIVE SERVICE 

TO ENSURE CONTRACT GUARDS PROTECT 

FEDERAL EMPLOYEES AND THEIR WORKPLACES 

Thursday, June 21, 2007

HOUSE OF REPRESENTATIVES

COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE, 

SUBCOMMITTEE ON ECONOMIC DEVELOPMENT, PUBLIC

BUILDINGS, AND EMERGENCY MANAGEMENT, 

Washington, DC. 

The Subcommittee met, pursuant to call, at 10:17 a.m., in Room 

2167, Rayburn House Office Building, the Honorable Eleanor 

Holmes Norton [Chairwoman of the Subcommittee] presiding. 

Ms. NORTON. We are pleased to welcome today’s witnesses and 

our visitors to this hearing entitled The Responsibility of the Department of Homeland Security and the Federal Protective Service 

to Ensure Contract Guards Protect Federal Employees and Federal 

Facilities. 

This hearing was made necessary because of evidence and serious allegations of wrongdoing, chaos, and irregularities in the contracting and employment of private security guards who protect 

Federal employees and facilities. 

Contract security guards are a critical component of the Federal 

strategy to protect the safety and security of Federal employees 

where they work, and many Federal facilities as well. In the Federal sector, security guards, many of whom carry guns, are as essential to protecting Federal employees as members of the Federal 

Protective Service. Security guards are a necessary supplement to, 

although not a replacement, for public law enforcement officers, 

whether local police officers or FPS law enforcement officers and 

others engaged in counter-terrorism activities. 

In the post-9/11 Federal environment, the Committee and this 

Subcommittee are mindful that security guards have neither police 

powers nor the extensive training of sworn peace officers, and that 

they cannot make arrests. Because of 9/11, the FPS was transferred to the Department of Homeland Security, yet we have seen 

the Federal growth of contract security guards, who do not have police powers or arrest powers, go to 15,000, while FPS has been 

slashed by hundreds of officers, down from an authorized number 

2

of 1,450 to between 1,100 and 1,150, with a goal of getting down 

to 950. 

The risk to security posed by this downsizing of the FPS and the 

conversion of police officers to security inspectors has led to action 

by both our Committee and the Homeland Security Committee, on 

which I also serve. 

Today we will learn about the work of security guards nationwide. Recently, STARTECH failed to pay 600 D.C.-area Federal security guards or to make other important benefit payments to pensions, health benefits and the like. This Committee intervened 

when inaction by the FPS and the Immigration and Customs Enforcement, the division of DHS where FPS is placed, was reported 

to us. Ultimately, I was unable to get direct intervention by FPS 

Chief Gary Schenkel and had to call Deputy Secretary Michael 

Jackson to get any action. 

Today we will hear firsthand about the effect on the employees 

and the Federal agencies involved. We are indebted to the contract 

security officers, most of whom continue to come to work to protect 

Federal workers, the visiting public, and their work sites. However, 

as the shooting incident between Department of Defense contract 

guards at Walter Reed yesterday highlights, concerns about the 

management, oversight, and professionalism of some Federal contract guards is widespread. 

Apparently, STARTECH experienced serious financial problems 

during the past six months. However, we have been unable to find 

that FPS or DHS took action or interceded until security guard 

payroll checks bounced three times. Yet, a year-end audit by the 

Defense Contract Audit Agency in 2005 concluded that, and I am 

quoting: ‘‘STARTECH’s accounting system is nonexistent for Government contract accounting purposes.’’ Why was the red flag not 

raised then? If FPS forwarded funds to STARTECH to pay its personnel, the Subcommittee would be concerned about possible misuse of Federal funds. 

In preparing for this hearing, the Subcommittee discovered that 

although STARTECH changed ownership two years ago, one of the 

new owners had served a five-year jail sentence for money laundering and fraud. Weldon Waites, the Vice President for Business 

Development at STARTECH, who, with his wife Sharon, is a majority owner of STARTECH, has agreed to give his own accounting 

of STARTECH, and we thank him for coming. 

The Federal Acquisition Regulations require that contracts be 

awarded only to contractors who are ‘‘capable, responsible, and ethical.’’ It is the responsibility of the FPS and DHS to make sure that 

these contractors are capable, responsible, and ethical both at the 

start and throughout the life of the contract, and that they treat 

their personnel, including guards, with the professionalism and respect they have earned. 

FPS inspectors were required to visit STARTECH guards at least 

weekly, yet our Committee learned nothing of the unpaid guards 

who were protecting Federal buildings until a contract guard 

union, the United Government Security Officers of America, alerted 

us. We continue to find the Administration’s plan to reduce the 

number of FPS officers from 1250 to 950 entirely unacceptable. If 

anything, failures like those uncovered by our investigation call for 

3

the strengthening of the Federal law enforcement and security 

guards. 

If the STARTECH officers had decided that they could no longer 

protect the Federal workforce and buildings without pay, the FPS 

contingency plan was to staff the security posts with FPS officers, 

many of whom DHS hopes to eliminate as part of FPS restructuring. 

Contract security guards are charged with protecting some of our 

most secure facilities, including military installations, nuclear 

power plants, and classified sites. They are tasked with preserving 

the lives and safety of our judges and other Federal employees. 

Had it not been for the loyalty and dedication of the contract security officers to their posts and their profession, the security and 

safety of Federal workers, their workplaces, and the visiting public 

would have been at risk after STARTECH defaulted on its payroll. 

On behalf of the Federal Government and Federal employees, I 

want to express our gratitude to the guards who remained on duty, 

despite assuredly personal hardship. We commend them and our 

other witnesses for coming forward and allowing our Subcommittee 

to get to the bottom of what appears to be an FPS contract guard 

program that needs top-to-bottom reform. 

I would like to ask our Ranking Member, Mr. Graves, if he has 

any opening remarks. 

Mr. GRAVES. Thank you, Madam Chair. I want to also thank all 

of our witnesses for being here today. 

I do appreciate your coming out. I am looking forward to hearing 

about the Federal Protective Service and its role in ensuring that 

our Federal buildings remain protected. 

This is the second hearing I think we have had on FPS this Congress, and I hope today’s hearing is going to clarify some of the 

process FPS uses to monitor security guard contracts and help assure this Committee that our Federal buildings and employees who 

occupy them are kept safe. 

I would also like to thank Inspector General Skinner for being 

here today. Mr. Skinner will testify on the IG’s role in evaluating 

FPS’s oversight on the contract guard program. 

We will also hear from representatives of STARTECH who will 

address the allegations against the company, its recent loss of several security guard contracts, and its affect on employees of the 

company who are on the front line when it comes to protecting our 

Government buildings. I look forward to hearing the testimony 

from officers and employees at the company this morning. 

The main responsibility of FPS is to protect Federal office buildings and its employees. It is this Committee’s job to see that this 

happens. We have shown our strong support for the inclusion of 

physical security measures in the construction of Federal buildings 

and courthouses across the Country. Additionally, over the past 

several Congresses, we have held hearings and marked up legislation to upgrade FPS and address the funding shortfall in its operating budget. 

We are here today to see that the appropriate oversight tools are 

in place so that FPS can accurately monitor all of its security 

guard contracts. As the Ranking Member of this Subcommittee 

that oversees Federal buildings, I am greatly interested in their seVerDate 0ct 09 2002 17:12 Feb 22, 2008 Jkt 000000 PO 00000 Frm 00017 Fmt 6633 Sfmt 6633 P:\DOCS\36684 HTRANS1 PsN: JASON
4

curity and the security of the Government workforce. We must be 

certain that those who are charged with protecting Federal buildings are carrying out their responsibilities as spelled out in their 

contract. Anything else would be a disservice to those who work in 

our over 9,000 Federal buildings across the Country. 

Again, I want to thank all of our witnesses for being here and 

look forward to the testimony. 

Thank you, Madam Chair. 

Ms. NORTON. Mr. Carney, do you have any opening statement? 

Mr. CARNEY OF PENNSYLVANIA. Yes, I do. Thank you, Madam 

Chairwoman. I want to thank you for holding this hearing today. 

We all know that the protection of the Federal workforce is extremely important, especially in light of yesterday’s events at Walter Reed. News reports out of Walter Reed regarding the shooting 

there are extremely disturbing. 

Madam Chairwoman, I know you share my sentiments about 

that. 

Yesterday’s incident begs the question of whether we should be 

augmenting our security forces at all Federal and military installations, as opposed to cutting them. Employing private security forces 

from private entities must be scrutinized. I don’t think anybody 

would disagree with that. The brave men and women that work in 

the service of our Nation deserve the peace of mind that we are 

doing everything possible to ensure their safety while at work. 

Frankly, I believe that the wounded men and women at Walter 

Reed and other places would rest easier knowing that they have 

military police as well as private security guards guarding them. 

As somebody who still wears a uniform, I would feel better myself 

about that. Not to suggest anything about the private security 

folks, but yesterday’s incident was troubling. It brings to the front 

questions about the screening process, especially about the mental 

health screening process, that security folks undergo. 

I do recognize that the vast, vast majority of security officers are 

dedicated, trained professionals. We should never cease in our vigilance to train and recruit the very best for the job. An incident like 

yesterday is one too many when it comes to guarding our Federal 

workforce and the brave men and women who fought and are 

wounded on behalf of this Nation. 

Again, Madam Chairwoman, I thank you for holding the hearing 

today. I look forward to the testimony. Thank you very much. 

Ms. NORTON. I understand Mr. Kuhl does not have an opening 

statement, so we have no more opening statements. 

I would like to invite our first panel to begin. I am pleased to 

welcome Weldon Waites, who is the Vice President for Business 

Development at STARTECH International Security, which is based 

in Columbia, South Carolina; and Ann Marie Messner, who is the 

Former Chief Operating Officer and General Manager of 

STARTECH International Security. She is now in Waynesboro, 

Pennsylvania. 

We thank you both for coming. Let us begin with Mr. Waites. 

5

TESTIMONY OF WELDON WAITES, VICE PRESIDENT FOR BUSINESS DEVELOPMENT, STARTECH INTERNATIONAL SECURITY; ANN MARIE MESSNER, FORMER CHIEF OPERATING 

OFFICER AND GENERAL MANAGER, STARTECH INTERNATIONAL SECURITY 

Mr. WAITES. Good morning, Madam Chair. I am Weldon Waites. 

I appreciate the opportunity to come here and visit with you and 

tell you my version of what happened that could help prevent this 

from happening in the future. Thank you again for inviting me 

again. My experience and thoughts regarding this topic I hope to 

share. I can give you only limited perspective, but perhaps it can 

be helpful, and offer insight into the limitations and challenges of 

a small contract company. 

Several years ago,—a few years back, matter of fact—two retired 

Army officers, Marion Pinckney and Randall Ford, formed 

STARTECH Security, known as Systems Training and Resource 

Technologies. That was approximately 18 years ago. In the early 

years, STARTECH experienced steady moderate growth, until they 

entered into the 8(a) setaside business program and really escalated their growth after the events of 9/11. 

In the fall of 2004, I was asked by Mr. Pinckney and Mr. Ford 

if I would assist them as they attempted to reorganize and modernize the company’s administrative policies and procedures. I did 

that for several months for no pay, just in an effort to help them. 

Shortly after our initial discussion, Mr. Pinckney and Mr. Ford 

both were diagnosed with cancer. It was during that time that both 

owners suggested to me that it would be interesting if I could purchase the shares of outstanding stock with STARTECH. I was interested but very reluctant, as I had no knowledge of the security 

business or Government contracting, plus the fact that I simply 

didn’t have the money. 

Anticipating my dilemma, they provided me with a contact at 

Bank of America who agreed to entertain the idea of my family 

purchasing STARTECH, and the underwriting process began. During the underwriting process, Mr. Pinckney died and left his stock 

to his wife. 

After Mr. Pinckney’s death and Mr. Ford’s health issues slowed 

the process and it took over eight months to finalize the sale of 

STARTECH, which closed in late May of 2005. Mr. Ford insisted 

on keeping 25 percent of the stock, as well as an employment 

agreement that provided him office headquarters and an annual 

salary of $125,000 a year. 

I might add, Madam Chairman, that STARTECH went through 

an extensive audit at that time and audited our accounts receivable. As we plowed through the due diligence prospects, it became 

obvious that administrative and operating changes were necessary 

if STARTECH were to remain competitive in the Federal Government showplace. 

In particular, we discovered dozens of invoices that company 

records showed unpaid. We also discovered invoices that had not 

even been prepared. At that time, we also did our post-due diligence work and acquired the services of a contract law firm called 

Whitwire and Garvin to do a report for us to let us know exactly 

6

how we were to operate a business that we knew not too much 

about. 

We received the report, and it was at that point in time when 

my wife, Sharon Waites, was appointed President and CEO, and I 

remained in the background as a business development member of 

the STARTECH family. 

I will also admit to you that the initial reason for this report was 

if we ever incurred any secured contracts, what would my role, 

based on my past record, be, and would it be possible for me to obtain a security clearance. The reports, which I will be glad to offer, 

all suggested that it was perfectly permissible for me to work, and 

I could even hold an office, although I elected not to. In regard to the Bank of America loan, they granted us a $12 

million facility comprised of a 5-year term loan with a borrowing 

base that offered us about two months of operating capital after the 

purchase price was considered. It was during that time that the 

Government payment process began to slow down, thereby causing 

our borrowing base to shrink. Our eligible receivables aged more 

than 90 days, thereby reducing our operating capital. 

As a result, Bank of America called our loan and we had to seek 

a new lending partner. It was at that time, through our personal 

funds, we had to make the first company payroll, which was over 

$400,000, that we put into the company to cover a payroll during 

that ugly period of exiting Bank of America and moving on to our 

next lender. 

Please note also, Madam Chair, that during the same period of 

time, Region 11 experienced several administrative changes. This 

meant that we worked with three contracting officers, two interim 

contracting officers, several contracting specialists, and the facility 

was moved from the Navy Yard to downtown. In other words, we 

went from a very good contracting officer to one mediocre to two 

that I didn’t even know and one that was doing a good job but he 

was going to retire in eight months. 

After Bank of America called our loan, we interviewed several 

banks, all of which complete internal audits as part of their due 

diligence. We passed every audit. We were approved for a $10 million facility this time that included the unpaid balance for the purchase price and 45 days of working capital. The experience with 

First Horizon, the second bank, became quite similar to that of 

Bank of America. This time it took only six months for our borrowing base to shrink so that there was no availability for cash to 

cover our 90-day accounts receivable, which were increasingly difficult to collect and once again reduced our borrowing availability. 

First Horizon did the same thing, they called our loan two weeks 

before Christmas of 2006. Having been through this horrible experience one time before, we knew that the process to secure new 

funding would be long and tedious and expensive due to attorneys’ 

fees, accounting fees, and fees associated with bank workout specialists. We kept all options open on funding, this time selecting 

Marquette Commercial Financing, a factoring company who would 

purchase outstanding invoices. 

I might also add that at that time STARTECH became so desperate that we sought the services of two of your fellow congressmen to initiate a congressional investigation to find out what it 

7

would take to get us paid, because if we got paid, we wouldn’t be 

having this problem today. 

As we looked for new financing, as I said, we got new financing 

from Marquette, and two of your colleagues helped us. After a complete review of our accounts receivable, they initiated a congressional inquiry on the outstanding receivables. 

In mid-March of 2006, during Marquette’s post-audit process, it 

was discovered that a few invoices that had been certified by a contracting officer from Department of Homeland Security Region 11 

had actually been paid. I have the e-mail track that shows the last 

day that this loan was closed that the invoices were not only alive, 

but they had not been paid. Some people contend that, but I will 

be glad to furnish this and any other information that you want, 

including a full accounting review that we have undertook on our 

own. 

About the same time, I went to the hospital for some heart surgery and I was out of work for about a three-week period of time, 

and during that period of time I got some repercussions from that 

and my brother died, so I was out of the office for about three 

weeks during that period of time. After Marquette called the loan, 

they came to meet with us, my wife and I, and we discussed the 

situation that caused the alarm of the invoices that they had 

factored that had been paid, that the Government certified that 

had been paid. We left the meeting with an understanding that 

they were not in the business of closing down small businesses and 

they would work with us. 

Shortly after that meeting—matter of fact, it was on a Wednesday—on a Thursday, they called us and said that Marquette had 

made a decision to call our loan, and at that moment they stopped 

every dime that was flowing from the Government to STARTECH. 

They took $5 million of accounts receivable that we could have 

used to operate on and applied it to the loan and basically froze 

us out. At that time, through additional loans from my family and 

my wife, we put in another $2 million and made two more or three 

more payrolls, with the anticipation that we would have a new 

funding arrangement within days. 

As you might well imagine, May 2007 was painful, stressful, intense to me and my family. We borrowed every cent that we could 

borrow. We mortgaged our home. We did everything we could to 

keep STARTECH alive. 

I deeply regret the failure of STARTECH on June 1st and the resulting distress to so many of our employees that I too learned to 

love and respect. There is no doubt in my mind that I did everything absolutely possible to save it. Perhaps it is merely ironic, but 

right now, today, I am negotiating to sell what remains of 

STARTECH, and preliminary figures provided by an independent 

CPA firm suggest that if this sale were to go through, or if the Government paid its invoices, there would be enough to pay all of the 

employees first, all of the loan with Marquette, and any other expenses that we have. 

STARTECH was never bankrupt. I had a meeting with our CPAs 

yesterday. It never was bankrupt. We had money that we were expecting from the Government that just has not come. That is going 

8

to be debatable, and I would be glad to furnish you accounting 

records and anything you want to clear this matter. 

I appreciate, Madam Chairman, the opportunity to let me make 

this statement, and I look forward to entertaining any questions 

that I can give you. 

Ms. NORTON. Thank you very much, Mr. Waites. 

Ms. Messner? 

Ms. MESSNER. Good morning, Chairwoman Norton, Ranking 

Member Graves, and distinguished Members of the Committee. 

Thank you for the opportunity to provide testimony on the protection of Federal employees and their workplaces. 

My comments this morning will be brief. However, I have provided a written statement for the record which cites specific examples and includes supporting documentation. 

In February of 1990, I began my career as a contract guard as 

part of a team that protected a Level IV Federal facility. Sixteen 

years later, STARTECH was replaced by another company through 

the procurement process. 

I elected to remain with STARTECH and was moved to the corporate headquarters as an administrative assistant. At the time of 

my resignation less than two years later, I was Chief Operating Officer and General Manager. 

Although my dealing with the Federal Protective Service was 

limited to the last few months of my tenure with STARTECH, my 

experience in the contract security industry is extensive. Please 

take that into consideration when determining the value of my testimony. 

The mission of contract guards and the Federal Protective Service is one and the same, that is, the protection of Federal facilities 

and occupants. The means by which that mission is accomplished 

differs. Contract guards protect through prevention by detection, 

providing services such as access control, package inspection, and 

identification of potential hazards. The Federal Protective Service 

protects through regulation, inspection, investigation, and enforcement. They are the primary emergency responder called for by contract guards. Contract guards and the Federal Protective Service 

are not mutually exclusive; they are separate entities on a single 

mission, and the mission is clear: protect the assets of the United 

States Government. 

The true value of security is illusive and is predicated upon what 

didn’t happen. In order to prove the value of security, you must 

prove a negative. I don’t have to do that in this case. 

STARTECH was incorporated in the District of Columbia in 

April 1989. Weldon Waites purchased 75 percent of the company in 

May 2005. In tax year 2006, five contracts with the Department of 

Homeland Security generated over $13 million, roughly half the 

company’s annual revenue. Yet, there was not enough money to 

fund payroll on more than one occasion. 

It is highly likely, and you have already heard some form of testimony in which the demise of STARTECH is at least in part due 

to the failure of DHS to pay valid invoices in a timely manner. I 

do not believe that is the case now and hasn’t been since the 1st 

of the fiscal year. There have been some occasional delays in payVerDate 0ct 09 2002 17:12 Feb 22, 2008 Jkt 000000 PO 00000 Frm 00022 Fmt 6633 Sfmt 6633 P:\DOCS\36684 HTRANS1 PsN: JASON
9

ments recently, but certainly nothing that would jeopardize an otherwise viable company. 

My theory of the demise of STARTECH is in stark contrast to 

any attempt to blame late payments from DHS or anyone else. It 

is my considered opinion that STARTECH died at the hands of its 

controlling owner, Mr. Weldon Waites. 

In September 2005, the DCAA prepared an audit report citing 

the identification of ‘‘nine significant deficiencies in the contractor’s 

accounting system.’’ Two years later, I could find no evidence of 

any progress on the correction of any deficiency noted in that report. 

In June 2006, financier number one, the Bank of America, issued 

a default notice to STARTECH. In addition to several areas of noncompliance with the terms and conditions of that loan, the default 

notice was caused by Weldon Waites’ failure to report a prior criminal history, including an indictment for 29 counts of conspiracy, 

bank fraud, false statements, and money laundering. 

In December, financier number two, First Horizon, issued a notice of default for, among other things, the failure of the financial 

statements to be complete and correct in all material aspects. Within two weeks of signing an agreement to provide funding, financier 

three, Marquette Commercial Finance, identified several DHS invoices that had been sold to them but had already been paid directly to STARTECH. Marquette was a factoring company. Payment for invoices was an outright sale to Marquette, it was not a 

loan. In essence, STARTECH was paid for the same invoices twice. 

Those invoices totaled over $1.8 million. 

The fruitless search for finance began again. Multiple financiers 

were contacted; multiple financial consultants were retained or 

continued; and multiple accounts receivable reports were identified. 

Needless to say, any financier who conducted a due diligent audit 

of STARTECH quickly realized the true financial state of the company and withdrew any offers made. 

The company’s accounts payable presented another challenge. 

