Documents Reveal San Antonio Event Company CRE8AD8 May Have Misled USDA In $39M Contract Bid
Gregorio Palomino may have misled the U.S. Department of Agriculture in initial communications to obtain a $39.1 million contract for his company CRE8AD8, as part of the agency’s signature hunger-relief program. That’s according to USDA documents TPR obtained Wednesday.
The USDA released the records relating to CRE8AD8's bid to participate in the Farmers to Families Food Box Program a day after TPR filed a public records lawsuit for them in federal court in San Antonio on Tuesday. The SMU Dedman School of Law First Amendment Clinic filed the suit for TPR.
The USDA awarded a contract to CRE8AD8 in May to deliver 750,000 food boxes to nonprofits across the Southwest to help families in need. CRE8AD8 received the award despite having no experience delivering large quantities of food and lacking a necessary license as well as trucks to transport the boxes.
The new documents also showed the contract was larger than even Palomino had expected. Ultimately CRE8AD8 was only able to complete two-thirds of its obligations, as stated by USDA officials in an August congressional hearing.
“We are initially interested in serving the San Antonio Food Bank located in San Antonio, TX and already have an agreement in place to do so,” Palomino wrote in an April 30 email to USDA. Attached to the email was his proposal for the Farmers to Families Food Box Program, a now $4 billion attempt to connect unused food at distribution centers to families in need.
But Food Bank president Eric Cooper said he had never heard of the organization until after the contracts were announced.
“They weren't on our radar. We didn't realize they were bidding just because they're not in the food industry,” he said in a May 27 interview.
He reiterated the point Wednesday night, saying that CRE8AD8 was one of a few dozen calls other staff members received from companies informing them they may bid. Cooper did confirm that no agreement had been discussed, and it wasn’t until after the award that the two organizations met to discuss the contract at length.
“I think it shows that there's this overstatement and and it's the perception of things that really, most people would ask, ‘Well, you know, did you really have a relationship with these guys?’” Cooper said.
It was not clear what impact Palomino’s misleading statements about an agreement to provide food to the San Antonio Food Bank prior to its award might have had on the outcome. The USDA gave no comment on this.
But it was clear from the government’s solicitation that having those relationships appeared to be a criteria for a successful proposal.
“The offeror should address existing nonprofit relationships and distributions channels and how they plan to develop new supply chain relationships if necessary (including engaging food banks and non-profits),“ the government solicitation read.
Before releasing the CRE8AD8 bid proposal to TPR, the USDA heavily redacted parts of the document, including the entire section where CRE8AD8 described its strategy for completing the contract as well as any food-distribution relationships it already had in place. In Palomino’s Wednesday night email to TPR, he said he urged the USDA to make these redactions while TPR’s records request was pending.
Because of these redactions, it was not clear if CRE8AD8 repeated its assertion from its email to the USDA about having a pre-existing agreement with the San Antonio Food Bank in its formal bid documents.
In any event, Cooper said no one from the USDA reached out to him about the existence of an agreement with CRE8AD8 while the agency was considering the company’s bid proposal.
In a May 1 email — a week before contract awards were announced — Palomino said he had contacted all of the food banks in Texas.
“I’m not aware of that. That was all after the award,” said Celia Cole, CEO of Feeding Texas, the coordinating organization for Texas’ 21 food banks. “It was the San Antonio Food Bank that reached out to other Texas Food Banks (for CRE8AD8).”
Palomino said in a Wednesday night email to TPR that CRE8AD8 had “detailed conversations with the San Antonio Food Bank, Feeding America, Feeding Texas” before incorporating information into their April/May proposal. He added that he had proof of such conversations but he did not provide that proof to TPR.
“If USDA awarded the contract on the basis of having those relationships, that is troubling because we did not have those until after the award,” Cole said.
That said, so many of the early Farmers to Families vendors were complete unknowns to food banks, so it was unclear what impact it had.
“We were surprised so many of the folks we knew weren’t selected,” Cole said.
Eric Cooper said that the entire episode upset him.
“It’s frustrating because the whole world knew the San Antonio Food Bank because they saw the images of Traders Village and the 10,000 families that were coming to get food,” Cooper said, referring to an April 9 distribution event. “So for a contractor to offer up a direct connection to an organization that is feeding its city (San Antonio Food Bank) and then getting that contract and then abandoning the nonprofit just seems wrong. And I think that’s what happened.”
He had another word for the way Palomino described his connection with the Food Bank to the USDA: Ironic.
Cooper felt it was ironic because after the award, the two organizations met, and he mapped out a path for how CRE8AD8 could deliver to the state’s 21 food banks. He also encouraged the company to deliver to all seven states included in the region.
But not long after the bad press around Palomino and CRE8AD8 started — some including pointed critique from Cooper — Palomino began saying there had never been any agreement with the San Antonio Food Bank.
