Federal Investigation into Corruption Involving Defense Contracts

Snowboarding vacations, trips to Singapore, and sex with female employees, are just some of the allegations about a relationship between a U.S. Army Corps of Engineers program manager and Sky Research Inc. The company, which conducts aerial surveys of old military bombing and gunnery ranges to find old weapons debris, allegedly won $160 million worth in contracts as a result of the relationship.

According to the federal database on government contracting, of the $116.9 million in contracts that Sky Research has received, 92% (or more than $107 million) have been from non-competitive contracts. Since 2001, Sky Research has received 434 federal contracts, 430 of which were with the Department of Defense. According to reporting from the Associated Press, the rigged contracts date back to 2004, which would cover all but ten contracts received by Sky Research.

The investigation focused on potential charges of bribery of a public official, conspiracy to defraud the United States, wire fraud, padding bids and bid rigging, affidavits said.

U.S. Army Special Agent Derek W. Lindbom wrote that the investigation was sparked by a confidential informant who contacted the Army’s inspector general in 2010 with allegations that Hodgson returned bids to Sky Research with instructions on how to change them so they would be sure to win a contract, that Sky Research hired personal assistants to work just with him, and that Hodgson arranged for their salaries to be billed to the government.

The informant also alleged that the Skys billed the government for a vacation to Singapore and Bali, listing it as a marketing cost, Hodgson arranged for them to be paid advances for work not yet finished to carry them through slow periods, the Skys arranged for cars to be sold below cost to Hodgson, and bought an airplane from Hodgson’s son, which was upgraded at government expense.

When an investigator interviewed Hodgson, he admitted taking his kids on annual snowboarding vacations with Sky and his kids, and considered Sky a good friend, the affidavits said. Shown invoices for a fishing trip to Alaska paid for by Sky, Hodgson said he paid him back in cash, but couldn’t recall which account he had withdrawn the money from.

Hodgson also acknowledged having a romantic relationship with one woman who worked at Sky Research, which included sex, and having sex with two others, an affidavit said. One former Sky Research program manager said she was fired after refusing to have sex with Hodgson
Hodgson denied statements from women who worked at Sky Research that he sat in on hiring interviews for women who would be working with him.

Read more from the Associated Press.


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