JACS Tossed By Job Corps
It would be hard to imagine a more innocuous do-gooder, national youth-serving organization than Joint Action in Community Service (JACS). This 39-year-old faith-driven group reports having up to 2,400 volunteers to help graduates of Job Corps – low-income 16- to 24-year-olds – find jobs and begin careers.
But prospects for a happy 40th birthday in January for the nonprofit – founded by the Inter-Religious Committee Against Poverty – are slim to none. In August, the U.S. Labor Department’s Employment and Training Administration (ETA) rejected the JACS’ five-year, $20.8 million contract renewal bid. JACS was blindsided by defense contractor McNeil Technologies and its subcontractor, Leonard Resource Group (LRG), owned and operated by LaVera Leonard. She is a multitiered operative and permanent fixture in the $1.5 billion-a-year Job Corps.
JACS’ impending demise offers a cautionary tale about how politicized funding decisions have become throughout the Bush administration. Increasingly, national groups that receive federal funds strive simply to not be noticed by the GOP political appointees who dispense grants and contracts. The ETA’s defunding of the National Youth Employment Coalition (NYEC) – apparently because of its advocacy inclinations on behalf of service providers and disadvantaged youth – signaled ETA’s ardor to “defund the left.”
But JACS always presented a scrupulously apolitical agenda, and didn’t even belong to NYEC. JACS did, however, belong to the National Job Corps Association (NJCA), a nonprofit trade group with a 501(c)(6) tax status.
The NJCA was founded in 1998 to “unite the Job Corps community,” including 122 Job Corps centers in 48 states. Its nine-member board includes Scott Lilly, a former top Democratic staffer on the House Appropriations Committee; Court of Appeals Judge Sergio Gutierrez of Idaho; and former Sen. Bill Brock of Tennessee, who is also former chairman of the Republican National Committee and a former secretary of labor. The NJCA chair is Richard Schubert, a former head of the American Red Cross and chairman emeritus of the International Youth Foundation. NJCA’s president is none other than Leonard, who is also a board member and whose LRG consulting firm staffs the NJCA.
The NJCA’s 80 members basically pay LRG (also founded in 1998) to lobby Congress to keep its mitts off Job Corps, while pushing for increased appropriations. That’s all standard business practice in the Iron Triangle of Congress, executive branch agencies and special-interest recipients of federal largess. The NJCA – which really means LRG – is watching the reauthorization of the Workforce Investment Act and fending off what one Senate Democratic staffer calls “the monarchy”: Assistant Secretary of
Labor for Employment and Training Emily Stover DeRocco, and her courtier, Deputy Assistant Secretary Mason Bishop.
What is remarkable is the pervasive influence of Leonard on all Job Corps matters on and off Capitol Hill. A former middle-school home economics teacher from Delaware, her company’s motto is “Creativity, Tenacity and Results,” and both admirers and critics credit her on those counts.
“She’s an honest broker,” says Stephanie Powers, CEO of the National Association of Workforce Boards.
As a staffer at the Home Builders Institute, self-described as “the workforce development arm of the National Association of Home Builders,” Leonard learned the Job Corps ropes and played a vital role in beating back a 1984 attempt to zero-out funding for Job Corps. She did the same in the mid-90s when plan were pushed to convert Job Corps funding to block grants to the states, much as what happened to the Department of Education’s 21st Century Community Learning Centers in 2001.
Leonard is married to the Job Corps in more ways than one. Her husband is former Job Corps official Tim Sullivan, still a civil servant at the Department of Labor.
Within three years after starting LRG, Leonard built it up to a staff of 30, with $3 million in annual revenue, according to an article by Leonard herself in Business Woman Magazine.
Virtually all NJCA membership dues from JACS and others wound up in the bank account of LRG. Between 1998 and 2004, according to lobbying reports filed with the U.S. Senate, NJCA paid LRG $600,000 just for its work on Capitol Hill. Leonard does “a credible job,” says NJCA board member Faye Washington, CEO of the YWCA of Greater Los Angeles, which has operated a Job Corps center for 40 years.
JACS – with an annual budget of about $4 million, 98 percent of which came from its single Labor Department contract for Job Corps support services – paid about $1,000 a year in dues to the NJCA. Those membership dues, which can run up to $10,000 per organization, have offered protection from congressional critics of Job Corps, but not from the machinations and business ambitions of Leonard. A few years ago, Leonard sent JASC Executive Director Harvey Wise a handwritten thank-you card with the note: “to one of Job Corps’ class acts!”
In March, the Labor Department issued a request for bids to undertake the various support services to Job Corps graduates that JACS had been performing without incident since 1968. Says one former senior JACS staffer, “I didn’t even know we had any competition.”
It was McNeil Technologies, founded in 1985 by businessman James McNeil. Two-thirds of the company’s revenue comes from the Defense and Energy departments. It has 1,000 employees.
One component of the company – with expected revenue of $100 million in 2005, according to Washington Technology – is its Intelligence and Security Programs, led by retired Gen. Spider Marks. Marks commanded the U.S. Army Intelligence School Fort Huachuca, in Arizona, at the same time that inmates at the Abu Ghraib prison in Iraq were being abused by interrogators who were trained at that base. (Full disclosure: Nose Knows is a proud 1960 graduate of the predecessor school, then at Fort Holabird in Baltimore.) Shortly after the scandal broke, Marks spoke on National Public Radio and called the abuse “disgusting.”