STARTECH has not paid most of its considerable expenses since 

prior to January of 2007. Weldon Waites’ personal expenses were 

paid regularly. These expenses include mortgages for condominiums in Washington, D.C. and Myrtle Beach, South Carolina. 

Other South Carolina expenses, like parking spaces at the Gamecock Pavilion and storage facilities, which reportedly include a slip 

for his 46-foot boat, were paid for by STARTECH. 

The May 4th payroll was late. Weldon Waites continuously asserted the funds were available, but they were not. Most of the 

paychecks issued May 18th and all of them issued May 24th were 

returned due to insufficient funds. On May 31st, DHS sent a notice 

of post-vacancies caused by the payroll issues in the morning and 

a show cause notice in the afternoon. On June the 1st I responded 

to the show cause notice. Part of my June 1st response to that notice included the lines: ‘‘It is my opinion that STARTECH is not 

only financial bankrupt, but morally and ethically as well. It is in 

the best interest of the Federal Government to revoke all 

STARTECH contracts and to immediately issue them to another 

reliable contractor.’’ All five DHS contracts were contacted for 

cause on June the 3rd. 

10

Five hundred and thirty-three STARTECH employees still have 

not been paid, most since May the 4th. Since January of 2007, payroll deductions made for employee benefits, including health insurance, 401(k), pension, and union dues, have not been forwarded to 

the providers of those benefits. 

The stated purpose of this hearing is the responsibility of the Department of Homeland Security and the Federal Protective Service 

to ensure contract guards protect Federal employees and their 

workplaces. I respectfully submit to you that the Federal Protective 

Service cannot possibly protect 8900 Federal buildings with 1200 

officers. The people that are protecting you, that are standing post, 

are contract guards, 15,000 strong. The contract guard program absolutely needs tighter regulation, advanced training, more inspections, and follow-through on any sanctions levied. 

Anyone who is in the position of controlling the work of contract 

guards or handling any of the money associated with the guard 

contract must be subjected to at least the same level of background 

check as the guards who work for them. Annual financial audits 

will keep the money where it is needed and where it was intended 

to go. 

Weldon Waites sacrificed his company, his employees, and your 

security on the alter of his greed. I beg you to ensure that this 

never happens again. I have been honored by the opportunity you 

have given me to speak before you today, and I thank you from the 

bottom of my heart. I would be happy to answer any questions. 

Ms. NORTON. Thank you, Ms. Messner. 

Actually, I want to thank you both and say it took some courage 

for both of you to come forward, Mr. Waites to not simply be accused, but to come forward and to give his own accounting, and certainly Ms. Messner, who has played a valuable role, in her terms, 

at least, as a whistleblower. I think she has certainly uncovered 

important issues for Federal contracting, and not alone for this 

particular contractor 

First let us establish, Mr. Waites, whether you are still in business. Do you have any contracts? Are you technically insolvent? 

Mr. WAITES. Madam Chair, the CPAs that were working with us 

had a debate with our attorneys yesterday, and I understand that 

there are three definitions of insolvent. If it is the one that means 

that you have no money in the bank, then absolutely we are. But 

based on our accounts receivable, we are not. 

Ms. NORTON. Are those accounts receivable entirely from the 

Federal Government? 

Mr. WAITES. No, ma’am. 

Ms. NORTON. To whom else do you provide services? 

Mr. WAITES. We had some commercial accounts also. 

Ms. NORTON. Were those employees paid over the past several 

weeks? 

Mr. WAITES. To my knowledge, none of the employees have been 

paid since the first payroll that was missed after we personally 

made the three payrolls prior to that. 

Ms. NORTON. None of the employees of the Federal Government 

or your private contracting services have been paid? 

Mr. WAITES. No, ma’am, not since the first payroll that we 

missed a portion of. 

11

Ms. NORTON. Well, you have been paid, have you not? 

Mr. WAITES. I have not. 

Ms. NORTON. You have continued to pay on your condominiums 

here and in South Carolina and your other obligations? 

Mr. WAITES. I would like to address the Committee on that. I 

mentioned in my opening statement that I worked for Mr. Pinckney and Mr. Ford for about a year before we had the opportunity 

to purchase STARTECH, and it was in my employment agreement, 

since I lived elsewhere, that they would provide me a place to stay. 

So we have had this for my entire stay here, which has been over 

three years. It hasn’t been something that just recently happened. 

Last year, I made 48 trips, most of which lasted three to five days, 

so I am here a lot, and the condo payment was part of my compensation package. As far as the Myrtle Beach condo, we have a 

presence with an original thought to move the corporate office one 

day, and we are going after the business in South Carolina that requires a South Carolina presence, and in that regard we paid the 

entire down payment out of our own personal funds back in November—I mean, October, excuse me, late October, and since we 

were going to maintain an office on the coast of South Carolina, it 

was our decision, ,along with counsel and CPAs, that we should invest, rather than pay rent. 

Ms. NORTON. So you believe that, in 2006, when you and your wife registered a deed in North Myrtle Beach for a $530,000 

beachfront condominium, that was that was necessary for your 

business? That was 2006. 

Mr. WAITES. Yes. I think it was in November of 2006. As I said, 

we made the down payment of $125,000 for this and talked to our 

accountants about it to find out if this is the best way for us to develop business in South Carolina. So that was the decision. By the 

way, I might add that——

Ms. NORTON. Well, excuse me—oh, go ahead. 

Mr. WAITES. I might add that I don’t think but one or two payments have been made by STARTECH on that condo, because it is 

now in foreclosure. 

Ms. NORTON. Oh, that too is in foreclosure now. 

Mr. WAITES. Yes, ma’am. 

Ms. NORTON. That same month, the same month that you were 

buying the North Myrtle Beach property, you say in your own testimony that First Horizon called its loan because of STARTECH’s financial position. Even though they were calling its loan, you 

thought you could invest in beachfront property at the time? 

Mr. WAITES. That is a two-way street for STARTECH. In order 

for us to maintain stability, we had to grow, and we had the right 

people in place in South Carolina to develop business to——

Ms. NORTON. In beachfront property? 

Mr. WAITES. Beg your pardon? 

Ms. NORTON. You had the right people in South Carolina in 

beachfront property? 

Mr. WAITES. Well——

Ms. NORTON. I mean, you had no office there at the time. 

Mr. WAITES. We did not have an office——

Ms. NORTON. So why does the beachfront property amount to 

having people in place to set up a headquarters in South Carolina? 

12

Mr. WAITES. The prospects that we were going after in South 

Carolina required, just like with D.C., through the procurement 

process, that you have a presence or have office space in South 

Carolina or near the properties that we were trying to get contracts 

for. So it served as an office and a condo. Matter of fact, I have 

been to it three times. 

Ms. NORTON. Your account of not getting paid by the Federal 

Government is something this Committee takes very seriously. 

This is not the first time we have heard it. In my opening statement I indicated that I believed that Federal contracting needs topto-bottom reform, and it is clear to me that that is the case. However, Ms. Messner has testified that much of your blues and problems predated this six-month period that we are particularly focused on; that many of the problems that you speak of date back 

to early this year. 

Are you saying that your company has been in continued difficulty and unable to perform its services without taking extraordinary financial steps, some of which appear to have been marginal? Is that the way you stayed in business? 

Mr. WAITES. As I said in my opening remarks, looking back, I 

feel like STARTECH was underfunded from the day that we decided to make the purchase. 

Ms. NORTON. Are you saying undercapitalized? 

Mr. WAITES. Undercapitalized, because the agreement was to furnish the acquisition cost in the loan. Now, we made that loan every 

month and was current with it for 12 months, and the reason that 

Ms. Messner stated that Bank of America called that loan is not 

correct, about my record. They put that in their complaint, but it 

was decided that it was a covenant violation and our ratios were 

not what they were supposed to be; and we dispelled that argument in the negotiations with them right up front. 

Ms. NORTON. Mr. Waites, let me move on to what immediately 

brings us here. During the past six months, tens of thousands of 

dollars in employee contributions to 401(k)s, health care benefit 

plans, union dues, pensions were withheld from paychecks, but apparently never passed along to the appropriate benefit administrators. What happened to these funds? 

Mr. WAITES. I would like to expand on that a little bit, if I could, 

because I had a meeting on Tuesday in Baltimore with the Department of Labor to discuss these very issues. You have to keep in 

mind that since Marquette called our loan, we were not afforded 

one cent to operate on. They took all of the Government payments, 

which have now started to come forward, and applied them to our 

loan. 

Ms. NORTON. Well, did you inform the Federal Protective Service 

or anyone in the Department of Homeland Security that all of 

these funds were being taken for a loan and that you had no funds 

to pay for these benefits which are required by Federal law? And 

what did you do with the funds? Who took the funds out of the 

checks? 

Mr. WAITES. We never got the funds. 

Ms. NORTON. For six months you never got the funds from the 

Department of Homeland Security? You didn’t pay for the month 

of June or much of the month of May or June, but what about beVerDate 0ct 09 2002 17:12 Feb 22, 2008 Jkt 000000 PO 00000 Frm 00026 Fmt 6633 Sfmt 6633 P:\DOCS\36684 HTRANS1 PsN: JASON
13

fore that time, when apparently you were paying, at least some of 

the time, for Federal contract employees? What happened to the 

funds for the benefit payments that have not yet been received for 

union dues, 401(k)s and the like? 

Mr. WAITES. From the time that First Horizon called our loan, 

they did a similar thing that Marquette did, in that they kept the 

funds and they worked with us——

Ms. NORTON. So you are saying that though these funds were 

withheld from employees, they went to Horizon? 

Mr. WAITES. I would like for you to hear me out on this. The 

funds during the period of time that First Horizon called our loan, 

naturally, they had an assignment of claims on it, so they held the 

funds. At that time, I sent a variety of e-mails and was in constant 

contact with the workout person that we were dealing with employee benefits. So sometimes they would send the net amount to 

the payroll and other times they would send the entire amount, 

and when they were sent, they were wired directly to the thirdparty administrator who paid the benefits, and that is why there 

it is sort of a gap in the way they were paid, because we were at 

the mercy of the bank and they paid basically what they wanted 

to. 

Ms. NORTON. So it’s the bank’s fault that these employees have 

not received their benefit plans—union dues, 401(k)s—because you 

turned all of the funds over to the bank to meet a loan. And you 

did not use any of these funds for any other purpose? 

Mr. WAITES. No, ma’am, we did not. In fact, the entire——

Ms. NORTON. Ms. Messner, you were sitting right there. Is that 

your view of how these funds were handled? 

Ms. MESSNER. No, ma’am, it is not. In the transference between 

Bank of America and First Horizon, in about July or August of 

2006, Bank of America had an escrow account set up for employee 

benefits. When it switched over to First Horizon, that escrow account was not set up. When the lady who did the payroll would finish her payroll, she would do a status sheet that would say this 

much for payroll, this much for taxes, this much for garnishments, 

and this much for employee benefits. 

Every week, before payroll went, either I or Ms. Case, the payroll 

lady, would speak to Mr. Waites about it. From about October to 

December it wasn’t paid and every week we were faced with the 

same argument that I don’t know why ADP, the payroll company, 

doesn’t just do it. We explained to him that we had contacted ADP 

on numerous occasions, that ADP would do garnishment taxes and 

payroll only; they wouldn’t do what they determined employee voluntary contributions. 

In about December of 2006, we were $185,000 in arrears on employee benefits. There was a $185,000 check written to the thirdparty administrator, who had basically been floating us a loan for 

that period of time. After that check bounced twice, I believe it was 

a wire, but the money was made good by January. From January 

to present, I have heard we don’t have the money to do it; when 

we get the financing, it will be done; and Ed Riley, the third-party 

administrator, owes me money. This is Mr. Waites telling me, Ed 

Riley owes me money, he can pay it. 

14

Ms. NORTON. That is a pretty factual rendition, as opposed to an 

opinion, Mr. Waites. Do you doubt the accuracy of what you just 

heard? 

Mr. WAITES. Certain things I certainly do disagree with entirely. 

First of all, I took over a company that I really didn’t know at the 

time how they handled their benefits, you know, the benefit payments. So when we found out the way—you can’t find out everything the first day—it was my suggestion that we handle the employee benefits differently. Now, when it comes to Bank of America 

and——

Ms. NORTON. Handle it differently how? 

Mr. WAITES. Well, by setting up a trust account, like she said, 

because the money was never ours. But the point I am trying to 

make is that this was Ms. Messner’s administrative duties to work 

this out. As far as arguing with me, I am going to provide the Committee with records that if I ever got a cent out of any of it or had 

any benefit from it, it will be right there for you. The point is that 

from the Bank of America loan calling up until this date 

STARTECH never had control over like one or two pay periods or 

a month of its accounts receivable; the banks controlled them all. 

I had to beg the banks each week on a payroll——

Ms. NORTON. Mr. Waites, we just heard testimony that the banks 

would not control these benefit payments. And I don’t want to go 

into a who-struck-John here, but it does look like you are saying, 

look, I got a business; I didn’t know how to do the business; I was 

learning on the job how to do business. That is one alibi. The next 

alibi is that it was Ms. Messner’s fault that somehow these benefit 

payments, these 401(k) payments, these health care payments were 

not made. Do you take any responsibility for running this company, 

sir? 

Mr. WAITES. I was always in an advisory capacity. I did the best 

that I could. 

Ms. NORTON. You are the owner of the company. 

Mr. WAITES. No, ma’am, I am not. 

Ms. NORTON. Who owns the company? 

Mr. WAITES. Sharon Waites and Randy Ford. 

Ms. NORTON. So your name is not on any ownership document 

of the company? 

Mr. WAITES. No. 

Ms. NORTON. I am going to have one or two questions before 

going on. 

Is the reason for that your felony conviction? The reason that you 

are not an owner of the company your felony conviction? 

Mr. WAITES. No, it was not. 

Ms. NORTON. What was his conviction in relation to, was it in 

connection to a business that you owned? 

Mr. WAITES. No. 

Ms. NORTON. What was it in connection to, please? 

Mr. WAITES. It was in connection with a land deal that I was in 

with several other people. 

Ms. NORTON. Was your wife on the premises as the sole owner 

of the company and are you not listed as joint owners of the company? 

Mr. WAITES. I am not. 

15

Ms. NORTON. You are not listed as joint owners of the company? 

Mr. WAITES. No. 

Ms. NORTON. Your wife is the sole owner of the company? 

Mr. WAITES. No. She owns 75 percent of the stock and Mr. Ford, 

Randall Ford, owns 25 percent of the stock. 

Ms. NORTON. Who ran the company, your wife? 

Mr. WAITES. Yes. 

Ms. NORTON. She was on the premises, and not you? 

Mr. WAITES. Well, we were both on the premises. 

Ms. NORTON. We ought to have your wife here, then, shouldn’t 

we? Because you are not the owner and you don’t take responsibility here because it is your wife who is the 75 percent owner of 

this company, is that right? 

Mr. WAITES. That is correct. But I do accept full and complete 

responsibility for any errors that we made——

Ms. NORTON. Well, how can you? It is your wife’s responsibility 

if she ran the company and owns the company. 

Mr. WAITES. Well, because she is my wife. 

Ms. NORTON. And why didn’t you ask her to come and testify? 

Is she here? 

Mr. WAITES. No, she is not. 

Ms. NORTON. Well, I don’t understand why you didn’t ask the 

owner of the company. It seems to me, forthright in coming forward 

in the sense that you wanted to take responsibility, but you just 

testified that you are not the one who owns the company and that 

the 75 percent ownership is by someone else. 

Mr. WAITES. Well, the invitation came from you and it asked for 

me. 

Ms. NORTON. Now, is it not true that you were once the owner 

and that the ownership was transferred because of bank involvement? 

Mr. WAITES. I said in my opening statement that the day we 

closed I was the owner. We then sought counsel to find out——

Ms. NORTON. The day you closed what? Excuse me. 

Mr. WAITES. Closed the loan to buy it. We closed the loan in my 

name and Mr. Ford’s name. 

Ms. NORTON. That is when you purchased the company. 

Mr. WAITES. That was the day of the closing. 

Ms. NORTON. And then somebody told you that, with a felony 

conviction, you probably couldn’t get Federal contracts? 

Mr. WAITES. Well, we sought counsel to find out exactly——

Ms. NORTON. And did counsel advise you that, with a felony conviction, you probably couldn’t get Federal contracts? 

Mr. WAITES. That is not exactly what they said. I would be glad 

to provide the Committee with what they said, but that is not exactly what they said. 

Ms. NORTON. Would you both stand? We did not swear witnesses 

in. It doesn’t have anything to do with you. I was not in regular 

order. Would you raise your right hand? 

Do you swear to tell the truth, the whole truth, and nothing but 

the truth? 

[Witnesses answer in the affirmative.] 

Ms. NORTON. Would you sit down? 

16

You have testified that you are not the owner of this company, 

your wife is the owner of this company; that your wife was on the 

premises as often as you; and that you did not run this company. 

Now that you have been sworn, would you like to maintain that 

testimony? 

Mr. WAITES. With the exception of as much as I was. 

Ms. NORTON. How much was she on the premises and how much 

were you on the premises in approximate percentage terms? 

Mr. WAITES. I would say 75/25. 

Ms. NORTON. Was your wife ever in the District of Columbia, 

where this company is registered? 

Mr. WAITES. Yes. 

Ms. NORTON. Seventy-five/twenty-five, I am sorry, who? 

Mr. WAITES. I was on this premises about 75 percent and she 

was on the South Carolina office premise about 75 percent of the 

time. 

Ms. NORTON. Was she in the District of Columbia 75 percent of 

the time? 

Mr. WAITES. No, I would say she was probably in the District of 

Columbia 40 percent of the time. 

Ms. NORTON. How about you, how much of the time were you in 

the District of Columbia? 

Mr. WAITES. Probably 75 percent of the time. 

Ms. NORTON. Let me ask you this, finally, about the employees. 

That is what brought us here, frankly. Did you or anybody on behalf of your company contact the employees who were not paid for 

three weeks and indicate to them anything about why they were 

not being paid or what was going to be done about it? Did you have 

any communication whatsoever with them? 

Mr. WAITES. I probably talked to a couple of hundred that called 

me individually. 

Ms. NORTON. So when they called you individually you talked, 

but you never initiated any conversations with them? 

Mr. WAITES. My conversations have been through the Department of Labor to find the funds——

Ms. NORTON. No, no, no, no. My question has to do with three 

weeks, or about three weeks, when people weren’t being paid. Was 

there any communication from STARTECH—I guess I should say 

from your wife, since she was the owner of the company—to employees concerning the failure to pay people their wages? 

Mr. WAITES. If you are asking did we send out a communication? 

We did not. 

Ms. NORTON. Of any kind? 

Mr. WAITES. I spoke with union leaders and I spoke with key 

people that——

Ms. NORTON. What did you tell the union leaders? 

Mr. WAITES. I told them that we were doing our best to get funds 

to pay the employees. 

Ms. NORTON. Ms. Messner, do you have any comment, before I 

move to Mr. Graves, on the failure to pay employees for—first of 

all, what was the period of time, the exact period of time during 

which employees were not paid? 

Ms. MESSNER. May the 4th paychecks were late, they weren’t actually issued until May the 18th. Excuse me, May the 8th. On May 

17

the 18th, payroll went out, but probably about 75 percent of it was 

returned due to non-sufficient funds. May the 24th was another 

payroll that went out; 100 percent returned due to insufficient 

funds. 

Ms. NORTON. So you are saying checks went out. 

Ms. MESSNER. Yes, ma’am. 

Ms. NORTON.—to employees. 

Ms. MESSNER. Yes, ma’am. 

Ms. NORTON. And that these employees would then go to cash 

them——

Ms. MESSNER. Yes, ma’am 

Ms. NORTON.—and the bank would not cash the check because 

there was not enough money to pay the wage that was recorded on 

the check. 

Ms. MESSNER. Generally what happened, ma’am, if an employee 

deposited at the bank, it would show in their account as available, 

but because the payroll checks at that time were being drawn off 

a South Carolina bank account, the employee’s personal bank 

would pull that money back, after about five or seven days, when 

they figured out that there was no money in the South Carolina account. 

Ms. NORTON. Is this the first time this has happened, Mr. Waites 

and Ms. Messner? 

Mr. WAITES. Yes. 

Ms. NORTON. Ms. Messner, do you know of any other period during which employees were not paid? 

Ms. MESSNER. Payroll has been late a couple of time, especially 

over the last year, but this is the first time it was insufficient 

funds, with the exception of a few—I want to say maybe back in 

March there were a few checks that were written off the South 

Carolina account that bounced, so we had to replace those checks. 

But it wasn’t the entire payroll, it was maybe 10 checks. 

Ms. NORTON. Were employees paid late? 

Ms. MESSNER. Employees were paid late several times. I believe 

the officers can answer that better than I can. 

Ms. NORTON. Thank you. 

Mr. Graves? 

Mr. GRAVES. Thank you, Madam Chairman. 

You still have contracts out there. Are you still providing any security services anywhere? 

Mr. WAITES. No. 

Mr. GRAVES. I am curious as to when your financial problems 

started and through this whole process, at least. Was there ever 

any security gaps that resulted or any performance issues that resulted? That is what concerns me as much as anything else, is, you 

know, obviously, the job is to protect those Federal employees, protect those facilities, and I am worried about security gaps and gaps 

in the performance based on what was supposed to be provided. 

Mr. WAITES. To my knowledge, there were no gaps. 

Mr. GRAVES. Was there ever a time that STARTECH ever failed 

to provide any required security guards? Was there ever a time 

that there was ever any—I am sure when folks aren’t getting paid, 

you know, it gets a little hard for you to show up or even want to 

18

get motivated. Was there any time that you didn’t have guards 

there at any facility? 

Mr. WAITES. I don’t know of any other than in the end, when the 

payroll issues arose. 

Mr. GRAVES. Well, then was there a gap in security levels at that 

time? 