“The SA Food Bank was not made promises of quantities. They literally demanded quantities and demanded that we only serve the Food Bank network by locking up all truck deliveries across the SW region. That was not going to happen on our watch,” Palomino wrote in a text message to a WOAI reporter.
In his email to TPR Wednesday night, Palomino pointed to his company’s successes despite criticism of his lack of experience:
“Our event (company) talent delivered more boxes than most of the awardees and exhausted about 80% of the award dollars in about 32 days,” he said.
However, Palomino didn’t directly address TPR's questions about CRE8AD8’s purported agreement with the San Antonio Food Bank that he asserted was in place in his April 30 email to the USDA and again in a follow-up May 1 email to the agency.
He again said there had never been any promises of boxes, only an assurance that some food would go to food banks.
Palomino depicted Cooper as trying to insert himself into CRE8AD8’s process and insisting on handling the coordination.
Cooper didn't agree with that description. He said Palomino asked him to be involved because of CRE8AD8’s inexperience. He pointed to one of their first meetings, which included brainstorming about how to transport food to some of the sites and distributions.
“[Palomino said,] ‘I've got a lot of friends in the limousine business and, you know, maybe we can engage them to help deliver to your sites,’” Cooper recalled.
The fact that Palomino had suggested such an unorthodox idea, one that likely wouldn’t hold up to food safety standards of refrigeration, was troubling to Cooper.
“I guess after hearing that comment, I knew how... under the water these guys were,” he said.
TPR asked Cooper to review Palomino's emailed statements to the USDA, which asserted a pre-bid agreement with San Antonio Food Bank. After his review, Cooper said it reinforced his position that Palomino had repeatedly made misrepresentations.
“I think from what I’ve learned of CRE8AD8, they have the ability of stretching reality,” he said.
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It was a reality that Cooper said played out on social media through photo ops and online messaging. Palomino could be seen at multiple events with his own photographers and videographers.
“I think I was asked to post them in social media more (times) than we got truckloads of food,” Cooper said.
For example, after telling Cooper that they wouldn’t be able to deliver until June 1, the food bank got a call from Palomino late in the afternoon on the Friday before, asking to make a delivery.
“He's like, ‘Hey, I've got 10 pallets of produce I want to deliver. USDA told me, if I could just get you holding one of these boxes, that'll make me look good and show that I'm fulfilling the contract,’” said Cooper.
The half truckload of produce resulted in another volley of poor press for CRE8AD8.
It wouldn’t be the first time that CRE8AD8 embellished its connections and performance. The company said on its website it did business with many companies and agencies, including USAA and the North Dakota Department of Transportation. But those entities said they had no record of working with the firm.
In his emailed response to questions, Palomino called TPR's reporting "neither accurate or truthful.”
The newly released documents showed more of the story from the company’s perspective.
“As we were awarded more boxes than we anticipated, we may use the other facilities we identified in our proposal to fulfill all the boxes,” said Palomino in a May 13 email to USDA.
That email appeared to surprise the USDA as CRE8AD8’s bid proposal seemed to indicate the company could deliver as many as 1 million boxes.
“If you believe you were awarded more boxes than you were supposed to, I need to know ASAP. I want to make sure that you are successful,” his contract officer at USDA said in a follow up email.
When CRE8AD8 made its proposal to the USDA, it was working out of a portion of a North Side Mexican restaurant. It wasn’t clear how the company expected to box and ship even a fraction of the 750,000 boxes they were awarded. According to emails to the USDA, they would relocate some of their operations to a cold storage lease on the city’s South Side.
The issue of the size of their award didn't appear in subsequent emails. In the end, USDA officials told Congress CRE8AD8 had failed to deliver 250,000 food boxes.
Even then, food banks in Texas received only a fraction of what they expected. Some received none at all, as was the case at the West Texas Food Bank.
“Once he (Palomino) learned the level of accountability that the food banks have, he strategically started to look for other channels for distribution,” Cooper said.
At this time, CRE8AD8 was working with churches and nonprofits, organizations that traditionally wouldn’t have done this kind of work at this scale.
Palomino, Cooper said, was more interested in making money and looking good than in delivering food to families.
“A whole lot of hype. In fact, that first meeting that we had … face to face, they wanted to bring a film crew.”
And the CRE8AD8 hype hurt families to the tune of 250,000 boxes of food. One in four families are food insecure in Texas, and more than 10% of the state sometimes or often lack enough to eat each week.
“I do believe they probably had the intention to make as much money as possible, and probably had the appetite to fulfill the entire contract," Cooper said. “I think their ability and capacity — the facts are the facts — they didn't have it therefore, they couldn't deliver.”
Palomino was proud of his company’s achievements, and he said CRE8AD8 was in the right.
“If we had done anything to mislead the USDA, the public or media; it would have been addressed in the Oversight Committee Hearing in August, he said. “However, the USDA backed us up and supported our achievements.”