McNeil Technologies’ Job Corps and youth work know-how are minimal. In 2004, it purchased the Chapel Hill, N.C.-based Research and Evaluation Associates (REA), run by Peggy Richmond. REA had the Job Corps contract to run the Call Center Information Service, which answers inquiries from prospective enrollees and their parents.
In July 2005, McNeil landed a $6.7 million contract to provide property management services at 96 Job Corps contract centers.
A year earlier, McNeil had been purchased by Veritas Capital, a New York-based private venture fund with an advisory board that includes retired Gen. Barry McCaffery, the White House drug czar during the Clinton administration. Crowed Veritas Capital in a news release, “McNeil Technologies is playing a critical role in the U.S. efforts in Iraq.”
Veritas Capital knows a fire sale when it smells one. In August 2005, around the time Veritas began buying up MZM Inc., a national security firm, the federal government charged U.S. Rep. Randy “Duke” Cunningham (R-Calif.) with accepting a bribe from MZM. Did this allegation, recently verified in Cunningham’s guilty plea, give Veritas any pause? Apparently not, since it finished its buyout of MZM at the end of September.
Presumably, ownership of MZM comes with its 42-foot yacht, the “Duke-Stir,” where Cunningham stayed rent-free while in Congress. Right around now Cunningham, who resigned, must be thankful that the No Frills Prison Act he co-sponsored didn’t pass. The bill required “living conditions ... not more luxurious than those that the average prisoner would have experience if not incarcerated,” so his meals could be served by candlelight emanating from the silver candelabras he received as a bribe.
So, faced with a choice between JACS – a tiny, faith-inspired outfit with a network of volunteers – or a gigantic Wall Street private venture fund, the DOL’s DeRocco chose McNeil.
When JACS’ Wise arrived for a mid-August meeting with Job Corps Administrator Grace Kilbane, everyone at JACS thought it was to tidy up the details of the new contract. JACS staff members were stunned to learn that a company they had never heard of had won the contract.
JACS and its board, led by retired Methodist Church official Roger Burgess, decided to protest their corporate death sentence. Like any diligent national executive, Wise turned to his trade association, the NJCA, for advice on hiring a lawyer. In response, Leonard e-mailed Wise on Aug. 17: “Dear Harvey, LRG has never used an attorney for the purpose of mounting a protest. … I sympathize with your situation. In government contracting, we all have experienced wins and great disappointments. I sincerely hope that the future will open up new opportunities for you. LaVera”
What NJCA President Leonard failed to mention to her loyal dues-paying member is her company, LRG, had put together the McNeil bid and was a subcontractor for an uncertain sum (which could run in the neighborhood of $1 million a year). LRG’s teaming up with McNeil Technologies, says Wise, “came as a total surprise.” Says one of Wise’s disappointed staffers, former Deputy Executive Director Chris Setti, “LaVera is a backstabber.”
Leonard did not respond to repeated phone calls and e-mails asking for comment.
NJCA board member Washington says the board has no policy “one way or the other” on Leonard competing with her own membership, and she didn’t know that Leonard had done so.
With its appeal rejected, JACS has imploded. Wise will retire in January. The JACS board plans to become the volunteer staff and march onward. “JACS is looking toward a new game, not an end game,” Burgess says.
JACS has a smattering of work, including some in New York City funded by the New York Community Trust, and in Denver helping teens leaving foster care. Still, acknowledges a former staffer, this plan amounts to whistling past the graveyard.
Also among the departed will be most of JACS’ volunteers, who are not thrilled to give their time to boost the profits of a defense contractor. A few JACS staff around the country have sucked it in and gone to work for McNeil.
One’s perspective on stabbing is shaped by who gets stabbed, and who’s doing the knifing. A posse of knife-wielders is stalking ETA political appointees DeRocco and Bishop, her deputy. (See Nose Knows, October 2005.) They are widely held in contempt throughout the employment and training field. Few Republicans in Congress, or Democrats, can stomach the dyspeptic duo. No opportunity to micromanage and screw up ETA’s $11.1 billion in spending is too trivial for the duo. That includes the Job Corps.
Apparently, with her five-year contract in hand, Leonard has had enough of ETA’s meddling and incompetence as well. This time, Leonard blindsided Job Corps and ETA.
In a legislative coup, the Senate Appropriations Subcommittee on Labor, Health and Human Services, Education and Related Agencies, chaired by Sen. Arlen Specter (R-Pa.), has inserted language in the spending bill removing Job Corps from ETA and placing it directly under DOL Secretary Elaine Chao. One Democratic Senate staffer acknowledges that the move may make little real difference – Chao is AWOL from her job most of the time – but it certainly captures how Capitol Hill and Leonard feel about
DeRocco and Bishop.
Says one Capitol Hill staffer, “I can’t image it [the transfer] happening if LaVera didn’t want it.”
The fate of the legislation won’t be decided until the Labor, Health and Human Services, Education and Related Agencies appropriations bill becomes law with the provision intact. That development is expected in December, unless Congress just punts all the remaining budget battles and passes a continuing resolution covering the 10 months left in fiscal 2006.
The next time the NJCA members gather – and this is one business-savvy crowd – they may be wondering who’s going to be JACSed by Leonard next.
In October, LRG announced that it hired Ed Trumbull as vice president of policy and strategic partnerships. He will manage the legislative and membership efforts for LRG clients, including the National Job Corps Association.
Contact: U.S. Employment and Training Administration (866) 4-USA-DOL, www.doleta.gov; Joint Action in Community Service (202) 537-0996, www.jacsinc.org; National Job Corps Association (703) 519-6430, www.njcaweb.org; LRG (703) 548-8535. www.lrginc.org.