Mr. WAITES. I am not quite sure. I feel certain that there were, 

but I don’t know who they were and how it was covered. But for 

the most part I was told that about 80 percent of the posts were 

covered. 

Mr. GRAVES. I am a little concerned by the comment ‘‘I feel certain.’’ That concerns me a lot, again, because the job is to protect 

those Federal employees in those buildings, and ‘‘I feel certain,’’ 

that concerns me. 

Thanks, Madam Chair. 

Ms. NORTON. Thank you, Mr. Graves. 

Just to follow up one question before I go to the next person, and 

I need to know who the next person is. 

You say 80 percent of the posts were covered? 

Mr. WAITES. I said approximately, and I don’t know that for a 

fact; that was one figure that I——

Ms. NORTON. So you didn’t have any supervisors on site assuring 

that these posts in Federal buildings, which you were hired to keep 

secure, were being covered? 

Mr. WAITES. Well——

Ms. NORTON. I mean, where does your 80 percent figure come 

from? 

Mr. WAITES. I really don’t know where the 80 percent; I saw it 

somewhere as I was talking to the contracting officers or somewhere as we were winding down the——

Ms. NORTON. But you took no responsibility to make sure that 

people were on the job and that they were—you already have said 

you didn’t communicate with them about being paid. You also took 

no responsibility to make sure that they were on the job. 

Mr. WAITES. That is not so. On Thursday, before the contracts 

were pulled on Friday, we had a conference call with FPS. We had 

a company, Wackenhut, and their chief executive officer on the 

phone willing to take over the contracts at that time. 

Ms. NORTON. Just a moment. I am asking now not about willingness to take over the contract. I am asking about what Mr. Graves 

raised, that his greatest concern would be whether or not these 

posts were covered. And you say approximately 80 percent, though 

you have no personal knowledge of that and apparently assigned 

no supervisor of any kind to report to you whether the posts were 

being covered. 

Mr. WAITES. I did not say that. I did talk with all of the site supervisors and went through regular checks with them to find out 

how many guards he had and how many posts that he had covered, 

and we were also prepared to——

Ms. NORTON. Mr. Waites, did anyone do a roll call in your behalf 

during the weeks when these employees went unpaid? A straightforward question. Did anyone take a roll call, come back to you and 

say, Mr. Waites, tell your wife, who is the owner, that this many 

19

people are on the job and this many people are not on the job? That 

is my question. 

Mr. WAITES. The answer to that is I think Ms. Messner had 

meetings with them. She just said she was the Chief Operating Officer at the time that you are suggesting. Not only was I calling the 

guards and the supervisors, but I was also——

Ms. NORTON. No, you said the guards called you. You did not say 

you were calling the guards. You said the guards called you and 

you answered questions from the guards. 

Mr. WAITES. Well, I misstated, then. I did call guards and I 

talked——

Ms. NORTON. You called each of these 600 guards who weren’t 

being paid? 

Mr. WAITES. No, I called guards. 

Ms. NORTON. Called who? 

Mr. WAITES. I called guards. 

Ms. NORTON. You called who? 

Mr. WAITES. I called several guards myself. 

Ms. NORTON. How did you choose which guards to call among 

those who weren’t being paid? 

Mr. WAITES. Some that I knew and some that I didn’t. You know, 

I don’t know personally every one of them. 

Ms. NORTON. Ms. Messner, would you clear some of this up? 

In other words, you, in some kind of ad hoc fashion, said to some 

of the guards something. 

Ms. Messner, he said you were the Chief Operating Officer. 

Ms. MESSNER. Yes, ma’am. 

Ms. NORTON. Did you communicate with the guards? Did you 

take roll? 

Ms. MESSNER. Yes, ma’am, I did. On May 24th, for that payroll, 

Mr. Waites had assured—the ending result was he had assured 

that there would be money in the bank by the following Tuesday, 

which I believe was the 29th. It was over Memorial Day weekend. 

He assured that the money would be in the bank by 1500 hours, 

or 3:00 p.m. I sent a notice out to all project managers and all corporate staff that this is the information that I have, that the money 

will be there for both payrolls by 1500 on the 29th; that, contrary 

to popular belief, Mr. Waites is not hiding, he does return phone 

calls; and various things like that. 

After I sent that, I sent another e-mail out. That e-mail I requested the project managers to disseminate to all personnel by 

any means necessary. After that, I sent an e-mail to the project 

managers asking for a status report every morning and every afternoon of how many officers that were not showing up because they 

hadn’t been paid. The word that I had gotten was that officers 

wanted to come to work; however, couldn’t afford the gas money to 

get there. 

On May the 31st, I had a meeting with—I invited project managers, site supervisors, and shop stewards to a meeting on May 

31st at the Department of Education building, which was one of 

the ones that we protected. At that meeting, I said we are not 

going to get paid. The next pay date was the next day. 

Ms. NORTON. You were on the premises then? 

20

Ms. MESSNER. Yes, ma’am. And I explained to the officers that 

were there that there is no money; we are not going to get paid tomorrow because corporate staff has not been paid either. I stepped 

out of the room to allow them a few minutes to talk amongst themselves, and when I came back I saw people who had nothing giving 

to people who had less than nothing. They reached into their own 

pockets for gas money for fellow officers so that they could show 

up. And Mr. Waites, at a union meeting via conference call on May 

23rd, explained to the shop stewards present that it was not his 

fault if they mismanaged their money, and it was not his fault if 

they got evicted or didn’t pay their car payment. That is what he 

told the guards. 

So I explained to the people, I figured they deserved to know. If 

you are not going to get paid, you deserve to know so you can make 

alternative arrangements. I told them May 31st. They pledged to 

stand post as long as they could without pay. On June 1st I sent 

the notice to the FPS take our contracts, because it was unfair to 

the 500 people to keep working without being paid, which they 

would have done. 

Ms. NORTON. Well, in this post-9/11 climate, we can only thank 

you for having encouraged people to stay on the job. 

Mr. Waites, did you contribute to the funds for employees who 

needed gas money to get to work? What is the average wage of 

these employees? 

Mr. WAITES. Well, we put $2,500,000 of borrowed money and 

made the payrolls that led up this; didn’t get paid ourselves——

Ms. NORTON. Mr. Waites, you know, you might try answering my 

question. You just heard testimony that some of the employees, 

who have little themselves, were essentially passing the hat to help 

others who had even less. I am asking you did you contribute anything to these employees who had not been paid and perhaps had 

even less than you? 

Mr. WAITES. Not directly. 

Ms. NORTON. All right. 

Let me move on. I guess Mr. Carney was first, actually. 

Mr. CARNEY OF PENNSYLVANIA. Thank you, Madam Chair. I have 

several questions. This is quite startling testimony, actually. I am 

amazed. 

Mr. Waites, who replaced your wife’s company in fulfilling these 

contracts, which agency was that, do you know? Who filled in? 

Mr. WAITES. Oh, I think Frontier Security did part of them and 

Coastal Security did the other part. 

Mr. CARNEY OF PENNSYLVANIA. Did their employees get paid, do 

you know? 

Mr. WAITES. Yes. 

Mr. CARNEY OF PENNSYLVANIA. Yes, they did get paid? 

Mr. WAITES. I am not sure I understand. 

Mr. CARNEY OF PENNSYLVANIA. Do you know if their employees 

got paid? 

Mr. WAITES. The Coastal employees? 

Mr. CARNEY OF PENNSYLVANIA. Yes. 

Mr. WAITES. Yes. 

Mr. CARNEY OF PENNSYLVANIA. Okay. Okay. 

21

Ms. Messner, have you heard of similar problems at other security firms, private security firms? 

Ms. MESSNER. In the 16 years that I was a guard, I had worked 

for one other company that went bankrupt and bounced payroll, 

and that would have been in the late 1980s, and that was due to 

fiscal malfeasance. 

Mr. CARNEY OF PENNSYLVANIA. Ms. Messner, what was morale 

at STARTECH? How precipitously did it slide? I am sure that it 

had to. 

Ms. MESSNER. Individual morale was low because when you—it 

is hard to protect others when you think that your stuff might be 

on the street before you get off shift. But, honestly, believe it or 

not, morale kind of improved because we had a common enemy. 

Mr. CARNEY OF PENNSYLVANIA. Interesting phrase. 

I am going to ask just a basic question, Mr. Waites. Who is responsible here? 

Mr. WAITES. The ultimate responsibility would have to fall on 

our shoulders. 

Mr. CARNEY OF PENNSYLVANIA. What does that mean? What are 

you going to do to make this right? 

Mr. WAITES. We have done several things. I met with the Department of Labor on Tuesday and signed all the documents. 

Mr. CARNEY OF PENNSYLVANIA. What kind of documents? 

Mr. WAITES. To assure that the remaining invoices that we have 

outstanding, that the guards are paid first, and their benefits. That 

was a meeting all day long in Baltimore on Tuesday. I have negotiations with a company that is interested in helping us, and that 

would be the first priority, is to pay the employees. 

Mr. CARNEY OF PENNSYLVANIA. All right. 

I have no further questions at this time, Madam Chair. 

Ms. NORTON. Thank you, Mr. Carney. 

Mr. Dent, pleased to welcome you for any questions. 

Mr. DENT. Thank you, Madam Chairman. 

My question is for Ms. Messner. When did you originally have 

your concerns about STARTECH’s ability to perform as a legitimate security guard contractor for the Federal Government? And 

I think you might have answered it, but when did you report those 

suspicions? 

Ms. MESSNER. My first concerns actually started when I was in 

the field, because we were never inspected by the company; basically, we were in no man’s land. With this particular situation, I 

became very concerned in March of 2007, and the reason why I became concerned in March of 2007 was prior to the closing of the 

Marquette deal in which the invoices were sold, both the Chief Financial officer and me personally explained to Mr. Waites that the 

Federal Government had already paid for those invoices. There 

were two people authorized to sign to sell those invoices to Marquette; I was one and Sharon Waites, Mr. Waites’ wife, was the 

other. She was in South Carolina. I refused to sign the document 

because it was theft. He signed her name. 

Mr. DENT. So it was in March of 2007 is when you first had your 

suspicions and concerns. And when did you report those concerns 

or suspicions that you just outlined? 

22

Ms. MESSNER. Sir, I reported it immediately upon suspicion. I 

asked for clarification, I said, this can’t be right. I explained it to 

Mr. Waites. I talked to everybody who would listen. And if I had 

had the money, I would have hired a sky writer. I didn’t know who 

else to go to. I talked to Marquette. After it was done, I talked to 

Marquette, I spoke to attorneys. I told everybody immediately. 

Mr. DENT. I guess my next question, then, to Ms. Messner is 

when did you learn first about Mr. Waites’ criminal background, 

and do you think that that should automatically disqualify a company from being considered for Federal Government contracts, particularly security guard contracts? 

Ms. MESSNER. I first learned part of his history in or about June 

of 2006, when Bank of America closed the loan. Mr. and Mrs. 

Waites called me into their officer, they advised me that he had a 

blip in his past, and they asked me to be ‘‘the face of STARTECH.’’ 

They signed legal documents saying that they had no power or control; they made it very clear to me that it was paper only. After 

that, I didn’t have any reason to question him. 

As far as exclusionary practices from Federal contracts, especially security, absolutely. Without a doubt. Contract guards must 

pass a background check. If you have too many traffic tickets, you 

can’t be a guard. Yet, you give control of 530 guards to a convicted 

felon. It does not make sense to me. 

Mr. DENT. And, finally, it is pretty clear from your rather extensive background in Government contracting work that you have got 

a pretty good understanding about what works and what doesn’t. 

What recommendations, with respect to contract oversight, do you 

have for this Committee? It is our job, of course, to see that our 

Federal buildings and employees are protected, so what would you 

recommend to us? 

Ms. MESSNER. I would recommend that this be the last study or 

the last investigation, that STARTECH be held up as the example 

of exactly what not to do. I believe that if you want to know the 

true picture of security in Federal buildings, that you need to go 

to the Federal Protective Service officers and the contract security 

guards, and find out from them what they need to do the job. They 

are professionals and they will tell you. And, primarily, any funding that is done, you need to make sure that it is the right amount 

at the right time to the right people for the right reason. Inspect, 

investigate, and train. 

Mr. DENT. Thank you very much. I guess the Federal Protective 

Service will be in the next panel, so thank you for your comments. 

I yield back to the Chair. 

Ms. NORTON. Thank you, Mr. Dent. 

Mr. Arcuri. 

Mr. ARCURI. Thank you, Madam Chair, and thank you for having 

this hearing. 

Mr. Waites, what was the peak employment of STARTECH? 

Mr. WAITES. About 750, I think. 

Mr. ARCURI. And when did the peak employment take place? 

Mr. WAITES. In late 2006. 

Mr. ARCURI. Late 2006. November, December of 2006? 

Mr. WAITES. Sort of like that. 

Mr. ARCURI. After your financial problems started to develop? 

23

Mr. WAITES. Well, no. The peak might have been a little bit before that. As I said earlier——

Mr. ARCURI. Well, I just want to know when was your peak employment. About what time? 

Mr. WAITES. 2006. Early 2006 or late May, I would guess. The 

reason I say that is we had a couple of contracts that we lost——

Mr. ARCURI. Okay, first part of 2006. 

Mr. WAITES. Yes. 

Mr. ARCURI. Okay. And when did your financial problems start, 

in your opinion? 

Mr. WAITES. May 31st, 2005. 

Mr. ARCURI. Okay, so your peak employment came after your financial problems began to develop? Just yes or no. 

Mr. WAITES. Yes. 

Mr. ARCURI. Okay. Now, at the time of your peak employment, 

what was your percentage of Federal employment as opposed to 

private sector employment or other employment that you had 

Mr. WAITES. Ninety-five percent Federal and 5 percent. 

Mr. ARCURI. Okay. Now, the pay that you would receive for Federal contracts relative to the private contracts, was it the same, 

higher, lower? What was the percentage? 

Mr. WAITES. It is higher because of collective bargaining agreements in the Federal arena. 

Mr. ARCURI. So you would receive more money as a result of your 

Federal contracts. 

Mr. WAITES. The employees got paid more, yes. 

Mr. ARCURI. Okay. And you would receive more, I take it. 

Mr. WAITES. Yes. 

Mr. ARCURI. Okay. Now, what was your profit margin in your 

business? Generally, what is your profit margin? 

Mr. WAITES. Less than 3 percent. 

Mr. ARCURI. Ms. Messner, would you agree with that? 

Ms. MESSNER. The peak for STARTECH business was the last 

quarter of 2001, post-attack. The profit margin for STARTECH is 

between 3 and 5 percent. It can go as high as 7 and a half. 

Mr. ARCURI. And would you say that is about the general percentage for the industry? 

Ms. MESSNER. Probably, yes. 

Mr. ARCURI. Okay. 

Now, Mr. Waites, during the period of your peak performance or 

your peak employment, I should say, in early 2006, did you take 

any loans? Was that a period that you applied for any of your 

loans? 

Mr. WAITES. We applied for a loan in 2005, was the first loan. 

Mr. ARCURI. Was that to purchase the company? 

Mr. WAITES. Yes. 

Mr. ARCURI. Okay. And how much was that loan for? 

Mr. WAITES. Eight million dollars. 

Mr. ARCURI. Okay. And what was the purchase price of the company? 

Mr. WAITES. I think it was $7.5 million. 

Mr. ARCURI. Okay. What was the additional half million dollars 

for? 

Mr. WAITES. Operating capital. 

24

Mr. ARCURI. Okay. What is the purpose of operating capital? I 

mean, I understand the guard business is pretty labor intensive 

and low in terms of capital investment. What was the purpose of 

that additional half million dollars for capital investment? 

Mr. WAITES. Well, our expenses that we call G&A is usually 

about 5 percent. 

Mr. ARCURI. What is G&A? 

Mr. WAITES. Your operating income is about 5 percent of the contract. 

Mr. ARCURI. Okay. 

Mr. WAITES. And if you maintain overtime, keep it low—because 

you can’t budget for overtime—you can pay all of your administrative expenses plus overtime out of G&A. 

Mr. ARCURI. Did you take any of that $8 million out for the owners? 

Mr. WAITES. No. 

Mr. ARCURI. Was any of that taken out? 

Mr. WAITES. The only amount that was ever taken out as far as 

the two owners was at the end of 2005——

Mr. ARCURI. We will get to that. My question was with respect 

to the first loan, did you take anything out? 

Mr. WAITES. No. 

Mr. ARCURI. Okay. 

Is that right, Ms. Messner? 

Ms. MESSNER. I am sorry, sir, I wasn’t in the office at that time. 

Mr. ARCURI. Okay. 

Now, when did you take the second loan out? 

Mr. WAITES. The second loan, we were with Bank of America 

from May 31st, 2005 to——

Mr. ARCURI. My question was when did you take the second loan 

out. I don’t get a lot of time to ask questions——

Mr. WAITES. I think it was June or July or 2006. 

Mr. ARCURI. Okay. So it would be about six to eight months 

later, a year later? 

Mr. WAITES. A year later. 

Mr. ARCURI. Okay. And what was the purpose of the second 

loan? 

Mr. WAITES. Our first loan was called. 

Mr. ARCURI. Okay. And how much was the second loan for? 

Mr. WAITES. Almost the same amount. We had paid it down, but 

our borrowing base had gone back up, so it was about the same 

amount, about $8 million. 

Mr. ARCURI. Okay, so you paid it down. How much did you pay 

down from the first loan? 

Mr. WAITES. We had a revolving loan and a term loan, and, with 

interest, it was paid down a couple million dollars, I think, during 

that period of time. 

Mr. ARCURI. But you borrowed $8 million again? 

Mr. WAITES. We had to——

Mr. ARCURI. What did you do with the excess at this point? 

Mr. WAITES. Any excess that we ever had was put in the operating account and we used it for payroll. 

Mr. ARCURI. Was any of that used to purchase the condo in 

South Carolina? 

25

Mr. WAITES. No. 

Mr. ARCURI. Okay, where did the money come from to purchase 

the condo in South Carolina? 

Mr. WAITES. Out of our personal savings. 

Mr. ARCURI. Okay. In whose name was the condo in South Carolina? 

Mr. WAITES. Mine and my wife’s 

Mr. ARCURI. Okay. So you bought it in your name and used your 

money, but it was being paid for, the mortgage was being paid for, 

I take it, by STARTECH? 

Mr. WAITES. STARTECH paid two payments, I think. 

Mr. ARCURI. Okay. And your purpose in doing that was to set a 

business up in South Carolina? 

Mr. WAITES. Correct. 

Mr. ARCURI. All right, now, why did you purchase a beachfront 

condo as an office or as a place to set up? Couldn’t you have found 

someplace cheaper in order to set up a business or in order to set 

up an office in South Carolina? 

Mr. WAITES. Most likely, I could. 

Mr. ARCURI. But you didn’t. 

Mr. WAITES. I did not. We selected this place. 

Mr. ARCURI. And STARTECH paid the two payments for it. 

Mr. WAITES. I am not sure, but I think it was two. 

Mr. ARCURI. Two. And it probably would have continued if 

STARTECH didn’t get into problems with their financing, correct? 

Mr. WAITES. Yes. 

Mr. ARCURI. Now, you indicated that your wife was in South 

Carolina 75 percent of the time? 

Mr. WAITES. Yes. 

Mr. ARCURI. But you also said she was in D.C. 40 percent of the 

time. Is that your position? 

Mr. WAITES. I think I either misstated or somebody misunderstood. 

Mr. ARCURI. I wrote it down, so I know that is what you said, 

but——

Mr. WAITES. Well, if I did, I stand corrected. 

Mr. ARCURI. Okay. 

Mr. WAITES. She is here about 25 percent of the time, period. 

Mr. ARCURI. Okay. And she is in South Carolina 75 percent of 

the time. 

Mr. WAITES. Yes. 

Mr. ARCURI. Okay. Now, what did you do with the extra money 

from the second loan, that $2.5 million that wasn’t needed to pay 

off the first loan? 

Mr. WAITES. It went back into operating capital, and there was 

never enough excess in our borrowing base to last over two payrolls, which is about $2 million. 

Mr. ARCURI. Did you ever pay yourself or your wife back any 

money that you lent to the company during that period of time? 

Mr. WAITES. No. 

Mr. ARCURI. Okay. Did any of that money get paid out to you 

and your wife in salaries or bonuses or in any way? 

Mr. WAITES. We had a salary. 

Mr. ARCURI. Okay. 

26

Mr. WAITES. We did not take a bonus in 2006. We called it a distribution. Mr. Ford and I took out a distribution in 2005 because 

it is a sub-S and we had to pay taxes. 

Mr. ARCURI. Okay. And how much did you take out in 2005? 

Mr. WAITES. I think it was about—we used to prepay everything, 

but we found out that there was a certificate of deposit somewhere——

Mr. ARCURI. My question was how much did you pay for yourself. 

Mr. WAITES. I think it was 75 percent of $500,000. 

Mr. ARCURI. Okay. That was your cut on it? 

Mr. WAITES. Yes. 

Mr. ARCURI. Okay. So it was over 400,000. 

Mr. WAITES. Yes. 

Mr. ARCURI. Okay. And how much did you pay yourself in salary 

in 2006? 

Mr. WAITES. The combined salary for both of us is about 

$185,000 a year. 

Mr. ARCURI. When you say both of us, you and your wife? 

Mr. WAITES. Yes. 

Mr. ARCURI. Ms. Messner, is that the case? 

Ms. MESSNER. No, sir, it is not. Mrs. Waites bills STARTECH by 

invoice for any work she does for the newsletter or the website. She 

gets paid $50 an hour by invoice only. Mr. Waites’ salary is 

$360,000 a year. 

Mr. ARCURI. Okay. 

