Congress is investigating a billion dollar program that includes a controversial contract given to a San Antonio company. Federal investigators may also be looking into the program.
The House of Representatives Select Subcommittee on the Coronavirus Crisis launched an investigation Monday into the USDA’s Farmers To Families Food Box Program, a program touted by Ivanka Trump and pushed by other White House officials.
“This is truly a win-win-win program,” said Ivanka Trump in a video touting the program at a North Carolina nonprofit Monday. “USDA has never done anything like this.”
The first daughter announced another billion dollars for the program as well, though it wasn’t immediately clear where that money would come from.
The program originally budgeted $3 billion to prop up the food distribution system by paying 198 vendors to deliver produce, protein, and dairy products to the families in need. The program routed the food through nonprofits, including food banks. But there are questions about who was given contracts for this critical service.
“I am concerned that the Trump administration’s management of this critical effort has been marred by questionable contracting practices, a lack of accountability, and a failure to deliver food to many communities that need it most,” said James Clyburn, chairman of the subcommittee and Democratic congressman for South Carolina.
Clyburn pointed to questions surrounding several contracts to vendors with little or no experience, including San Antonio’s CRE8AD8 (pronounced Create a date), a wedding and event planning company with no experience that received the seventh largest contract in the country.
The subcommittee requested all documents related to the CRE8AD8 contract, including audits performed by USDA. It also requested documents for nearly a dozen other companies.
The subcommittee said it was also troubled by $10 million in contracts not initially disclosed.
Farmers to Families issued its first round of contracts on May 8 and completed the process at the end of June. The $1.2 billion immediately ran into conflicts as many contracts went to vendors without experience, including $39 million for CRE8AD8 and another for Ben Holtz Consulting.
Ben Holtz confirmed to TPR he had received a request for documents from the subcommittee.
At the time the contract was awarded, CRE8AD8 didn’t have any handling or food logistics experience. It lacked trucks, facilities as well as a license to distribute food, which under the contract it would need to do for seven states across the Southwest.
U.S. Congressmen Joaquin Castro and Lloyd Doggett, who both represent parts of San Antonio, called on USDA to withdraw the contract.
“If they did any background check at all (USDA) would have determined that this particular vendor was incapable of doing this job,” Doggett said in May.
| Related: USDA Lets Contract Lapse With Controversial San Antonio Company |
CRE8AD8 failed to deliver at least 250,000 food boxes, according to USDA officials, who disclosed the number at a July congressional hearing.
“We have no idea what you are doing. Nor do you. Because you can’t answer the questions," said Rep. Marcia Fudge, Democrat of Ohio, in the hearing berating USDA officials over lax oversight of Farmers to Families.
“I would suggest that if we are going to continue to do this program at least be able to give us some answers. Who is getting the food? Are you giving them rotten food, which is what I am hearing in some of these instances? Are you paying for someone to really give it to someone who should have it? We have none of those answers. This is fraught with waste, fraud and abuse,” she said.
Many of the contracts — approximately 95% — from the first round of funding were extended past the June 31 end date. CRE8AD8’s wasn’t.
It wasn’t clear how much CRE8AD8 was paid. The USDA has not released documents related to CRE8AD8 requested by TPR. Some of the requests date back to May.
USDA said the company delivered 500,000 boxes in the same congressional hearing. Based on those figures, CRE8AD8 could have been paid more than $26 million.
The number of boxes the USDA said the company delivered surprised area food banks that tried to work with CRE8AD8.
Multiple shipments scheduled to arrive at the West Texas Food Bank in Midland/Odessa were cancelled at the last minute at the end of June.
The San Antonio Food Bank only received about 40% of the shipments it had scheduled with the company, an arrangement the company said never existed in previous reports.
Food banks across the region expressed reservations about working with the inexperienced vendor. In turn, it appeared CRE8AD8 worked increasingly with churches and nonprofits that had little or no experience handling food or running distributions.
The federal government may also be investigating the program. TPR learned one organization that worked with the Farmers to Families program including CRE8AD8 received a call from an FBI investigator. He requested documents including shipping receipts for food delivered from Farmers To Families vendors between May and July 7th.
“Unfortunately, pursuant to policy, we can neither confirm nor deny the existence of an investigation,” said Michelle Lee, special agent for the San Antonio FBI field office.
CRE8AD8 was one of about five vendors whose shipments would have been included in documents turned over to FBI investigators.
Ben Holtz Consulting would have also been included in some of the documents. The company was awarded $40 million to distribute produce food boxes across the Southwest. Its contract was withdrawn shortly after it started delivery.
“That’s news to me,” said Ben Holtz when informed of the possible FBI investigation into the Farmers To Families program.
Holtz did confirm receiving a letter from the Coronavirus subcommittee about its inquiries.
He also confirmed he had applied for the USDA’s third round of funding on Farmers To Families.
“I have a very qualified team of partners and a network of non profits with food insecure populations that would benefit,” Holtz added.
Holtz felt his network didn’t get the chance to prove itself before the contract was cancelled.
Gregario Palomino, CEO of CRE8AD8, didn’t respond to requests for comment by the time of publication. The executive has lashed out at news media in the past for questions about the contract.
Many Texas food banks have spoken highly about Farmers To Families but have also expressed concern about the way the first round of contracts was issued.
The program has put out 70 million food boxes, according to the USDA. But questions loom about who received that food and whether or not the money was properly spent.
As one food bank executive who asked not to be named said, “I would hate for them to think this is what success looked like.”
The House subcommittee requested all documents be delivered by Sept. 7 and said in the letter that it would hold hearings the following week.
Paul Flahive can be reached at Paul@tpr.org or on Twitter @paulflahive.