Mr. WAITES. My response to that, if I may reply, is that for accounting purposes we were advised for me to take the income because of our tax situation, so——

Mr. ARCURI. Did you receive that money or did you not receive 

it? 

Mr. WAITES. I did. 

Mr. ARCURI. Okay. My next question is with respect to the loan 

that the banks placed through the assignment on your collateral, 

on your accounts receivable, did they also place an assignment on 

your private sector accounts receivable? 

Mr. WAITES. Yes. 

Mr. ARCURI. Okay. All accounts receivable? 

Mr. WAITES. Yes. 

Mr. ARCURI. Okay. 

Ms. Messner, is that correct? 

Ms. MESSNER. Yes, it is. 

Mr. ARCURI. Okay. And you took a third loan as well, Mr. 

Waites? 

Mr. WAITES. The third loan was with the factoring company. 

Mr. ARCURI. Okay. And how much was that for? 

Mr. WAITES. I think it was about $8 million. 

Mr. ARCURI. And what was the purpose of that loan? 

Mr. WAITES. To pay off the First Horizon loan and give us half 

a month of operating capital. 

Mr. ARCURI. Okay, the First Horizon loan was actually the second loan that you took, though, right? 

Mr. WAITES. Yes. 

Mr. ARCURI. Okay. And how much had you paid that down to? 

27

Mr. WAITES. As you know, it would go up and down on the bor- rowing base, but it was about $8 million. I mean at one time it was 

probably $7 million and at the end it was near 8. 

Mr. ARCURI. Okay. And what would you do with this extra 

money? If you were taking money out of the revolving loan fund, 

what would you do with this extra money? 

Mr. WAITES. There was never any extra money. Every check that 

was written is accounted for; it was for business expenses that 

were deductible and certified by our accountants. 

Mr. ARCURI. You just said it went up and down and it was a revolving loan fund, that you would pay it down to about 7 and then 

it would go up again. 

Mr. WAITES. Well, a lot of the time, since that was a monthly revolver, if we would get paid on certain invoices, the loan would go 

down. If we wouldn’t get paid, it would go up and it would eventually reach your maximum borrowing base, and you couldn’t exceed 

that. 

Mr. ARCURI. All right, my last question is this. What other personal expenses did STARTECH pay for you and your wife? 

Mr. WAITES. They paid personal expenses——

Mr. ARCURI. Did they pay for your house, for your rents, for your 

cars? 

Mr. WAITES. No. 

Mr. ARCURI. None of those? 

Mr. WAITES. They paid for no cars. 

Mr. ARCURI. Did they pay for your home here in D.C., your 

apartment? 

Mr. WAITES. They paid the rent on that, yes. 

Mr. ARCURI. Okay. And your mortgage in South Carolina. 

Mr. WAITES. No, they did not pay for the mortgage in South 

Carolina. 

Mr. ARCURI. You just said that on your beachfront condo in Myrtle Beach. 

Mr. WAITES. Oh, I thought you meant where we lived. I am 

sorry. 

Mr. ARCURI. Okay. 

I have nothing further. Thank you, ma’am. 

Ms. NORTON. Thank you very much, Mr. Arcuri. 

Just to wind up for the record, in retrospect, Mr. Waites, don’t 

think we are unsympathetic to the plight of small business people. 

On both sides of the aisle, people look first to the problems of small 

business, people we know. Most of them go out of business, the 

problems are so great. Much of it is miscalculation. A lot of it 

comes from what you encountered. You took over a business that 

you have testified you had no experience in. Yet, you felt you could 

operate the business. And some of the problems you encountered 

may have come from that fact. 

Were any funds from the Federal Government, Mr. Waites, ever 

used to meet other accounts or expenses other than Federal accounts or expenses? 

Mr. WAITES. I am not sure I understand that. 

Ms. NORTON. Monies paid from the Federal Government, were 

those monies ever used to pay for other expenses other than Federal expenses incurred in connection with STARTECH and its FedVerDate 0ct 09 2002 17:12 Feb 22, 2008 Jkt 000000 PO 00000 Frm 00041 Fmt 6633 Sfmt 6633 P:\DOCS\36684 HTRANS1 PsN: JASON
28

eral responsibilities or other accounts other than your Federal account, Federal STARTECH account. 

Mr. WAITES. Well, we had, as I stated earlier, commercial accounts. 

Ms. NORTON. Yes. And my question is were any of the Federal 

funds ever used, even temporarily, to cover some of those commercial accounts. 

Mr. WAITES. I really couldn’t answer that because it all went into 

one operating account. 

Ms. NORTON. So there was not an attempt to keep those funds 

separate——

Mr. WAITES. No. 

Ms. NORTON.—so that the Federal accounts could be paid? 

Mr. WAITES. No. 

Ms. NORTON. Ms. Messner? 

Ms. MESSNER. That is correct. And there were several accounts. 

Ms. NORTON. I noted in your testimony, Mr. Waites, that you 

said that there were preliminary figures from your CPA, the independent CPA, that what remains of the company would be adequate—and here I am quoting from you—‘‘to pay previously unpaid 

salaries, outstanding employee benefits, and accounts payable.’’ 

Would you forward those figures to this Committee, please? 

Mr. WAITES. Yes, I will. 

Ms. NORTON. Ms. Messner, did you testify that on only one occasion, did I hear you correctly, was there enough for payroll? 

Ms. MESSNER. Since May? Since May the 4th, May the 4th payroll was okay; May the 11th was okay. After that it was——

Ms. NORTON. How about before that? How about in your previous 

employment with the company? 

Ms. MESSNER. There was one occasion in which they had to bring 

the checks to us from D.C. I can’t remember what that was about, 

but that would have been in probably 2000, 2001. 

Ms. NORTON. Mr. Waites, sorry, did you want to answer? 

Mr. WAITES. Yes, ma’am. Those payrolls that you were—the two 

previous payrolls that she was speaking of are the ones that we 

made and wired the proceeds from our funds directly to ADP. 

Ms. NORTON. Mr. Waites, I am curious when you say a loan was called you got $2 million from your wife. Would you explain that, 

please? The company got $2 million from your wife? 

Mr. WAITES. I don’t recall—I recall——

Ms. NORTON. Do you recall $2 million from your wife in the testimony? 

Mr. WAITES. I thought that I said that we put over $2 million 

of our personal funds to fund the two payrolls that I just described. 

Ms. NORTON. I see. Those funds would have come from where? 

Mr. WAITES. Our personal funds, and then we borrowed from——

Ms. NORTON. How much in Federal funds do you have and personal funds do you have, then, sir? 

Mr. WAITES. I have none. 

Ms. NORTON. Well, then where did you get $2 million in personal 

funds from? 

Mr. WAITES. Well, I thought the question was how much do I 

have today. The payrolls that we made came from my retirement, 

personal retirement that I have had all my life, and our personal 

29

assets that we saved. And my wife was a Federal Government employee, so we put all that together and made the next to the last 

payroll. And then the last payroll we went to a personal investment 

group and borrowed it, and they made that payroll. 

Ms. NORTON. Mr. Waites, Ms. Messner has testified and tried to 

make us understand the link to Marquette, that essentially you 

were paid for invoices twice, and she explains in her testimony 

that, unlike the two banks mentioned in your testimony, Bank of 

America and First Horizon, Marquette was not a bank, but a factoring company. Without getting too technical, these are not people 

who make loans. The invoices, however, less than a certain age, in 

this case 90 days old, would be sold outright, with 90 percent of 

the proceeds immediately available, in this case to STARTECH in 

the form of cash; and that such a deal was finalized March 6th, 

2007, which meant that you were selling the invoices and getting 

paid by the Federal Government, then getting paid by Marquette 

as well. 

Do you believe that was an appropriate arrangement and an appropriate way to handle Federal funds that you received? And what 

happened to the funds? 

Mr. WAITES. Prior to the Marquette closing, we were with First 

Horizon. When they called our loan, they had a full 100 percent assignment of claims of all funds, so they all went directly to First 

Horizon. We didn’t have access to any except what they would release to us to make these payrolls. 

Ms. NORTON. Who was the Marquette deal between? 

Mr. WAITES. I was coming to that. After we sought additional financing and went with Marquette, they agreed to factor the accounts receivable, which in essence means that they purchase the 

invoices once you have owned them and they have the assignment 

of claims. They actually own the invoices and they also take a personal guarantee from any other funds. So STARTECH, from the 

problem that we had with First Horizon through the Marquette 

deal, never got the opportunity, but like on one or two occasions, 

to enjoy the benefit of the factoring and operate out of our own 

funds. 

The other thing that you mentioned was I have been accused of 

signing off on the Marquette loan, and it is important for you, the 

Committee, to understand that we used a loan broker to help us 

find this financing, and he handled the transactions. In my hand 

I am holding a copy of the invoices that Marquette sent to the Federal Government and the dialogue that the Federal Government 

exchanged that led up to the funding of the loan, and the last word 

of the last sentence says ‘‘I just spoke with Jackie Jones and she 

confirmed that the invoices have been approved and none are paid 

yet.‘‘ That was the basis that I made the decision to sign off on the 

loan that she alluded to. I didn’t make it on the——

Ms. NORTON. You mean the Marquette deal. 

Mr. WAITES. Yes, ma’am. 

Ms. NORTON. So you are testifying that the Federal Government 

was complicit in this arrangement? 

Mr. WAITES. I have the document here from the Federal Government. 

30

Ms. NORTON. Well, that is perfectly fair, sir, if they knew about 

it, and, of course, we will ask them about it. 

Mr. WAITES. Yes. I relied 100 percent on——

Ms. NORTON. Wasn’t that some indication, though, that the company was in some financial difficulty, that perhaps DHS or the 

Federal Government should have taken note of? 

Mr. WAITES. Absolutely. 

Ms. NORTON. Yes, sir. In retrospect, Mr. Waites, if you had to do 

it over again, would you forego expenses charged to STARTECH 

like the BSI properties, two BSI properties, $1600 per month for 

a boat slip and the parking spots charged through Kawliga, $550, 

for a tailgate spot at the University of South Carolina charged to 

STARTECH? 

Mr. WAITES. I would like to address both of those, if I could. First 

of all, the boat slip is 10 years old and was paid for two years ago. 

That $1600 had nothing to do with the boat slip. 

Ms. NORTON. Excuse me. So the $1600 which is on the 

STARTECH account was not being paid for by STARTECH? 

Mr. WAITES. No, ma’am. You made a statement that the $1600 

was to pay for a boat slip. That is incorrect. 

Ms. NORTON. Monthly. 

Mr. WAITES. No, ma’am. There is no boat slip. The boat slip that 

we own has been paid for for a year and a half. 

Ms. NORTON. What is it doing on a STARTECH account? 

Mr. WAITES. The $1,600 was not for the boat slip, it was for the 

office for Columbia, South Carolina rental. 

Ms. NORTON. Ms. Messner, are you aware of this office rental? 

Ms. MESSNER. There are actually, I guess, now three offices in 

South Carolina: it is the home office at 4637 Limestone in Columbia; there is a second office at, I think, 4844 Forest Drive in Columbia; and then the beach house. 

Ms. NORTON. Well, I thought the beach house was there in order 

to be the office. 

Ms. MESSNER. Ma’am, we have no business in South Carolina. 

We do not have one guard; we do not have one contract in South 

Carolina. 

Mr. WAITES. That is not true. We have a contract with the University of South Carolina, and we provide guard service for a parking facility that you mentioned earlier. So we do have contracts in 

South Carolina. 

Ms. NORTON. You paid $550 for that tailgate parking spot at the 

University of South Carolina and charged it to STARTECH, just 

like the $1600 shows. You say it is for rental, but you say the boat 

slip didn’t have anything to do with it, it was for rental, but not 

the beachfront property? 

Mr. WAITES. May I elaborate on that so I can clear it? Our mortgage payment in South Carolina where we live is about 4,000-

something dollars a month. For that we have two offices built in 

a separate location that STARTECH rents. It was set up to do that 

way because that percentage of the mortgage payment that we 

make is attributable to STARTECH work. I spend 25 percent of my 

time there and my wife spends 75 percent of her time there. The 

$1600 is the mortgage payment for—I mean is the rental for the 

mortgage payment for the Columbia, South Carolina office. 

31

The other office that this lady referred to is a P.O. Box where 

we get corporate mail. So there are two offices in South Carolina. 

I would like to get the record straight on these. If we are going 

to make sworn statements, they should be accurate because there 

is no boat slip in the picture. The boat slip has been owned for 10 

years. 

Ms. NORTON. Well, I am glad you corrected the record on that, 

if that be the case. 

Ms. Messner, were you paid all of your salaries before you left 

the company? 

Ms. MESSNER. No, ma’am. The last time I was paid was on May 

the 4th. 

Ms. NORTON. How much are you owed by the company? 

Ms. MESSNER. If you included unpaid vacation time that was accrued but not taken, I am owed somewhere between $12,000 and 

$15,000. 

Ms. NORTON. Mr. Waites, you say you bought this company from 

owners who had gotten it as a part of the 8(a) process? 

Mr. WAITES. No, ma’am. I think they were in the 8(a) process, 

but over the course of the period of time that my wife and I had 

an interest in the company, they graduated from the 8(a) program 

and went into big business. 

Ms. NORTON. Were these members of minority groups or women? 

Mr. WAITES. Yes. You asked earlier the reason. The main reason, 

back when we decided to reorganize the structure of the company 

was to make us competitive, because my wife is a minority and minority ownership gave certain credits as far as the procurement 

process was concerned. 

Ms. NORTON. So your wife, because she was a woman, could inherit the 8(a) designation? 

Mr. WAITES. You couldn’t inherit the 8(a), but in the procurement process, if you are a woman-owned business, you get certain 

credits that you would not get had you not been woman-owned. 

Ms. NORTON. So she did in fact get those. 

Mr. WAITES. Yes, we did. 

Ms. NORTON. Is that the reason why she was the owner of the 

property? 

Mr. WAITES. That was the primary reason. Back when we decided to step back and look what we had ‘‘gotten into,’’ the main 

priority was how can we be competitive in the procurement field, 

and our counsel advised us that it would be better if we were minority/female-owned. 

Ms. NORTON. Ms. Messner, you testified that, in point of fact, 

there were some noticeable improvements in the timely payments 

of invoices by the Federal Government since 2006. Would you 

elaborate on that, please, since Mr. Waites seems to ascribe much 

of the concern and problems of his company to late payments? 

Ms. MESSNER. Yes, ma’am. In the summer of 2006 there was a 

reorganization with our contracting officers in which all of 

STARTECH’s contracts were placed under one contracting officer. 

Once she was in place, she started doing a scrub of each contract 

through her contract specialist. She identified for the contract for 

the National Building Museum, she identified several payments 

that had not been made, that were owed, that were related to temVerDate 0ct 09 2002 17:12 Feb 22, 2008 Jkt 000000 PO 00000 Frm 00045 Fmt 6633 Sfmt 6633 P:\DOCS\36684 HTRANS1 PsN: JASON
32

porary additional services. She also identified several that were 

owed for a secondary contract. 

She told me that the way to get the money was to file a claim. 

I had no idea how to do it. She walked me through it; she helped 

me; she gave me advice; and those payments were paid. 

In addition, there were——

Ms. NORTON. Were payments being received on time during the 

last six months? 

Ms. MESSNER. Yes, ma’am. Yes, ma’am. As a matter of fact, we 

were beginning to get some older payments, and our accounts receivable report was down to about $4 million when I left there. 

Mr. WAITES. May I comment? 

Ms. NORTON. Yes, indeed. 

Mr. WAITES. During this same period of time, matter of fact, one 

of the last documents that this lady provided for me, on May 31st, 

was an aging. She gave me the document. We refer to it as what 

it is, is what it is. Naturally, I wanted it to be higher, but she did 

the document. And the May 31st document, that I would be more 

than happy to furnish the Committee, said that we have an accounts receivable of $5.2 million. That was the basis that we were 

to close our last loan on on the Friday that STARTECH was closed 

down. They had verified those receivables. That was platinum 

funding. 

The other point I wanted to make is that two of your esteemed 

colleagues, Jim Clyburn and John Spratt, Congressman Spratt, 

agreed and looked at our accounts receivable and sent a letter to 

Congress, signed off on them after we had them audited, and 

agreed that that was eventually going to put STARTECH out of 

business. 

Ms. NORTON. What were the dates on——

Mr. WAITES. I can furnish you the letters, but I don’t have them 

in front of me. 

Ms. NORTON. You know, because I indicated earlier in my questioning that we have no excuses here. The Federal Government, 

Department of Homeland Security and others, are accused habitually of late payments. That is one of the reasons why were are 

looking at the way in which the Federal Government, not just one 

department, does business. 

Mr. WAITES. Well, you all have asked Ms. Messner all the questions about that, but I have a comment about the new FPS office. 

Once it was transferred from Region 11, was transferred from D.C. 

to Philadelphia, positive things began to happen; invoices started 

getting paid; we knew exactly the status of the contract——

Ms. NORTON. What is the difference between D.C. and Philadelphia? I am sorry, I don’t understand. 

Mr. WAITES. During this whole process——

Ms. NORTON. Is there a different regional——

Mr. WAITES. No, ma’am. They moved the procurement office from 

Downtown D.C. to Philadelphia during this process, and so now 

these contracts are administered out of Philadelphia, and that is a 

professional group that is doing a good job, and a lot of the invoices 

that she is speaking of have been paid in the last few weeks because of the good job that they are doing. 

33

Ms. NORTON. Yes, of course, it was in the last few weeks that 

people were unpaid. 

Mr. WAITES. But that is the point I am trying to make, Congresswoman, is that all of the money that was being paid was going to 

Marquette, and they were applying it toward the loan rather than 

releasing any funds for us to operate on. In the meanwhile——

Ms. NORTON. Ms. Messner, would you care to comment on that, 

funds were all going to Marquette and, therefore, they didn’t have 

the funds to pay their employees? I mean, that is what I am getting from this. I am talking about in the last few weeks. 

Ms. MESSNER. Yes, ma’am. But it was Marquette’s money. Marquette had given STARTECH the money up front. 

Ms. NORTON. I thought you had sold, in fact,——

Ms. MESSNER. Yes, ma’am. 

Ms. NORTON.—the invoices to——

Ms. MESSNER. Yes, ma’am, we had sold the invoices to them and 

there was a loan component of it when they identified——

Ms. NORTON. So they got 90 percent of the money up front. 

Ms. MESSNER. Yes, ma’am. 

Ms. NORTON.—from Marquette. 

Ms. MESSNER. Yes, ma’am. And when Marquette identified $1.8 

million worth of invoices that were sold to them that had already 

been paid and they had no way to collect, they made that a loan. 

Mr. WAITES. May I comment on that? 

Ms. NORTON. Certainly. 

Mr. WAITES. The $1.8 million is the same ones that the Government signed off on that told me that they were legitimate invoices. 

They are listed on this piece of paper that I will provide for you. 

Ms. NORTON. We are not questioning the legitimacy of the invoices; we are questioning the people not being paid, even though 

you were given money. Apparently, they got 10 percent but you got 

90 percent of the funds up front. That is what we are questioning. 

Mr. WAITES. Well, I don’t know how much clearer I can make it 

except that STARTECH got none of that, it was all applied—they 

did buy the invoices; they advanced 90 percent on them, but the 

deal in the agreement was that we would factor new invoices each 

month, and those new invoices that were to be factored would be 

operating income. So it was a revolving thing; whatever comes in 

pays down the old invoices; we send in new invoices for payment. 

And that is the way we operated. 

Ms. NORTON. Ms. Messner, would you kindly——

Mr. WAITES. And they stopped that. 

Ms. NORTON. Let’s clear this circle up, then. Do you agree with 

Mr. Waites’ notion of why the invoices which were paid up front, 

nevertheless, didn’t go to salaries? 

Ms. MESSNER. No, ma’am, I don’t. I believe that Mr. Waites was 

playing fast and loose with the finance. I received an e-mail that 

was forwarded to me by the CFO in which First Horizon was trying 

to identify the true owner of an invoice in the amount of just over 

$323,000. First Horizon wanted to make sure it belonged to 

STARTECH and, if so, to wire it to Marquette. Mr. Waites responded to the CFO, via e-mail by his personal account in South 

Carolina, do not respond to this e-mail. The CFO sent it to me. I 

sent I back to Mr. Waites and said this invoice belongs to MarVerDate 0ct 09 2002 17:12 Feb 22, 2008 Jkt 000000 PO 00000 Frm 00047 Fmt 6633 Sfmt 6633 P:\DOCS\36684 HTRANS1 PsN: JASON
34

quette; it was factored. He sent an answer back to me saying, okay, 

I surrender, I wanted to use it as leverage. That is how he did finance. 

Mr. WAITES. May I comment? 

Ms. NORTON. You certainly may. 

Mr. WAITES. This was the $350,000, or whatever the number 

was, that I was trying to get Marquette to release from us to payroll, to cover payroll. So when an invoice hit First Horizon Bank, 

which is a lockbox for Marquette, my strategy was to tell Marquette, rather than send it up to them to apply to a loan that was 

already almost paid off, send it to cover the payroll. If that is called 

juggling of finances, I call it trying to figure out a way to survive 

and keep the company alive. Perhaps it was an invoice that they 

had purchased. We didn’t know because they couldn’t tell us immediately which invoices were paid. 

Ms. NORTON. Well, Mr. Waites, it didn’t keep the wages alive 

after all. I guess the bottom line is, as you say in business, the people weren’t paid. 

Let me just ask you one final question. Are you under investigation——

Mr. WAITES. No. 

Ms. NORTON. You are not aware that you are under investigation 

by any Federal agency? 

Mr. WAITES. No. 

Ms. NORTON. Do you think you should be to clear this matter up? 

Mr. WAITES. I don’t mind it. 

Ms. NORTON. All right. 

Mr. Graves, do you have any further questions? 

[No response.] 

Ms. NORTON. This has been an unusual hearing. Normally, a witness like Ms. Messner comes forward and the witness in the shoes 

of Mr. Waites is afraid to show his face. 

Mr. Waites, first thing I have to say is that I respect you for coming forward, testifying alongside Ms. Messner, rather than hiding 

in the bushes. I do believe that much of what has happened has 

been of your own doing. There is no such thing as being a victim 

of being a small business. When you are a small business, you take 

on the responsibility of being a small business. We have seen some 

expenses that we think were not prudent, but we don’t think you 

were trying simply to drive the company into the ground. 

You have testified that you essentially weren’t qualified to run 

the business, that you had never run such a business; you were a 

felon and could not have, in fact, applied to run this business for 

the Federal Government. By taking steps to conceal that, even 

though they appear to have been legal, you kept from the Federal 

Government a material fact. Out of this hearing, one of the bills 

that will come out of this hearing is one that, in fact, keeps a company from essentially hiding a felon on the payroll and indicating 

that the ownership is by someone who does not have a record. 

I am not one of those who believe that if you have a record you 

should never be able to own a company or never be able to do business, even with the Federal Government, but I do believe that 

transparency is required. I do think, if you will forgive me, that a 

company being partially run by a felon has no business in charge 

35

of security guards for the Federal Government, if I can say so on 

the record. Therefore, there is huge Federal culpability here. There 

is Federal culpability particularly in late payments; there is Federal culpability in failing to monitor your business closely; and I 

think it behooves the Committee, which is doing an investigative 

hearing and not simply an oversight hearing, to come forward with 

remedies. 

Let me say to both of you we would be pleased to receive in writing any remedies you think are appropriate for the kind of situation a small businessman in your case, Mr. Waites, finds himself, 

and the kind of situation you, Ms. Messner, believes that someone 

charged with your responsibility has. I am very impressed with 

how candid you have been about what the Federal Government 

should have done as well. 

So we are not here throwing stones at anybody. We are having 

an investigative hearing because we believe that the contract system for the Federal Government is broken. I don’t know how many 

newspaper articles from how many agencies one needs to have before one comes to the conclusion that this needs fixing top to bottom. 

Please regard your testimony here as valuable in helping us fix 

a system not of your own making. Thank you for coming forward. 

I am pleased to call the next witnesses. These witnesses are 

Latanya Montgomery, a former STARTECH security guard; Brian 

Smith, also a former security guard from STARTECH; James Carney, the Acting President of the United Government Security Officers of America; and Assane Faye, Washington, D.C. District Director of Security, Police and Fire Professionals of America International Union. 

Let us hear first from the two former STARTECH guards, Ms. 

Montgomery and Mr. Smith. 

Would you please stand? I should swear all four of you in. 

Do you swear that the testimony you are about to give is truthful, so help you God? 

[Witnesses answer in the affirmative.] 

Ms. NORTON. Let the record indicate that the witnesses answered 

in the affirmative. 

Ms. Montgomery. 

TESTIMONY OF LATANYA MONTGOMERY, FORMER STARTECH 

INTERNATIONAL SECURITY GUARD; BRIAN SMITH, FORMER 

STARTECH INTERNATIONAL SECURITY GUARD; JAMES D. 

CARNEY, ACTING PRESIDENT, UNITED GOVERNMENT SECURITY OFFICERS OF AMERICA; ASSANE B. FAYE, WASHINGTON, D.C. DISTRICT DIRECTOR, SECURITY, POLICE AND 

FIRE PROFESSIONALS OF AMERICA INTERNATIONAL UNION 

Ms. MONTGOMERY. Good morning, ladies and gentlemen. My 

name is Latanya Montgomery. I am a former employee of the now 

defunct STARTECH International Security and shop steward for 

the SPFPA International Union, serving the membership at the 

Food and Drug Administration, College Park, Maryland. 

I do not wish to pontificate, but to speak to you this morning 

from the point of view of a single mother of four. Even though I 

reported for work everyday that I was scheduled over the past 

36

eight weeks or more, I have been compensated for a mere total of 

40 hours of those hours of service, and I must say that that was 

from another company altogether. 

As I mentioned before, I am the single mother of four children, 

one of whom recently graduated from high school on June 1st, 

2007. My daughter was deprived of the graduation celebration for 

the biggest day of her young life due to my current financial situation. My savings have been depleted and my checking account 

stands overdrawn. 

I want each of you to imagine the disappointment in the faces 

of my children when I have to explain to them that mommy doesn’t 

have the money to do normal everyday things such as a trip to the 

grocery store to buy milk when we have run out. The feeling for 

me is inexplicable. I want each of you to imagine the embarrassment I have felt on a continuous basis having to burden family 

members and friends for favors and loans that I am unsure of 

when or if I could pay back. 

I struggled every morning with impetuous thoughts of why 

should I go to work, when I didn’t know if or when I would be compensated for the service I provided for and under STARTECH 

International Security. My children, family, and friends asked the 

same question of me. I had to make a conscious decision everyday 

to be an exemplar example for my children, that it was my duty 

and to have faith that I would make it through this detrimental 

hardship, struggle, stress, and strife. 

I am not a Government official, military personnel, or even a police officer, but I am essential. I am the first defense, the eyes and 

ears for the Federal Protective Service and Homeland Security; a 

deterrent, if you will. So even as the morale of myself and that of 

many other contract guards is at an all-time low, I, we continue to 

report for duty. 

I feel further victimized, indirectly, if you will, by the red tape, 

investigation, and the time it takes to devise and implement a plan 

of action to right the wrongs that have been done. How long does 

it take to reconcile this situation? This is the United States of 

America, where I, as a citizen, depend on you, the powers that be, 

to protect me from unhealthy and unfair labor practices. 

I have waited and wondered where is the Government. Surely, 

they must know my present predicament. There must be someone 

who monitors the contracting companies after awarding multi-million dollar contracts. We, as contract guards, have quality assurance personnel from the Department of Homeland Security come 

into our respective workplaces and Government facilities to ensure 

that the offices are in compliance on a constant, everyday basis, 

without warning. The quality assurance personnel check everything, especially the credentials you must obtain and keep valid in 

order to continue to work on that Government contract. Where is 

the quality assurance for the actual companies? Who goes to the offices and checks the financial status of the heads of the companies 

to make certain that they are in compliance? Who makes sure that 

the heads of these companies have obtained and maintained all of 

the requirements to continue to do business with the United States 

Government? 

37

With respect to the matter at hand and the reason for this hearing today, I propose that the morale of the contract guard is the 

solution for safe and secure Federal employees and Federal office 

space. I also implore you to form a direct means to expediently deal 

with those companies who would continually violate the Service 

Contract Act and collective bargaining agreements in place, respectively, and to bring forth and resolve these situations as they arise 

to expedite and facilitate these results in such a manner so that 

we, as essential contract guards, do not have to suffer lengthy periods of time without results and compensation. 

I believe that I can speak for my fellow officers when I say the 

feeling of the impact of the current state of affairs is one of annihilation. I feel that examples need to be made and exemplary damages should apply and are in order. 

I pray that I will never experience such hardship again. My family and I have suffered long enough. Thank you. 

Ms. NORTON. Thank you, Ms. Montgomery. 

Mr. Smith. 

Mr. SMITH. Good morning. My name is Brian Smith. I am a 

former employee of STARTECH Security, as well as Union steward 

for the SPFPA International Union, and I served my tour of duty 

at the Food and Drug Administration in College Park, Maryland. 

I would like to take a few moments of your time to respectfully 

and directly address the current issues regarding security, namely, 

to ensure that security professionals are able to effectively protect 

Federal employees and their workplaces. 

Although addressed in first person, I not only represent myself 

and my personal experiences, but the sum total of the voice and petition of all former STARTECH employees and security personnel. 

For the past 12 to 24 months, STARTECH International Security 

has repeatedly failed to pay salaries to its employees in a timely 

manner and in accordance with their collective bargaining agreements. The most notable occurrences trail back to February 24th 

of 2006, with concurrent dates to include June 16th of 2006, March 

23rd, 2007, May 4th, 2007, May 18th, 2007, and June 1st of 2007. 

On each occasion payroll has either been shortened, delayed, or 

simply not available. 

As a result, I have endured massive and elongated hardships. I 

have been penalized by my respective banking and financial institutions for the numerous overdraft and insufficient funds fees that 

are on my accounts. I have had to resort to pay-day loans and high 

interest cash advances in order to get through from one pay period 

to the next. I have even had to borrow money from friends and relatives in order to help pay bills and provide food for my wife and 

three boys. 

On June 9th I became an alumnus of Nyack College, with a 

bachelor’s in organizational management. However, due to the negative status of my bank account and a dishonored payment to the 

college, I was almost unable to participate in my own graduation. 

All of the hard work, dedication, time off from family, amongst 

other great sacrifices made, seemed somewhat to no avail. The anticipation of celebrating one of the most monumental educational 

achievements in my life is sadly overtaken by disappointment. 

38

Today, I am still unable to receive my degree or transcript as a result. 

To say the least, I, as well as my fellow colleagues, have been 

humiliated, embarrassed, defamed of character, and are experiencing credit damage resulting from negative and derogatory reporting. Hence, this entire experience has left STARTECH employees ultimately devastated. This is in fact enough to hinder effective 

job performance and damper morale, but with a sense of duty, I 

myself and many of my colleagues have continued to go to work, 

as prescribed by the Federal Protective Service, in order to protect 

the Government’s assets, which include the employees of the 

United States Government within various Government facilities on 

United States Federal properties. 

Amongst other monetary issues, union dues have been deducted 

from employee paychecks each pay period, but not submitted to the 

union since September of 2006. Health insurance and 401(k) contributions have also been deducted, but not properly administered 

on behalf of the employees. For many contract sites, to include 

Oxon Hill Data Center, Landover Warehouse, AOL in Reston, Virginia, and the FDA in College Park, Maryland, as well as others, 

a total of $528 monthly per employee has been allotted by the Federal Government for health and welfare, but no adequate plan was 

ever put in place. Many covered employees were even denied medical coverage or mailed a bill with demands for payments from doctor’s offices. To that extent, I am gravely concerned about the sick 

and personal leave and vacation time that was accrued, unused, 

and never paid. Also, the employer pension contributions, where 

are they? Is all yet lost? In regards to protecting people and property, the biggest questions of the day are: Who is going to protect 

us, the security professional, or our property when we have not 

been compensated for the work that we do? How long do we have 

to wait or our families have to suffer before we are properly recompensed for our circumstances? How much more are we to endure? 

Undoubtedly, there is a very serious problem, as STARTECH 

International Security is not the first or only company to steal 

monies from the employees, as well as the Federal Government, 

put its employees in such dire straights, and hide under the veil 

of bankruptcy. Thus, it is imperative that a solution is found to 

prevent these occurrences from ever happening again. 

In conclusion, this literary correspondence represents the disgruntled and discontented, but diligent, dedicated, and loyal security professionals who have endured these tumultuous circumstances, working without pay or compensation throughout the 

duration of the past four to six weeks. Thank you. 

Ms. NORTON. Thank you, Mr. Smith. 

Before I move on to Mr. Carney and Mr. Faye, could I just once 

again thank you for your service, thank you for remaining on the 

job when you would have been within your rights, obviously, when 

you were not paid, not to continue to serve. 

Congratulations to you, Mr. Smith, for obtaining your degree. We 

are aware that many security guards are just like you, young people trying to improve themselves, often working part-time, sometimes full-time and going to school at the same time. That you perVerDate 0ct 09 2002 17:12 Feb 22, 2008 Jkt 000000 PO 00000 Frm 00052 Fmt 6633 Sfmt 6633 P:\DOCS\36684 HTRANS1 PsN: JASON
39

severed and got your degree only adds to the admiration we have 

for you. I do want not say that both of you have indicated the highest level of professionalism, for which the Federal Government is 

indeed grateful. 

I will move on to Mr. Carney. Mr Carney represents the United 

Government Security Officers of America. 

Mr. CARNEY. Madam Chairwoman, Ranking Member Graves, my 

name is James Carney. I am the Acting President for UGSOA. 

Ms. NORTON. Please pull your microphone close. See, you can 

hear me because I hold my microphone close. Sometimes I have 

trouble hearing witnesses, we up here, because the room is so 

large. Please hold the microphone close and speak into it. 

Mr. CARNEY. I thank you for your invitation to be present and 

testify before the Committee. I also thank you for your scrutiny 

into this matter; it is indeed serious and requires your immediate 

attention. I want to especially thank you, Madam Chairwoman, for 

your decisive and immediate action to intervene in the STARTECH 

matter. 

In the days following the failed payroll of STARTECH, I wrote 

you and the Department of Labor and the Department of Agriculture. I have not seen this kind of concern come from a congresswoman before, or any Member of Congress; and this has happened 

all too many times before. So, again, I thank you. Without your involvement, these guys wouldn’t be this far along in recovery of 

what is owed to them. 

I would like to remind everyone that the alternative was to 

strike STARTECH and take up picket signs right out there on the 

streets. How unfortunate that would have been. 

UGSOA represents 12,000 security officers nationwide. When 

properly trained and certified, we are the professional security 

force that augments the FPS mission. We work effectively with the 

Federal Protective Service police officers, many of which are our 

friends and colleagues. In many cases, we have had to operate with 

arrest authority, as opposed to what you were hearing on this Committee, as there are no FPOs in many of the localities to effectuate 

an arrest. The contractors we work for come and go and we, the 

contract security officers, always remain. 

The security forces that you have out there right now on Federal 

contracts are loyal to the mission, they are loyal to the contract, 

and they are loyal to a fault; and that fault has never become more 

apparent than now. We have worked to protect Federal buildings 

in many cases without being paid and for extraordinary amounts 

of time. We have heard about the testimony of the STARTECH 

matter, but I can provide other examples where this has happened 

in other localities throughout the United States. Here, it happens 

all too often on Federal contracts, let alone the pure private sector. 

What could be more fundamental to labor than being paid for 

time worked? This is the kind of stuff we were talking about in the 

early 20th century; even back in the 19th century. You do not hear 

about this abuse among security guards protecting malls that you 

shop in or the apartment complexes that we live in. Yet, right here, 

on Federal contracts, it is happening. The most recent example just 

happened a few weeks ago, as we have heard, right here in Washington, D.C. We look closely and, lo and behold, Mr. Waites has a 

40

criminal record for fraud. How did he get ownership of this contract? Even if his ownership is in question, how did he get this 

much control? It has to be asked and it cannot be ignored. 

Recently, I have never felt more inclined to be adversarial in our 

representation to these security contractors than I do right now. 

How could anyone fault us for taking action in the face of such 

events? We have shown great restraint. 

I read the testimony of Chuck Canterbury, President of Fraternal 

Order of Police, which was submitted to this Committee on April 

18th. His pursuit to advocate for the position of the Federal Police 

officers in opposition to the reduction in forces that they were facing, he pointed to a system of contract guards that are unqualified. 

Without solid examples, the easiest thing to do is point to a ‘‘unqualified guard,’’ which is nothing more than a stereotype. I have 

worked these jobs as a security officer. I was proud to put on that 

uniform and that gun belt every day. I knew the responsibility and 

the goals of our mission. 

As a union representative, I have argued the complexity of our 

duties in wage cases before judges at wage variance hearings before the Department of Labor. The result of those wage hearings, 

after showing the work that we really do, has reclassified us. Our 

jobs are something more than just a guard. We are security officers, security police officers, and special police officers. Those classifications exist on a Government contract. 

The STARTECH security officers were classified as security police officers over a year ago by a decision and order of the administrative law judge of the Department of Labor. Prior to that, they 

were classified as Guard 2s. Much of the training for a contract security officer mirrors the level of an FPS officer. For example, the 

use of deadly force, the same pistol course as the FPOs, and we 

must fill out, many times, a Form 3155, which is a criminal report, 

the same as the FPOs. Please take me very literal here. We are not 

saying we are Federal police officers, we augment the FPS police 

force, but our duties are more important and complex now than 

ever. 

Admittedly, we are finding huge deficiencies between the training and the qualification that we are supposed to be provided by 

the contractor and what we are actually getting. This is none of the 

security officers’ fault. I have been to every major city in the 

United States, and the contract security officers take their jobs seriously. They are wanting and wishing to receive the very best 

training and meet the higher standards that the Government expects, but in many cases the doors to this training are not open to 

us. 

You do not need to look any further than the Inspector General’s 

report in October of last year, where he discusses the problems 

with the agency as it relates exactly to the oversight of these contracts and the failure of these contractors to train and qualify the 

security officers. That IG report shows what the security officers 

have known for years. From our own evaluation at UGSOA, we 

have learned something very interesting, however: where we have 

a solid and longstanding labor relationship with our employers, the 

Federal contractors, the incidents of failed training and other security contract failures are decisively less. That speaks volumes to 

41

the labor stability and the direct correlation to improve security 

and performance on these contracts. 

If you look at the correlation, you will see that it works the other 

way as well. There is a contractor right now in Colorado before the 

10th Circuit Court of Appeals habitually on labor violations. In concert with that report, you will find a contractor who had to pull all 

their security officers out of the Federal buildings in April after the 

contractor, Amguard, let their credentials and certifications expire. 

Last year alone, certain security contractors have stopped paying 

their security officers. In Tampa and Miami, Florida, Superior Protection, Inc., head up by CEO Jack Heard, failed to meet payroll 

for two months. Now, we have heard about a failed payroll here. 

Imagine going for two months. I reported this to GSA and DHS because Superior had a history going back clear to 2000. These 

abuses are chronicled in various forms: arbitration cases; districts 

of the Department of Labor; the national office of the Department 

of Labor, where I flew out and met with their teams back in 2004; 

the U.S. District Court in Miami; the U.S. District Court in Tampa; 

the 5th Circuit Court of Appeals; the U.S. Supreme Court. The list 

goes on. And there is pending litigation against Superior, even 

though they have defaulted. 

It was no surprise to me last year that Superior’s paychecks 

began reporting insufficient funds. These insufficient funds were to 

my members in Tampa, Florida in May and June of 2006. Here is 

what did surprise me: the character and integrity and the heart 

and souls of the DHS contract security officers in Tampa and 

Miami, who remained working for eight weeks without a paycheck, 

protecting Federal buildings. Eight weeks. 

Six weeks into this fiasco, after I had tried the system by calling 

DHS and DOL and everything we could do to think of to stop this 

thing, we decided with our local members that enough was enough, 

and we were prepared to strike. I notified DHS at all levels. When 

I landed in Tampa on July 6, I had a voice message from Department of Homeland Security in D.C., Ms. Nina Ferraro, which was 

just short of a guarantee of a new contractor. She stated, ‘‘That we 

shouldn’t strike because security guards would be happy with the 

outcome the next day.’’

I waited that extra day. In the meantime, I went to all the security officers I could find and assure them. One more day, I kept 

telling them, one more day, based on this call from Ms. Ferraro. 

Can you imagine six weeks without a paycheck and your international union official has to go around to the sites—not the Government officials, not the company—having to tell everyone let’s 

just wait one more day? 

The Tampa security officers should be commended and decorated 

for staying there, working without pay that long. I mentioned this 

to the FPS commander in Tampa while I was there. They have not 

been formally commended, but a year later they finally got their 

pay. 

UGSOA should have your attention. If not, it gets worse, and we 

have already heard the story about what happened here in Washington, D.C. with STARTECH. You have heard from the witnesses 

who are here that have lived it. What we are talking about from 

Mr. Waites in his criminal history was not petty cash fraud, it was 

42

bank fraud. In the criminal record, it is $2.7 million buying a Corvette for his daughter, a condominium, and a Rolex watch with 

fraudulent money, and that list goes on. It is in the court record. 

According to Ms. Messner, who you heard a moment ago, the 

bank default notice was caused by the failure of Mr. Waites to report his criminal record to the bank. 

We have more examples about how these contractors are failing. 

The list could go on. 

I am going to skip ahead because of time——

Ms. NORTON. Yes, if you could just summarize, Mr. Carney, because we kept the first panel very long for the record. 

Mr. CARNEY. I understand. 

Ms. NORTON. But your testimony is very important to us as well. 

Mr. CARNEY. Just, for the record, understand I can provide other 

examples to the Committee upon your request. 

Ms. NORTON. Examples of other companies are you saying? 

Mr. CARNEY. Yes. 

Ms. NORTON. Yes, I wish you would provide just that kind of information as extensively as you can for the record. 

Mr. CARNEY. A preview of it is in my written testimony, Congresswoman. 

Ms. NORTON. Yes. 

Mr. CARNEY. What I have reported would be a tragedy in the private sector, but on Government contracts it should never happen. 

Government security contracts ought to be not run this way. It is 

wrong in the private sector and it is doubly wrong here. It is like 

we were having our own mini Enrons and Tycos right here on Federal contracting. 

Collective bargaining works and it has a positive and meaningful 

impact not only for the employees, but for the greater security network in the United States, and I can provide examples of that to 

the Committee as well. We can work together, but it has to come 

through a reciprocal process of communication and an inclusive 

process where labor has a voice. 

I have been tracking various issues before this Committee. Some 

of the recent highlights are the recommendations of the Department to cut back the Federal Protective Service staff. In the face 

of these many problems, FPS already has more than enough to 

handle. Actually, they don’t have enough security or police officers 

to cover the work that they do have. Those are the guys that we 

count on to inspect these contracts and ensure that no more 

STARTECHs happen, no more Superiors happen, no more 

Amguards happen, ELAs, MVMs, Sooner Process and Investigation; and the list goes on. 

The question before this hearing and before this Committee is 

what was DHS’s responsibility to ensure, DHS must ensure, absolutely. The responsibility is shared with the contractor, but the authority in the process, the authority in the process is the Department. And it is painfully obvious to me that we are lacking oversight in the resources, the funding in the budget at all layers in 

this procurement system. 

I read Inspector General Mr. Skinner’s report, his most recent 

annual performance plan of April 2007. On page 14 he describes 

the objectives he has identified for the acquisitions, Training and 

43

Qualifications of the Acquisitions Workforce—he is talking about 

us—and the objective being to what determine to what extent the 

acquisitions workforce must meet education, experience, training, 

certification requirements, adequacy of measures used to oversee 

compliance with acquisition workforce, training and qualification 

requirements. I would like to see that certain criteria applied to the 

contractors who own and operate these contracts, including their 

executive officers. 

In conclusion, finally, what doesn’t translate to me in the broader 

security perspective is that we are doing a surge of troops overseas 

right now and we are cutting back the homeland security troops 

right here in our homeland. Shouldn’t we be talking about a buildup of our troops on the homeland who are protecting the United 

States and its critical Government infrastructure? In light of that, 

my opinion is that if we can afford to do it overseas, we can afford 

to do it right here. To do a cutback now would appear to be a huge 

mistake. 

Madam Chairwoman, I would not make these recommendations 

in seemingly critical observations without an extension of UGSOA’s 

promised assistance in this process to the Committee, to Mr. Skinner, and to Ashley Lewis, Director of Acquisition Policy. Whatever 

we can do to assist in these evaluations, either by providing your 

agents access to our local leaders or our members who have seen 

the violations, please take advantage of that. But, also, please protect them. Improve those whistleblower protection laws that you 

guys have been pushing. It would be a huge resource to utilize 

what we are seeing in your audits. 

I know there are some questions about small versus large contractors and things like that. I thank you for your time, and I 

would be glad to answer any questions you might have. 

Ms. NORTON. Thank you very much, Mr. Carney. 

Mr. Faye. 

Mr. FAYE. Good morning. My name is Assane Faye, International 

Security, Police and Fire Professionals of America, SPFPA, Washington, D.C. District Director. I have been in that position for two 

and one half years, and been employed by the International Union 

for three years. In the Washington, D.C./Maryland area, the International Union represents nearly 2,000 security officers and, on 

their behalf, I would like to thank Madam Congresswoman Norton 

and Ranking Member Mr. Sam Graves for allowing our case to be 

heard without much delay on this prestigious law today. 

I also would like to thank the Mayor of Washington, D.C., Adrian 

Fenty; Corlis Sellers, Regional Administrator of Department of 

Labor, Wage and Hour Division; and particularly Enrique Lopez for 

working so diligently to bring our issue to the forefront of their 

agenda in the past six weeks; and Ms. Nina Ferraro, Contracting 

Officer for the U.S. Department of Homeland Security for the show 

cause notice she issued so promptly to STARTECH, the day after 

her office received the Union’s complaint. 

Between April 26, 2006 and March 28, 2007, I negotiated the collective bargaining agreement between SPFPA and STARTECH, 

covering the security officers at the Food and Drug Administration 

building in College Park; the Washington, D.C. Navy Yard; the National Data Center in Oxon Hill, Maryland; the USDA Center in 

44

Riverdale; the Potomac Center in Washington, D.C. and Wheaton; 

the Department of Education FOB6 in Washington, D.C.; and 

International Trade Commission in Washington, D.C., as well. 

Shortly after the negotiations in 2006, the employer began to 

show patterns of lateness on the payroll schedule. On a few occasions, employees were unable to get their paychecks until four days 

later and the employer namely, Mr. Weldon Waites, continually put 

the blame on the Government for failing to make these funds available to the appropriate bank. He said his company was now doing 

business with the National Bank of South Carolina, but the U.S. 

Government sent the funds to the wrong bank. As a good faith gesture, Mr. Waites offered the employees an additional paid vacation 

day. 

In May 2007, the problem reoccurred, except this time there were 

no funds available for the entire month. For two consecutive pay 

periods, the employer failed to meet its obligations under the collective bargaining agreement as set forth in Article 26. A grievance 

was then filed by Chief Shop Steward Brian Smith, sitting here 

today, underlining, furthermore, the employer’s failure to remit the 

health and welfare, and pension fund contributions to the respective accounts. In most cases, these accounts were never contributed 

to in accordance with Article 25 of the collective bargaining agreement. Additionally, the employer stopped remitting the dues contributions to the International Union since August of 2006, which 

again violated Article 2, Section 1 of the collective bargaining 

agreement. 

On or about May 20th, 2007, I spoke with Mr. Waites and requested a meeting. He agreed to meet with the union leadership 

on May 23rd, 2007, to explain the problems associated with the 

company’s failure to pay wages on the first pay period of the 

month. On the day in question, Mr. Waites decided to join us via 

speaker phone, and there he spoke for 45 minutes, responding confidently to all the questions that were asked and said with assurance that he had an overdraft protection account of $1 million set 

aside solely for the purpose of covering unanticipated payroll deficiencies. He also said that he had to use $2 million from Sharon 

and Weldon Waites’ personal bank to fund payroll. He further 

noted that this incident was merely ADP’s negligence to send unsigned checks on a Friday. He said ADP also failed to print the 

bank’s routing number on the checks, and that naturally made it 

impossible for the company to pay the employees. Interestingly 

enough, the employees did not receive their wages even two weeks 

after, and Mr. Waites’ bank account with the National Bank of 

South Carolina showed a negative balance of minus $1,334.31 on 

June 7, 2007. 

Later on, during the meeting, I asked Mr. Waites to tell us about 

the pension fund, the health and welfare, and the union dues contributions. He asked to be given some time to reconcile the figures 

in order to be able to make the payments. He once again put the 

blame on STARTECH’s former Operations Manager, namely, Mr. 

Melvin Mobley, who he characterized as a poor performer, and consequently promoted Ann Marie Messner, the General Manager, 

who was here earlier today, Ms. Messner. As a result, the previous 

45

Operations Manager resigned and everything would now be back 

on track. 

Two days later I found out that Mr. Waites himself wrote the 

resignation letter for Mr. Mobley and demanded that he sign it, 

which, of course, Mr. Mobley refused to do. Mr. Waites tactfully put 

his own staff out of work, starved the security personnel, and managed to avoid answering my question, which originally related to 

health and welfare, pension, and dues contributions, for which he 

was liable. 

For clarity, I took the liberty of calculating an approximate dollar 

amount owed to the bargaining unit employees using the hourly 

wage rate as a unit of measure, assuming that all monies, earmarked alike, were already paid out to STARTECH. If we use 

roughly a population of 1,000 employees, which is about the capacity of STARTECH, give or take, union and non-union employees included, times 160 hours of the month times $20.10 an hour, the answer would be $3,216,000 for the month of May alone. If we add 

to that $3.60 per hour for health and welfare times 160 hours of 

the month times 12 months—although the employer has misappropriated this money for longer than 12 months—times the 1,000 employees, the answer would be $6,912,000 for 2006. Let’s add again 

75 cents per hour for the 401(k) pension plan times 160 hours of 

the month times 12 months times 1,000 employees, the answer 

would be $1,440,000 for the year 2006 alone. The sum of all three 

totals is equal to $11,568,000 in a 12-month period, without including 10 sick days, 10 vacation days, assuming every employee has 

worked for the company for only one year. The approximate total 

would then be $11,568,000 plus $3,216,000, which add up to 

$14,748,000. 

It is my hope that the Government will not let STARTECH get 

away with this sum of money, since the sole access to remedy for 

the union in this instance seems to be the Service Contract Act and 

the Fair Labor Standards Act, or to respectively appeal to the resources of the Wage and Hour Division of the Department of Labor 

and the National Labor Relations Board. 

Unfortunately, under the bankruptcy shield, where Mr. Waites 

will presumably seek refuge, there is little assurance his corporate 

assets will meet the debt requirements, unless the negative balance 

of June 1st, 2007 finds its way up above par in a very dramatic 

way. 

While the qualification prerequisites of security professionals are 

getting tougher to acquire, post orders are getting more stringent, 

and the post-9/11 era is yet to live past the first decade, we cannot 

allow foreclosures and bill collectors’ threats and harassment to 

ruin the lives of our security professionals and their families. 

We are at the dawn of a new generation of security and law enforcement, not only in the United States, but globally, and we must 

demonstrate quality leadership by example; but to do so we need 

our pride, dignity, and respect restored. 

Madam Congresswoman, Mr. Ranking Member, the guard force 

needs your help to collect these unpaid wages from STARTECH, 

and it needs it urgently. Thank you. 

Ms. NORTON. Thank you, Mr. Faye. I thank both you and Mr. 

Carney. Clearly, these employees benefitted from having represenVerDate 0ct 09 2002 17:12 Feb 22, 2008 Jkt 000000 PO 00000 Frm 00059 Fmt 6633 Sfmt 6633 P:\DOCS\36684 HTRANS1 PsN: JASON
46

tation, somebody to speak for them, to represent them in a moment 

of crisis, and your own representation appears to have contributed 

to their professionalism, as well. 

I am going to move to the Ranking Member. Before I do so, I recognize that there are some security officers in the room who remained on duty in the Federal agencies involved who were unpaid. 

May I just ask all of you who meet that description, would you 

stand up so we could see you and give you our personal thanks? 

[Applause.] 

Ms. NORTON. Mr. Graves. 

Mr. GRAVES. Thank you, Madam Chairman. 

I too want to add my thanks to all of the officers that are here 

today and your colleagues. Thank you for the commitment to Federal employees and to the visitors that visit the facilities that you 

all protect. Your willingness and just the simple fact that you 

showed up for work even though you weren’t getting paid says a 

lot about your integrity and speaks volumes about your personal 

commitment to what you do, and it doesn’t go unnoticed, I have to 

tell you. 

I just have a couple questions real quick, and they are directed 

at Ms. Montgomery and Mr. Smith. Has the FPS helped to place 

you and your colleagues with other companies or in other roles as 

a result of this? 

Ms. MONTGOMERY. Well, starting June 4th, I believe it was, we 

have a company called Frontier that has taken over the contract 

temporarily, until October, the beginning of October, when 

STARTECH would have had to give up the contracts. 

Mr. GRAVES. So they basically just picked right up. Did they 

pretty well hire everybody? Did they just pick everything right up 

as far as the employees, the guards, the folks that are doing the 

work? 

Ms. MONTGOMERY. Yes, sir. 

Mr. GRAVES. How about the union? Mr. Carney, you might be 

able to answer this, about back benefits, back pay, that sort of 

thing. Are you guys helping them with that or is there an opportunity to? 

Mr. CARNEY. Here is where that process is at. The Department 

of Labor has seized the final payroll. Not payroll, invoices to 

STARTECH. So there is money there to be had to get these guys 

paid. At UGSOA we have been through this many times with these 

contractors; that is part of the stuff I want to give to the Committee. I have already given it in part to the Chairwoman. So the 

money is there to be had. If he were to file for bankruptcy, my experience in the Sooner Process and Investigation case that happened, I would say 2001, 2002, payroll moves right to the top of 

the list in a bankruptcy proceeding, so we are going to get paid 

first. The problem is it just takes so long. The guys down in Tampa 

that I gave testimony about, those guys didn’t get paid until just 

this last payroll, I think, almost a year later. What the Department 

of Labor has to do is they have to go in, find out who is owed what. 

If they get the cooperation of STARTECH to work those payroll 

records, they can process it a lot faster. But the money has been 

seized, as I understand it; it is there to be had; it just needs to be 

delineated and disseminated. 

47

Mr. GRAVES. Thank you. 

Madam Chair? 

Ms. NORTON. Thank you very much. 

Mr. Smith, I think you said you had to take a high interest loan 

when you weren’t paid. Are you speaking of those pay-day loans? 

Mr. SMITH. Yes, ma’am. 

Ms. NORTON. Oh, my goodness. I hoped everyone who is a Federal employee belonged to a credit union. You know, we now have 

citywide and county-wide credit unions because of the terrible interest for the pay-day loans, and there ought to be other ways to 

deal with this. 

Did either of the unions contribute in any way to the hardship 

these employees encountered? 

Mr. FAYE. In the case of our union, the system is somewhat difficult to utilize in terms of time, because it has to be put through 

the executive board, and then after they meet they will then pass 

it through membership at large before it gets approved. 

Ms. NORTON. Say that again, I am sorry. They have to do what? 

Mr. FAYE. This is coming to helping the membership financially, 

but the turnaround is too long, because you have got to go through 

the executive board members first. 

Ms. NORTON. So there is no fund. There is no fund out of 

which——

Mr. FAYE. Exactly. 

Mr. CARNEY. I believe what he is trying to say is the IRS prohibits cash disbursements from union treasuries, it is an IRS regulation, you can’t do that. So now you might ask yourself why do 

strikers get a strike fee or something. 

Ms. NORTON. Strike fund. 

Mr. CARNEY. That is because that is already written into our constitution. What he is describing is we would have to go back, 

amend our constitutions, amend our bylaws to do a cash disbursement, which, in a union, being a bureaucratic structure, it is a 

process you have to go through. So the immediate payment to these 

guys is not there. The second thing, most importantly, is he has 

our money. You know, what money do you hand out to the employees when they have been——

Ms. NORTON. It would have to be a preexisting fund, you are certainly right about that. 

Mr. CARNEY. That is the money we operate on as a union, and 

if we are not getting the dues deducted from the employees’ paychecks routed to us, which has not been the case, and it is the 

same with UGSOA, as Mr. Faye testified for SPFPA, back to September. I mean, they owe us money, so that is the same money you 

are talking about where we would be able to help the employees. 

Mr. FAYE. Right. 

Ms. NORTON. You heard Mr. Faye rather extensively how much 

in liability and what the basis for that liability would be and how 

you calculate it. I wonder if you, Ms. Montgomery or you, Mr. 

Smith, can say how much, at least in compensation, you are still 

due from STARTECH. I am not referring to what Mr. Faye did, 

health benefits, union dues, and the rest, just in straight out pay, 

base pay. How much would you calculate you are still due for time 

worked but not paid? 

48

Mr. SMITH. I am owed roughly about $4,000. 

Ms. NORTON. And you have not received any of that? 

Mr. SMITH. No, I have not. 

Ms. NORTON. Ms. Montgomery? 

Ms. MONTGOMERY. I want to include June 15th as well, because 

we worked through the 30th for STARTECH, so we should have 

been expecting a check on the 15th of June. So I think I would take 

that about $2,000 more than what Mr. Smith is saying. 

Ms. NORTON. So Mr. Smith would have to add $2,000. 

Ms. MONTGOMERY. He would need to add $2,000, so that is 

roughly, maybe, before tax, about $6,000. 

Ms. NORTON. I just asked staff about the Labor Department involvement. I understand that takes a whole year. They have to figure out who is involved. Meanwhile, there is no cash that flows to 

people who are unpaid. 

Mr. CARNEY. If I might add, when they settle those things, that 

is just for payroll; they don’t cover the interest loans. You are not 

going to get a payback on that as a security officer. 

Ms. NORTON. Do they cover the past compensation? 

Mr. CARNEY. Payroll. 

Ms. NORTON. Yes, payroll. 

Mr. CARNEY. The benefits——

Ms. NORTON. Including benefits, do they cover? 

Mr. CARNEY. Health benefits and those things, we have never 

been able to recover those in our experiences, even in the bankruptcy courts. 

Ms. NORTON. So you are saying that these employees who have 

lost how many weeks of pay, approximately? 

Mr. CARNEY. Six. 

Ms. NORTON. About six weeks of pay. That would mean six 

weeks worth of health benefits, pension benefits——

Mr. CARNEY. Pensions you might as well forget about; they are 

gone. If they had money going in——

Ms. NORTON. That is gone from their pensions. 

Mr. CARNEY. In the Sooner Process and Investigation case where 

he went to default, Larry Ferguson, we went to the bankruptcy 

court. We got our payroll, but we didn’t get anything else; and we 

had money that was supposedly going into 401(k)s and things like 

that. 

Ms. NORTON. So are you on the Federal, the same one I am on, 

the FEBPC? Are these employees covered by the FEBPC, the Federal employees, or are they privately covered? 

Mr. CARNEY. No, since they are private contracts, the contractor 

set up the benefit plan. 

Ms. NORTON. So they can’t even buy into our Federal health insurance. 

Mr. CARNEY. No, no. That is the benefit the Government gets 

from contracting out, is we don’t get the same benefits you do. 

Ms. NORTON. I am not talking about the benefit now. I am just 

saying they can’t even buy into the Federal Employee Benefit Plan. 

They have to have a private plan outside of that. 

Mr. CARNEY. That is correct. 

Ms. NORTON. Ms. Montgomery, you had a comment on that? 

49

Ms. MONTGOMERY. Madam Chairman, I was going to say we 

would love that, though. 

[Laughter.] 

Ms. NORTON. Yes, we do need universal health care, don’t we? 

We certainly now see what happens. 

Let me just ask what health care plan are you part of? Are you 

part of a health care plan? Is it a union provided health care plan? 

Mr. FAYE. No. Mr. Waites wanted to provide his own plan, 

and——

Ms. NORTON. Oh, heaven help us. 

Mr. FAYE. Right. And in this case he offered a substantial increase on the wages, and that was quite attractive and the membership, you know, liked it; they said, okay, well, in this case at 

least our wages are good, they are high enough. In some cases the 

wages were bumped from 15 and change to $20 so that he could 

just run the health and welfare. In doing so, he went and got a 

mini plan and people were rejected at the doctor’s office. All kinds 

of problems occurred and eventually he just gave it up. In the following collective bargaining agreement that we negotiated, he gave 

it up and the money now was to be disbursed back as cash to the 

employees’ paychecks and there would be no plan. Then they would 

go and shop for their own coverage. 

Ms. NORTON. Oh, goodness. 

Mr. FAYE. But even that he didn’t make good. 

Ms. NORTON. But even that he didn’t make good, because he 

would have had to put that money back in to their pay. 

Mr. FAYE. Exactly. 

Ms. NORTON. In other words, these employees are not covered by 

a plan, a health care plan, but must seek in the private market? 

Mr. FAYE. Yes, with cash. 

Mr. CARNEY. Madam Chairwoman? 

Ms. NORTON. As individuals? 

Mr. FAYE. Yes. 

Mr. CARNEY. Madam Chairwoman, that is one of the bigger problems we are seeing. At the tail-end of my testimony I talked about 

the differences between the small contractors versus the large contractors. The larger contractors, they still have problems with their 

benefit programs, but, by and large, they can operate, understand, 

and manage those plans in the administration of getting employees 

into them. 

Ms. NORTON. Do you have health insurance coverage? Do either 

of you have health insurance coverage now? 

Ms. MONTGOMERY. No, ma’am. 

Mr. SMITH. We thought we had a plan, but it was ineffective 

since the commencement of it, and the money that was allotted by 

the Federal Government to cover the plan is in question now. 

Ms. NORTON. Well, if all that happened was you were remitted 

a sum to try to fish for yourself in the private market, you can get 

individual plans, and that is exactly why nobody does it, because 

almost nobody can afford to do it that way. This is a very serious 

issue. Frankly, this is a serious security issue. 

What is the turnover, Mr. Carney or Mr. Faye, among——

Mr. FAYE. Well, our ratio slowed down greatly because of the 

wages, but prior to that the turnover was quite high. But when the 

50

hourly rate became $20 and up, then it stabilized a little; there was 

less turnover than the year before. 

Mr. CARNEY. I concur. In my experience in other contracts 

around the United States, when you finally get a livable wage on 

the contract negotiated over a period of time, the turnover rate 

goes down. 

Ms. NORTON. Well, the wages here, is it like the average wage, 

about $20 an hour? 

Mr. FAYE. No, about 16, 17. 

Ms. NORTON. Now, that is undoubtedly because these employees 

are unionized or represented by a union. How typical is this wage 

level in the industry? 

Mr. CARNEY. Oh, it is all over the board. I have argued these 

wage variance cases. In Houston, Texas, where they have a low 

cost of living, they are making $18.50 an hour. By comparison, I 

am arguing a case right now that is going before the Department 

of Labor where NASA security officers, who do predominantly the 

same thing, are getting 18 bucks an hour, but at an extraordinarily 

higher cost of living in San Francisco area of California. So you 

have to kind of weigh it against the cost of living for the locality. 

But, by and large, they are all over the board. I have met with the 

Department of Labor’s Bill Gross, who proscribes these wage determinations and they are high and low all over the place. You can 

have a high cost of living locality with a low wage and a low cost 

of living locality with a high wage. There is seemingly no rhyme 

or reason. 

But the thing about unions who negotiate on these contracts is 

we bring that into parity, and in my testimony that is what I was 

talking about; we have a positive effect which brings the overtime 

down, brings the turnover rates down, improves morale, and I 

could go into a dissertation about how morale affects security. 

Ms. NORTON. Well, we could see the effect of good morale, given 

what has happened to these employees and their remaining on the 

job. 

Mr. Carney. 

Mr. CARNEY OF PENNSYLVANIA. Thank you, Madam Chairman. I 

just have a couple questions. 

Mr. Carney, I want to congratulate you on your name. It is a fine 

name. 

Mr. CARNEY. My namesake. 

Mr. CARNEY OF PENNSYLVANIA. How many private security contractors are there in the U.S. approximately, do you know? 

Mr. CARNEY. I would say we deal with—on Federal contracts? 

Mr. CARNEY OF PENNSYLVANIA. Just industry-wide. How many, 

roughly, do we have? 

Mr. CARNEY. Between private and Federal security contractors, 

I would guesstimate 150. 

Mr. CARNEY OF PENNSYLVANIA. A hundred and fifty. Okay. How 

many STARTECHs do we have out there? 

Mr. CARNEY. Right now, you have got about five STARTECHs operating on Federal contracts, and potential STARTECHs. 

Mr. CARNEY OF PENNSYLVANIA. Okay. Right now. Were there 

more, have there been more in the past? 

51

Mr. CARNEY. Yes. In my testimony, if you look at it, I worked as 

a security officer in 19——

Mr. CARNEY OF PENNSYLVANIA. I will read your support. We submit it for the record. 

Mr. CARNEY. In the past there was ELA, who I worked for in 

Denver, Colorado, when I was a security officer on a Federal contract. Then you had Sooner Process and Investigation. We had 

STARTECH, Superior. There are a few that probably slip my mind, 

the actual name of the companies, but there are plenty out there 

that have defaulted. 

Mr. CARNEY OF PENNSYLVANIA. So out of the roughly 150 or so, 

20, you would estimate, are of STARTECH caliber? Or have 

STARTECH problems, put it that way. 

Mr. CARNEY. It is hard to estimate because your question was, 

in the broader security industry, how many contractors are out 

there. 

Mr. CARNEY OF PENNSYLVANIA. Right. 

Mr. CARNEY. The Federal Government has given preference——

Mr. CARNEY OF PENNSYLVANIA. Let me ask it this way. 

Mr. CARNEY. Okay. 

Mr. CARNEY OF PENNSYLVANIA. If you know, if you can estimate, 

even roughly, what percentage in the industry have problems like 

STARTECH has had? 

Mr. CARNEY. Twenty percent. But I would say one percent would 

even be too high if they are bidding Federal contracts and operating them. 

Mr. CARNEY OF PENNSYLVANIA. Yes, I agree. I agree. The average 

wage, what is the average wage, starting wage of a security guard? 

Mr. CARNEY. The averages are impossible to tell you because it 

is all weighted by locality and how the Federal Government is proscribing their wage determinations. It is kind of like spinning the 

roulette wheel; it is all over the board. And that is one of the 

things UGSOA is trying to do, we are trying to bring parity to the 

industry. The average wage, I would say, if I was going to throw 

out a guess, on a Federal contract for security officer classification, 

between $13 and $16 an hour. 

Mr. CARNEY OF PENNSYLVANIA. That would be about a nationwide average, you would say? 

Mr. CARNEY. Yes. 

Mr. CARNEY OF PENNSYLVANIA. Okay. 

Mr. CARNEY. It is really wide open. 

Mr. CARNEY OF PENNSYLVANIA. And how long does it take to 

have raises go into effect? I mean, you are with a job three years. 

What can you expect in terms of pay? 

Mr. CARNEY. Our raises are negotiated usually on an annual 

basis. Some of our collective bargaining agreements are structured 

based on your tenure. If you are a three-year security officer, you 

could get X amount of dollars more than a new hire. But, by and 

large, once you walk onto these contracts, you go through the certifications and qualifications, you are going to make the same as 

the guy who has been there a long time. We are trying to work a 

lot of that out in our negotiations, but it is something you can’t do 

in one collective bargaining session. 

52

Mr. CARNEY OF PENNSYLVANIA. No, I understand about salary 

compression and things of that nature. 

I do want to get back to something you just mentioned. Can you 

please describe the training process that the security guards go 

through, that your members go through? 

Mr. CARNEY. It usually starts with being hired. There is an extensive background check. 

Mr. CARNEY OF PENNSYLVANIA. The background check is part of 

the pre-hiring? 

Mr. CARNEY. Usually. At some phase in the two or three weeks 

that you go through training there is the background check. For 

the guys here in D.C., they have to get certain clearance paperwork, so then they have to wait on the clearance paperwork, and 

there is a backlog of those, we are hearing from one contractor 

right now. So it ranges from two weeks in regions where they are 

really on the ball. Regions of FPS, where they can get the guy’s 

background, get him what is called an interim suitability clearance, 

you are looking at anywhere from two weeks to, on the high end, 

maybe six to eight months, I have heard. 

Mr. CARNEY OF PENNSYLVANIA. How many—I guess for lack of a 

better phrase—uncleared personnel are on the job? 

Mr. CARNEY. You mean with interim suitabilities? I don’t know 

that number. 

Mr. CARNEY OF PENNSYLVANIA. Okay. So the training, then, involves what? 

Mr. CARNEY. You go through these Federal contracts line out 

about an 80-hour course that you have to go through. On average 

it is about 80 hours. Some of that time is spent with a contract 

trainer; some of that time is spent with a Government employee 

who is a specialist for that contract who trains you. But there is 

a grand total, on the average, about 80 hours of training, which includes your firearms qualification, what your authorities are, what 

our jurisdictions are, because we operate on partial, exclusive, and 

concurrent jurisdictions. So if you walk off the corner of the street 

to grab somebody who is trying to escape, you have got to know 

what jurisdiction you are in. So you have got to really understand 

all those dynamics. So they spend a lot of time on that; they spend 

a lot of time on report writing. 

Then you have to go through breakout training that is even more 

specific. You have to learn to run an x-ray machine and magnetometer, which are on the high end of industry right now. These 

things are highly technical; they can differentiate between organic 

and inorganic materials, and you have got to be able to go through 

that. You have to go through a simulated training course that 

brings bombs and stuff through so that you understand what you 

are looking for before you ever are on the line. 

I could go on. 

Mr. CARNEY OF PENNSYLVANIA. Sure. 

Mr. CARNEY. That gives you kind of a snapshot of the intensity 

of the training. 

Mr. CARNEY OF PENNSYLVANIA. Typically, who provides this 

training, is it the employer? 

53

Mr. CARNEY. Like I said, the employer in concert with usually a 

Government official at various stages. Some of it is layered so that 

you get it twice. 

Mr. CARNEY OF PENNSYLVANIA. All right. And what is the cost 

per person for the training, do you know? 

Mr. CARNEY. I have actually done some cost overruns when we 

were addressing turnover rates in collective bargaining, and we 

have seen costs to hire an employee, again, depending on region, 

somewhere between $3500 to $6,000 per employee to put them 

through this training. 

Mr. CARNEY OF PENNSYLVANIA. To go through the 80 hour 

course. 

Mr. CARNEY. Yes. When you factor in—there are a lot of things 

that factor into that. 

Mr. CARNEY OF PENNSYLVANIA. Sure. I appreciate that. 

Okay, I seem my time has already expired. I apologize. I do want 

to personally thank each one of you who stayed on the job even 

though the check wasn’t coming. It speaks of your character and 

your dedication to this Nation, and my personal thanks to all of 

you. 

Mr. Smith, Ms. Montgomery, thank you very much. Congratulations on your degree. I look forward to you getting the diploma and 

moving on. I appreciate that. 

No further questions, ma’am. I yield back. 

Ms. NORTON. Thank you for your questions, Mr. Carney. 

I am going to finish this hearing before 2:00. We have gone on 

for some time. But I do want to say this hearing is laying the 

groundwork for legislation that we regard as important. This is not 

an oversight hearing, this is an investigative hearing, trying to get 

to the bottom of a situation so we can do something about it. 

I only have a couple more questions, then I have an important 

announcement. 

One of you testified—it may have been Ms. Montgomery or it 

may have been Mr. Smith—that the FPS—I think it was Ms. Montgomery—came without warning to check into this situation. How 

often did they come? I mean, this led you to say so where is the 

Federal Government in all of this. How often did they come. Did 

FPS know? Did anyone from FPS communicate with you concerning the failure to pay you? Either of you. Did either of you hear 

from the Federal Protective Service or from anybody in the Federal 

Government? 

Ms. MONTGOMERY. No. We actually didn’t. When I was saying——

Ms. NORTON. Yet Federal Protective Service officers came to 

monitor you how often? 

Ms. MONTGOMERY. Everyday. It could be an everyday thing——

Ms. NORTON. Well, what did they do in monitoring you? What 

did they do? 

Ms. MONTGOMERY. They may come and just monitor your actions 

as far as dealing with the clients, the employees and such, and 

they would check your credentials to make sure that they are valid 

and that you have everything that you need. 

54

Ms. NORTON. Did they know that you are not being paid? Did the 

people who were monitoring you on a daily basis know that you 

were receiving no pay? 

Ms. MONTGOMERY. Well, towards the end, when most people 

were getting kind of fed up, you don’t directly approach them. It 

is almost like a secret society. 

Ms. NORTON. Like a what? 

Ms. MONTGOMERY. A secret society, because you can’t really approach FPS officers. As far as the contracting officer who handles 

the accounts, it is like that person is a secret, you can’t know, as 

contract guards. It is like you are at a certain level and you can’t 

go above that. Anything that you have to deal with or that you 

need to know or want to know, you would have to go through your 

project manager or the front office, and sometimes we——

Ms. NORTON. If they are checking your badge up close and personal, is that what it is, they come and check your badge? 

Ms. MONTGOMERY. Yes. 

Mr. CARNEY. They are there to check their credentials. They are 

there to check and make sure that the security mission is being accomplished, which is important. But when you address labor 

issues—I think they ought to take back to the contracting officer. 

When you address labor issues with them, though, a lot of times 

you are labeled as a crybaby and those types of things. 

Ms. NORTON. Even if you were to mention to an FPS monitor 

that you had received no pay for weeks, that would not be considered appropriate? 

Mr. CARNEY. This one would be the exception. Somebody would 

have to stand up and take notice. 

Ms. NORTON. What would be the exception, please? 

Mr. CARNEY. Where you don’t get paid, something so egregious 

as not getting paid. But I am talking about on the other matters, 

like I didn’t get my training or things like that. You will get disciplined by the contractor for going outside your chain of command. 

Ms. NORTON. Well, I understand that and I understand how the 

system works, and I wouldn’t want to suggest that the monitors 

are there to hear the grievances of the officers. 

Mr. CARNEY. Right. 

Ms. NORTON. I am trying now to find out whether or not, in the 

normal course of monitoring, it ever came to the attention of these 

FPS monitors that people weren’t being paid; and should it have. 

I mean, I can understand how an officer——

Mr. CARNEY. I can testify about——

Ms. NORTON.—like Ms. Montgomery would be reluctant. 

Mr. CARNEY. I can testify about the Superior officers in Tampa 

last year. FPS knew through the whole process, I mean, they told 

the two or three main guys down there this is what is going on 

every week. I don’t know what their responses were, but——

Ms. NORTON. So FPS officers did communicate, at least in 

Tampa, that there was no payment going to the officers on the job, 

but FPS did not respond for two months. 

Mr. CARNEY. They communicated with us that they were aware 

of it, yes, to the security officers. 

Ms. NORTON. Basically, because these officers happen to be 

unionized, the normal course would be to inform your union, and 

55

perhaps the union could do what you did, which is to try to get 

somebody to listen. Did you ever speak to anybody at the FPS? 

Mr. CARNEY. Yes, I did. In Tampa, I was on the phone with FPS 

regional contacts out of Atlanta at every step of the way. Like I 

said, I went six weeks into the fiasco of trying to work the system 

before I gave up on the system. The only time anybody stood up 

to take notice is when I gave my intention I am flying to Tampa 

and I am going to go to the Federal building and we are going to 

walk out and take picket signs up. That is the only time we ever 

get any attention to this thing. 

Ms. NORTON. Well, what would FPS tell you? Were you in touch 

with FPS here during this three or four or six week, or whatever, 

period it was concerning the failure of the contractor to pay the 

guards? 

Mr. CARNEY. I am sure they were. I know I was. I mean, we sent 

our letters to the Department of Agriculture, unanswered. I think 

you were cc’d on those letters. I reached out to——

Ms. NORTON. Mr. Faye? 

Mr. FAYE. Well, the only time I came in contact with FPS is 

when they called me and asked me how far this issue has gotten. 

Ms. NORTON. When was that? 

Mr. FAYE. In the past week or so I received about three FPS 

calls. 

Ms. NORTON. In the past week or so? 

Mr. FAYE. Yes. 

Ms. NORTON. After this thing blew up. 

Mr. FAYE. Exactly. However——

Ms. NORTON. Well, during the time when people were not receiving their pay, although FPS was on the job monitoring people, they 

had no particular knowledge of what was happening; their job was 

to see if people were on the job, and there was no indication that 

FPS had any concern about the failure to pay these men and 

women? 

Mr. FAYE. They reacted to the complaints that our union filed, 

because they had my name and they called me and said FPS has 

filed complaints against Weldon Waites and somebody else will call 

you; we are going to pursue this investigation. But during the week 

in question when they were afraid of the guards walking off posts, 

FPS showed up at various locations to make sure that the guards 

were on post. So they came early to replace them if they didn’t 

come to work. 

There was also another instance where I believe this company——

Ms. NORTON. So they were prepared to replace them if they 

walked off the job,——

Mr. FAYE. Exactly. 

Ms. NORTON.—knowing that people could only go so long——

Mr. FAYE. So long. 

Ms. NORTON.—without being paid. 

Mr. FAYE. Right. 

Ms. NORTON. But you know of no intervention by the FPS to 

make sure people were paid——

Mr. FAYE. To get them paid. 

Ms. NORTON.—to remain on the job. 

56

Mr. FAYE. No. No. They even brought this other company 

name——

Ms. NORTON. Now, we are going to be told that is because they 

were contract employees, and you know what we are going to tell 

them here? That somebody, we thought it was the FPS, has to act 

like a police force——

Mr. FAYE. Right. 

Ms. NORTON.—who is in charge of your men and women no matter who—has to act like a cop. 

Mr. FAYE. Exactly. And they brought the Decor Company—and 

most of Decor employees watch parking lots; they are not as graduates as our——

Ms. NORTON. I have got to move on, that is why I am not able 

to hear the most complete answer. 

Did the FPS ever call you in as union representatives since, in 

fact, they had the advantage of having somebody who represented 

all the employees, and say, look, tell me what you know; this is 

what we know; this is what we are doing? Was there any discussion of that kind from the FPS, who could easily have had Federal 

police, FPS officers there instead of security guards, since you were 

doing the same kinds of things that the FPS does? Any kind of conversations of that kind going on? Were any of those conversations 

initiated by the FPS? Did conversations have to be initiated by 

you? Could you answer those questions directly? 

Mr. FAYE. Well, the director of security at the FOB6, her name 

is Wynona—now, I don’t know how affiliated she is with FPS, but 

to her credit, she called me and we had about a half an hour conversation on the phone with two other—well, they were part of——

Ms. NORTON. This was during the six week period? 

Mr. FAYE. Right, during. And I think this happened about maybe 

three weeks ago. And when she came across all my letters and all 

the actions that our union was taking, she says, well, I have somebody here from your membership who is not aware of what was 

going on, and I think Mr. MacMillan, if he is still in the audience, 

was also part of the conversations. He said, well, I don’t know what 

the union is doing. So I showed him that we had a petition going 

on with over 100 signatures and that we initiated this whole thing 

right after it happened, and told him how far we had gone. 

So Ms. Wynona, to her credit, then wrote a letter out to people 

and thanked them for not walking off the posts, for continuing to 

go to work, and that this matter is going to continue to be investigated. 

Ms. NORTON. Who sent the letter? I am sorry. 

Mr. FAYE. Ms. Wynona. I only remember Wynona. MacMillan. 

Actually, he was part of the conversation. 

Unidentified SPEAKER. Department of Education. 

Mr. FAYE. Probably, yes. 

Ms. NORTON. Oh, this was some agency, someone in the agency, 

not the FPS. So the agency was grateful that it was being covered 

during the time——

Mr. FAYE. Exactly. 

Ms. NORTON.—even though the agency had no responsibility for 

providing the guards. 

Mr. CARNEY. Madam Chairwoman? 

57

Ms. NORTON. Yes. 

Mr. CARNEY. We are saying a lot what is FPS doing. There are 

layers to the whole thing. 

Ms. NORTON. We are aware of that. 

Mr. CARNEY. And I am just saying I believe it is the responsibility, in these types of incidents, of the contracting officials, the 

CO and the COR, to reach out to the union. But to answer your 

question——

Ms. NORTON. The contracting official works for the FPS, for ICE, 

and for DHS. 

Mr. CARNEY. Correct. 

Ms. NORTON. We are not in here getting into the innards of the 

bureaucracy. 

Mr. CARNEY. No. 

Ms. NORTON. We are treating this as a police matter. 

Mr. CARNEY. Yes, ma’am. 

Ms. NORTON. We are treating this as a security matter. We don’t 

care who it is supposed to be. 

Mr. CARNEY. No. 

Ms. NORTON. All we know is—I understand what you are saying, 

Mr. Carney. 

Mr. CARNEY. Okay, thank you. 

Ms. NORTON. This is what the concern that the Ranking Member 

indicated. This is the concern of this Chairman, that if these people 

are there for a purpose, to protect us from terrorism and from 

criminals, if they are not there, we are unprotected. 

Mr. FAYE. That is right. 

Ms. NORTON. It is as clear as that. If we don’t know if they will 

be there because they are not paid, we have no assurance we will 

be protected. 

Mr. FAYE. Right. 

Ms. NORTON. My concern is that when somebody has a police 

force, he doesn’t say, let me see, who do you report to, whether you 

are contract or not; he acts like he has got a police force, and treats 

everyone as if they are doing the same police duties, because guess 

what; your guards, your security guards were doing the exact same 

duties as FPS officers were doing. 

So we are very concerned because these people were transferred, 

transferred to the Department of Homeland Security post-9/11 to 

provide better protection. So when we find that there may not be 

good protection, 9/11 seems to have done us no favors in terms of 

making sure that we are protecting Federal employees. It is a matter of great concern to me because I am not only a Member of this 

Committee, I am a Member of the Homeland Security Committee, 

and I represent the nation’s capital. 

I thank you all for coming. We are going to have to call the final 

witnesses. They are very important to hear from and they are Inspector General Richard Skinner, Department of Homeland Security; the Director of the Federal Protective Service, Gary Schenkel; 

and the Director of the Acquisition Policy and Oversight for ICE. 

If you would come forward quickly. 

Much has been said about Mr. Waites, who is directly responsible, but there has been testimony here, obviously, concerning the 

58

Government, who is primarily responsible whenever we are talking 

about the security of Federal employees. 

I am going to ask for you to summarize your testimony, each of 

you, in five minutes. That is what we usually do. Because this is 

an investigative hearing, we have let it go on for much longer than 

that, because we wanted to hear as many facts as understood by 

all sides. We want to make sure that we give you a fair opportunity 

as well, so your testimony will be in the record and you can submit 

any other remarks afterwards. I will leave the record open for 30 

days. 

I am going to ask Mr. Skinner to summarize his remarks first. 

TESTIMONY OF THE HONORABLE RICHARD L. SKINNER, INSPECTOR GENERAL, U.S. DEPARTMENT OF HOMELAND SECURITY; GARY W. SCHENKEL, DIRECTOR, FEDERAL PROTECTIVE SERVICE, U.S. DEPARTMENT OF HOMELAND SECURITY; 

ASHLEY J. LEWIS, DIRECTOR, OFFICE OF ACQUISITION POLICY AND OVERSIGHT, U.S. IMMIGRATION AND CUSTOMS ENFORCEMENT, U.S. DEPARTMENT OF HOMELAND SECURITY 

Mr. SKINNER. Thank you, Madam Chair. 

Ms. NORTON. Oh, excuse me. I have to swear all three of you in. 

Would you please stand and raise your right hand? Do you swear 

that the testimony you are about to give is the whole truth and 

nothing but the truth, so help you God? 

[Witnesses answer in the affirmative.] 

Ms. NORTON. Let the record show that all three answered in the 

affirmative. 

And we will begin with Mr. Skinner. 

Mr. SKINNER. Thank you, Madam Chair. It is a pleasure to be 

here today. My testimony today will focus on the Federal Protective 

Service’s oversight of its contract guard program, payments to contract guard programs, and budget shortfalls and progress to date 

to improve contract and financial management. 

Before I begin, however, I would like to preface my statement by 

saying I believe this is very important to understand. When DHS 

was stood up in March 2003, it was shortchanged. That is, on one 

side of the ledger it acquired entire operational assets and programs of 22 disparate agencies. Yet, on the other side of the ledger 

it did not acquire proportionate share of the management support 

assets, such as procurement and financial specialists, to support 

these programs and operations. This is most evident with the 

transfer of the Federal Protective Service from GSA to DHS. 

Contract guard services represent the single largest item in the 

FPS operating budget, estimated to be $577 million for fiscal year 

2007. FPS has become increasingly reliant on its contract guard 

force, having less than 1,000 uniformed FPS officers nationwide. 

The contract guard workforce now numbers around 15,000, as you 

heard earlier today. 

FPS’s financial and procurement problems are longstanding. 

Prior to its transfer to DHS in 2003, GSA Inspector General and 

GAO reports repeatedly noted deficiencies with the guard contracts. In 2006, we too reported contract management problems. 

We audit FPS oversight of guard contracts in the National Capital 

59

Region, which, at the time of our audit, consisted of 54 contracts 

that provided about 5,700 guards to protect 125 buildings. 

We determined that FPS was not consistently deploying qualified 

and certified contract guards. Guards were not on post, were on 

post without current suitability determinations or with expired certifications. Thirty percent of the guards in our sample had at least 

one expired, but required, certification. For example, FPS employed 

guards with expired background investigations, medical certifications, and expired domestic violence certifications. In one instance, a guard was still on post seven months after being found 

unsuitable due to a felony assault conviction. 

Security guards were not armed at posts where they should have 

been. Conversely, they were armed at posts where they should not 

have been. Guards did not have security clearances, and non-citizen guards did not always carry the required work permits. 

We concluded that these deficiencies occurred because FPS was 

not equipped to effectively monitor contract performance. While 

contractors have the primary responsibility for assuring that all 

contract provisions are met, FPS too has the responsibility for validating whether or not contractors are complying with the explicit 

terms and conditions of the contract. Providing inadequate contract 

oversight can result in the Government paying for services it did 

not receive and placing FPS-protected facilities, employees, and 

visitors at risk. 

We also reported that FPS was not paying invoices for its contract guard services in a timely manner. Of the more than 25,000 

invoices paid nationwide from October 1st, 2004 to November 21st, 

2005, 88 percent were not paid within 30 days, as required by the 

Prompt Payment Act. As a result, FPS paid more than $1.2 million 

in interest penalties to guard companies. 

We attributed this problem to the ill-planned transition of the 

guard contract program from GSA to DHS. ICE’s financial management system simply was not capable of processing the thousands 

of invoices submitted by contractors each month. To compound the 

problem, FPS staff were not adequately trained prior to the transition—this is in 2003—to navigate ICE’s financial management system. 

With regard to recent budget shortfalls, we learned that funding 

issues had been a problem that has plagued FPS for years, again, 

prior to its transfer to the Department of Homeland Security. GAO 

reported that the security fees collected by GSA were not sufficient 

to cover the cost of FPS operations, and that the deficits were covered by GSA using monies from its Federal Building Fund. This 

problem was compounded when FPS moved to DHS. Not only was 

DHS not financially prepared to subsidize FPS operations, but, 

also, GSA was now charging DHS for the space that FPS occupies 

throughout the Country. 

I will conclude by saying ICE’s senior officers are well aware of 

these issues and are in fact taking some bold steps to resolve them. 

For example, FPS is creating a centralized procurement organization, increasing the number of procurement staff, and creating 

standard operating procedures in an effort to improve its management and oversight of its guard contracts; it has made improvements to its invoice payment procedures and systems, ensuring 

60

that contractor payments are made in a timely manner; and it proposes to reallocate its manpower according to a risk-based approach to securing Government buildings, which will result in an 

overall reduction in manpower and therefore resolving its financial 

difficulties. 

We are encouraged that ICE recognizes these problems and is beginning to take aggressive action to address them. When fully implemented, it appears that they could mitigate many of the problems that FPS is now experiencing. Nevertheless, we must keep in 

mind that these changes are in their infant stages. A lot can go 

wrong before they are fully implemented. Accordingly, my office remains committed to overseeing these and other financial and contract management challenges confronting ICE. We plan to work 

closely with ICE management in the months and years ahead to 

promote the economy, efficiency, and effectiveness of FPS’s programs and operations. 

Madam Chair, that concludes my remarks. I would be happy to 

answer any questions. 

Ms. NORTON. Thank you, Mr. Skinner. 

Mr. Schenkel. 

Mr. SCHENKEL. Chairwoman Norton, thank you for this opportunity to appear before you today to discuss the Federal Protective 

Service responsibility to ensure that contract guards protect Federal employees and their workplace, along with FPS’s response to 

a recent situation within the National Capital Region regarding the 

contract security guard company STARTECH. 

The contract guard program is a critical mission requirement of 

the Federal Protective Service. Approximately 15,000 contract security guards stand post protecting Federal facilities under the direction of——

Ms. NORTON. Mr. Schenkel, could you please, in light of the time, 

summarize the meat of your testimony, particularly as it pertains 

to the situation at STARTECH and to any ongoing difficulties you 

still perceive in the contracting operation, because we are going to 

have to leave here before 2:00. 

Mr. SCHENKEL. Well, let me just offer my personal apologies for 

not contacting you in the appropriate time manner. I did not know 

of that requirement. I will endeavor to ensure that you are made 

aware of any kind of situations like STARTECH again, and I am 

prepared to answer any questions that you have. 

Ms. NORTON. Thank you, Mr. Schenkel. 

Ms. Lewis, could I ask you to please summarize what you have 

to say so we can ask questions because of the time problem and 

the prior witnesses? 

Ms. LEWIS. Certainly. Thank you for the opportunity to appear 

today. 

As the head of the contracting activity for ICE, I have the overall 

responsibility for managing the contracting activities within ICE, 

including FPS. I have been with ICE about 14 months, and since 

my arrival, improving the quality and effectiveness of FPS contracting operations has been a top priority for me. 

The assistant secretary and other ICE senior leaders——

Ms. NORTON. Ms. Lewis, would you summarize the part of your 

testimony, because of the time frame and because we would like to 

61

ask some questions, having to do with this situation and with contracting, in particular, of FPS officers? 

Ms. LEWIS. Okay. With respect to the work done by our contract 

guards, we will work diligently to ensure that they are paid in a 

timely manner and in accordance with the Service Contract Act 

and the terms of the contract. I know recent events have raised 

concerns about the financial stability of our contract guard companies and their ability to perform and to pay their employees. In 

conjunction with your staff, we are researching methods to 

strengthen our ability to determine if a company may be in jeopardy. We are considering additional safeguards, including requiring 

our contractors to notify us when corporate officers change and 

having the company re-certify regarding past criminal activities of 

any new corporate officer; requiring notifications if payrolls are 

missed or if there is a material change in the company’s financial 

situation; and including, in our newly issued FPS Contracting Officers Technical Representatives Guide, the requirement for inspectors to closely monitor and communicate with company representatives any allegations of missed payrolls or similar allegations, and 

to promptly report these allegations to the responsible contracting 

officer. 

Finally, I do want to inform you that over the last year we have 

been establishing contingency guard contracts to provide emergency services in the event of a natural disaster or in the event one 

of our contractors cannot satisfy the terms of the contract. We hope 

to have these contingency contracts in place within the next few 

months. 

I would be happy to answer any questions you may have. 

Ms. NORTON. Thank you very much. And, again, I apologize that 

we took so long with the prior witnesses, but, after all, that is what 

brought us here in the first place. 

Mr. Schenkel, on May 30th you told my staff that the 

STARTECH payroll from May 25th had bounced because—and 

here staff has taken this down—payroll funds were sent to the 

wrong bank. But the Committee found from STARTECH officers 

that this was not the case, that the payroll bounced because no 

funds were sent to any bank. 

Now, you are a party to the contract. Yet, my staff appeared to 

have more timely information than you did about this contract. 

Why is that? We understand that you monitor the people by going 

around and seeing if they have the proper credentials. How do you 

monitor the contract——

Mr. SCHENKEL. Ma’am——

Ms. NORTON.—so that this kind of elementary information is 

made immediately known at the highest level? 

Mr. SCHENKEL. Yes, ma’am. We monitor on performance-base, 

and on the 26th of May, when we first heard rumors that there 

may be a problem with STARTECH, because that was the holiday 

weekend, it is difficult to monitor and determine whether or not 

the contract is truly being enacted to its full level of performance 

because of the diminished number of guard posts. So, consequently, 

on Tuesday, after the holiday, we started monitoring more effectively. We were able to start noticing numbers of guards on posts 

and started hearing complaints, or at least concerns would probVerDate 0ct 09 2002 17:12 Feb 22, 2008 Jkt 000000 PO 00000 Frm 00075 Fmt 6633 Sfmt 6633 P:\DOCS\36684 HTRANS1 PsN: JASON
62

ably be the better term, concerns from the guards themselves, and 

we continued our investigation based on that. 

Ms. NORTON. Did you take any action to intervene with 

STARTECH in particular? 

Mr. SCHENKEL. As far back as the Sunday, the 27th of May, that 

is where I got that information that we got from Mr. Gandy, who 

I believe was their Operations Officer, STARTECH’s Operations Officer, who gave us the information that he knew that he had sent 

the money to the wrong account and, consequently, there was a 

mixup in the payroll and the guards weren’t paid. 

Ms. NORTON. Well, now, didn’t you suspect that somebody giving 

you that kind of reason should give you pause, when somebody 

tells you, sorry, it went to the wrong account, that is why people 

aren’t being paid? 

Ms. Lewis, you were the contracting officer. May 10th is when 

these employees, I understand, began not being paid. Did you inform anybody at FPS, at ICE, or at DHS about this situation? Because Mr. Schenkel says he learned weeks later, May 26th. 

Ms. LEWIS. I did not become personally aware that there were 

any problems with STARTECH until approximately May 26th. I 

am not——

Ms. NORTON. Well, who in the world—here, we are giving out 

money, sending money, when you do it. Apparently, there are some 

issues with how rapidly people get paid, but that is the end of it? 

Ms. LEWIS. I can only react to information that I have. If that 

information is not given to me, I can’t——

Ms. NORTON. So there is no proactive monitoring of the kind that 

would alert you immediately if officers were not being paid. 

Ms. LEWIS. Typically, what employees will do that are subject to 

the Service Contract Act, if they are not being paid, they will report it to two places: they will report it both to the Department of 

Labor, who has oversight for compliance with that particular law; 

and they will also report it to the——

Ms. NORTON. Mr. Schenkel, I understand what Ms. Lewis is saying, and she is speaking like a contract employee. You know, if 

somebody isn’t getting paid, they say, hey, I am not getting paid. 

These are the functional equivalent of security officers charged 

with the highest level of police responsibility. Don’t you think there 

should be some proactive monitoring to make sure that these employees are paid so that the posts are always covered? 

Mr. SCHENKEL. Absolutely. And I have the greatest respect for 

the contract security. 

Ms. NORTON. But you told me, when I called you up personally, 

which is what led me to call, first, the Administrator, who happened to be out of the Country; then I called his Deputy. You told 

me that it was the contractor’s responsibility, or words to that effect, sir. You told me that, leaving me in a state of high frustration 

that I was talking to somebody who didn’t know what to do. 

Mr. SCHENKEL. Yes, ma’am. The contract states that the guards 

must be paid. The contract as to when they get paid is between the 

individual security guard and the contracting company. If they fail 

to pay the guards and we are notified, then we can act. 

Ms. NORTON. I notified you, but others had notified you ahead of 

time, and you told me, I repeat, that you had done what you were 

63

supposed to do in having paid the company. And you left me with 

no remedy, Mr. Schenkel, which is one of the first reasons I knew 

I had to have a hearing. I then had to call Deputy Administrator 

Michael Jackson, who then called in ICE. You suggested to me no 

remedy. And, by the way, it is not a requirement that I be informed. I was the last resort. I was informed because nobody else 

in the agency had responded on this issue. 

You are not required to come to the oversight committee and say 

we have a problem, although it is good form that the oversight 

committee learn of it from the agency rather than from employees. 

But that is not a requirement. The requirement is to pay people 

and the requirement is to act like a police chief whose posts may 

be left uncovered and who will be held responsible. That may be 

somebody else’s contract, but if those people walk off the job, nobody is going to hold the contractor directly responsible; they will 

hold the police chief responsible. Do you understand your job to be 

that of a police chief or do you think of yourself as some other kind 

of person? 

Mr. SCHENKEL. No, ma’am, I——

Ms. NORTON. Because you have not been a police chief before; 

you have not walked a beat before. You have not been an officer 

like the officers who you supervise. 

Mr. SCHENKEL. You are correct, ma’am, I am not a sworn officer, 

but I have law enforcement experience, yes, I do; and I have leadership experience, about 37 years of it. 

Ms. NORTON. Mr. Schenkel, I just have to say to you that my disappointment was personally in you, because it seems to me the 

first thing a police chief does is to act very much like a police chief, 

and he knows that he has got to have everything covered; and if 

somebody tells him that part of his beat isn’t being covered, he 

doesn’t look to see who the contract is with. This was a serious security failing at the top, and you need to hear it from this Subcommittee. 

It was exasperating to call the police chief and have the police 

chief tell me he had done all he was supposed to do in paying the 

contract. It was a bureaucratic response; it was not the response 

of a security officer. It was a source of huge frustration to me and 

it caused me to lose real confidence in the FPS, because you are 

the people who supervise the guards. You are supposed to be the 

officers; you are supposed to be the people who know how cops are 

supposed to behave. And, yet, you did not behave as a police chief; 

you believed like a government bureaucrat who had let a contract 

and that was the end of it. You need to know just how serious a 

failing that was. 

I have to ask you, Mr. Skinner, you know that ICE is announcing 

plans to downsize very dramatically FPS, eliminating many police 

functions. Do you have any concern about FPS reducing its workforce and therefore impacting the kind of oversight that seems to 

be necessary of contracting in the Federal Government? 

Mr. SKINNER. As part of their initiative, they are reorganizing 

their acquisition function, centralizing it, and at the same time actually adding additional resources. In my latest understanding, 

they are going to be adding anywhere from 30 to 35 additional people into their acquisition——

64

Ms. NORTON. To do what? 

Mr. SKINNER. To provide oversight monitoring of its——

Ms. NORTON. Contractors. 

Mr. SKINNER.—its contractors, yes, ma’am. 

Ms. NORTON. At the same time, of course, it is eliminating police 

officers, but I hear you. And I know some of this comes from appropriations. 

Mr. SKINNER. That is correct. 

Ms. NORTON. I am not blaming FPS for this at all. Nor am I 

blaming FPS for the shortfalls that you very rightly, very justifiably talked about, when FPS was subsidized through General Services Account. I would think that the Federal Protective Service or 

ICE or DHS would come forward with a recommended remedy for 

that, because that is a serious problem that Mr. Schenkel is left 

holding the bag for, Ms. Lewis is left holding the bag for, but can 

only be dealt with through some arrangement, some other kind of 

arrangement within the Federal Government or more funds. So we 

can continue to complain about that, but the failure of DHS to 

come forward with a remedy, to simply recite that that happened, 

is a failing, a security failing. 

I have to ask you, Mr. Skinner. You heard the small businessman complain here. Of course, he offloaded much of the responsibility onto the Federal Government, much more of the responsibility than he should have, but do you think that the way in which 

contracts are paid,—and you know the Federal Government, you 

know this part of the Federal Government—often late, in this case 

contributed to the downfall of STARTECH? 

Mr. SKINNER. It is inexcusable. Any time something like this 

happens, both the contracting officer and the contracting technical 

rep should be right on top of it, and if they suspect any foul play, 

they should be bringing our office into it immediately so that we 

can review it. 

Ms. NORTON. So you think this has got to be proactive, especially 

when it comes to security officers. 

Mr. SKINNER. Especially when it comes to security officers. But, 

in any case, under any contractual arrangement, if the contractor 

is not fulfilling their legal obligations, and particularly not paying 

their staff. 

Ms. NORTON. I am very concerned about expired certifications. 

We know that the Federal Government has its own certification 

program or requirement, quite apart from the State requirements. 

I must ask you both how can we have confidence that certified contract officers are in fact performing police duties in Federal buildings? 

Mr. SKINNER. You cannot have confidence unless you have a very 

good enforcement program, a very good monitoring program. You 

must rely on the contractor to fulfill his fiduciary responsibilities 

and performance responsibilities within the terms and conditions of 

the grant on one hand. But, on the other hand, I think the Federal 

Government has an explicit responsibility to provide oversight and 

monitoring in a very proactive way; not reactive, but in a proactive, 

routine, disciplined way to ensure that people that we are employing, whether they are contractors or full-time employees, are fulfilling their duties and responsibilities. 

65

Ms. NORTON. In this case, even the contract officer didn’t know 

about the people not being paid. And, as you say, you would expect 

anybody not being paid could undermine the mission of the agency, 

but here, to undermine this mission is to do very serious damage, 

perhaps to us all. 

Let me ask you a question, Mr. Skinner, about the National Capital Region. Here is where al Qaeda central here, in this region and 

in this city. In this National Capital Region, where most of the 

Federal workforce is located, concentrated, the number of so-called 

mission support personnel appears to be targeted for reduction by 

more than 60 percent, from 33 positions to 13. Overall, that would 

mean that the number of mission support personnel would be projected to decline by 15 percent, from 244 to 205 positions. Do these 

reductions concern you in terms of security, for the National Capital Region in particular? 

Mr. SKINNER. Madam Chair, we haven’t had an opportunity to 

actually analyze those reductions in their totality because they may 

be reducing—everything is based on a risk-based approach——

Ms. NORTON. That is why I said mission support personnel. 

Mr. SKINNER. In order for me to respond to that, I would have 

to take a look at the big picture to see——

Ms. NORTON. Would you take a look at these reductions and report to us in 30 days? In this region, we would just like to hear 

your unvarnished view of whether or not those reductions in this 

region, given what is located in this region, everything from the 

Supreme Court to very classified facilities, whether or not that is 

a prudent way to downsize. 

Do you believe the downsizing of the Federal Protective Service 

throughout the United States—I am not asking you for a budgetary 

opinion; I am asking you as the Inspector General—and the growth 

of security guards relative to FPS is prudent in the post-9/11 period? 

Mr. SKINNER. Well, the growth of security guards, contract 

guards, if that is what you are referring to, is I think probably a 

prudent way to go. The reduction of FPS, again, you would have 

to look at it in its totality. Is it a reduction or is it a transfer of 

responsibility? And that is a transfer——

Ms. NORTON. Let’s take the transfer of responsibility. 

Mr. SKINNER. From FPS to the locals. 

Ms. NORTON. I understand exactly what you mean. These officers 

at the Department of Education, at the Department of Agriculture, 

they were doing exactly what FPS officers were. I have never taken 

the position you have to have full-time FPS officers there. However, 

the Department takes the position that there are whole parts of the 

Country, 50 cities——

Let me ask Mr. Schenkel is that still part of the plan, to leave 

50 cities uncovered by FPS officers? 

Mr. SCHENKEL. Ma’am, the plan hasn’t been finalized, but what 

we did is distribute the available officers based on threat risk and 

then quantifiable numbers, and regardless of the numbers that we 

will have, that would be the proportionate distribution based on 

that risk. 

66

Ms. NORTON. Well, that is the way to do it. And, again, Mr. 

Schenkel, you will never see me hop on you for not having the officers. I understand that. 

My second question, though, goes to the conversion of officers. It 

is bad enough that you are downsizing officers. But now we have 

got officers used essentially as building inspectors, people who are 

peace officers, trained exactly as you train the D.C. Police Department, the Capitol Police, the Park Police, and essentially they are 

going around with flashlights. 

Do you think, Mr. Skinner, that given the downsizing of the FPS, 

that that is a prudent use of fully trained peace officers who carry 

guns and who alone can make arrests in buildings? 

Mr. SKINNER. Again, I am sorry, I am just not prepared to offer 

an opinion on that at this point in time. It is something that I 

would like——

Ms. NORTON. I am not asking you for numbers. I am asking you 

whether you think the use of peace officers as building inspectors 

is the highest and best use of people who have full police training. 

Mr. SKINNER. On the surface, it certainly would not appear that 

that would be the best use. 

Ms. NORTON. That is right. Thank you. 

We would like to submit questions, further questions to each of 

you. Yes, I am very concerned. I appreciate the issues that Mr. 

Schenkel confronts, in particular, having inherited the FPS, having 

it thrown at him without the resources, and then being confronted 

with the notion that now I am going to downsize what you do have. 

Neither of those do you have control over. 

But you did have control over whether these people got paid in 

the sense of intervening earlier. You do have control over how 

these officers are used; and you do have the obligation to tell your 

own OMB, or whoever will listen, before there are 50 cities left uncovered by FPS; and you do have the obligation to be transparent 

and, if you intend to do this, to let that be known early enough so 

that appropriate coverage can somehow be obtained. 

Let me end this hearing on a more pleasant note than it began. 

The Department of Homeland Security, now—we are not talking 

about Mr. Waites, who we can never expect to get much from, 

given the prior testimony—the Department of Homeland Security 

still owes $1.8 million to STARTECH for past invoices. Department 

of Homeland Security is obligated under law to give those funds 

now to the Department of Labor, which will cover back pay first, 

and, with anything that is left over, the benefits and pensions. I 

only hope that that will be enough. 

You have the apologies of the Federal Government, you who 

stayed on the job. But go from this hearing knowing that DHS has 

$1.8 million, and that is going to come to you first and foremost. 

Thank you all for coming to this hearing. 

[Applause.] 

[Whereupon, at 2:00 p.m., the Subcommittee was adjourned.]

67


36684.009
68


36684.010
69


36684.011
70


36684.012
71


36684.013
72


36684.014
73


36684.015
74


36684.016
75


36684.017
76


36684.018
77


36684.019
78


36684.020
79


36684.021
80


36684.022
81


36684.023
82


36684.024
83


36684.025
84


36684.026
85


36684.027
86


36684.028
87


36684.029
88


36684.030
89


36684.031
90


36684.032
91


36684.033
92


36684.034
93


36684.035
94


36684.036
95


36684.037
96


36684.038
97


36684.039
98


36684.040
99


36684.041
100


36684.042
101


36684.043
102


36684.044
103


36684.045
104


36684.046
105


36684.047
106


36684.048
107


36684.049
108


36684.050
109


36684.051
110


36684.052
111


36684.053
112


36684.054
113


36684.055
114


36684.056
115


36684.057
116


36684.058
117


36684.059
118


36684.060
119


36684.061
120


36684.062
121


36684.063
122


36684.064
123


36684.065
124


36684.066
125


36684.067
126


36684.068
127


36684.069
128


36684.070
129


36684.071
130


36684.072
131


36684.073
132


36684.074
133


36684.075
134


36684.076
135


36684.077
136


36684.078
137


36684.079
138


36684.080
139


36684.081
140


36684.082
141


36684.087
142


36684.088
143


36684.089
144


36684.090
145


36684.091
146


36684.092
147


36684.093
148


36684.094
149


36684.095
150


36684.096
151


36684.097
152


36684.098
153


36684.099
154


36684.100
155


36684.101
156


36684.102
157


36684.103
158


36684.104
159


36684.105
160


36684.106
161


36684.107
162


36684.108
163


36684.109
164


36684.110
165


36684.111
166


36684.112
167


36684.113
168


36684.114
169


36684.115
170


36684.116
171


36684.117
172


36684.118
173


36684.119
174


36684.120
175


36684.121
176


36684.122
177


36684.123
178


36684.124
179


36684.125
180


36684.126
181


36684.127
182


36684.128
183


36684.129
184


36684.130
185


36684.131
186


36684.132
187


36684.133
188


36684.134
189


36684.135
190


36684.136
191


36684.137
192


36684.138
193


36684.139
194


36684.140
195


36684.141
196

Æ


36684.142