The Pentagon didn’t want it, but McKeon’s amendment would steer millions to a pilot program that would hire private companies to put veterans in jobs.
By Roxana Tiron
Nov. 12 (Bloomberg) — If Howard “Buck” McKeon gets his way, one of his last acts as House Armed Services Committee chairman may be helping a home-state company that enlisted his son as a consultant.
McKeon’s committee incorporated into this year’s Defense authorization bill a requirement that the Pentagon spend as much as $35 million a year on a pilot program that would hire private companies to place veterans in jobs.
It’s a program the Pentagon didn’t request and doesn’t want.
It “would create a costly third party management layer” that duplicates other existing efforts, according to a package of Defense Department appeals to the 2015 National Defense Authorization Act released by the watchdog organization Taxpayers for Common Sense.
Until the final version of the bill is written, the job-placement provision is just a proposal in the House-passed defense bill, H.R. 4435. Private House-Senate negotiations on the bill are scheduled to begin today among the “Big Four” — the chairmen and ranking minority-party members of the House and Senate Armed Services committees.
McKeon, a California Republican, brought up the proposal in the 10th hour of a public session acting on the bill in May. His panel added it to the larger measure by voice vote and then moved on to the next amendment. It was one of 210 amendments before the committee, according to data compiled by Bloomberg.
In Plain Sight
Everything that happened was legal and done in plain sight in a room full of reporters, lobbyists and other observers.
“It is obscured in the open,” Steve Ellis, vice president of Taxpayers for Common Sense, said in an interview. “Members may have voted a little different if they had known a little bit more about it.”
The company, Granite Bay Employment Solutions of Sacramento, previously had pitched its proposal to the Defense Department and was turned down. It hired Howard D. McKeon Jr., the chairman’s son, as a consultant. McKeon Jr. helped Granite Bay draft the legislative language, according to Kirk Uhler, who owns a minority stake in the company.
Though he had the power to slip the provision into the original draft of the bill, McKeon Sr. didn’t go that route.
He brought it up as a separate, stand-alone amendment, and pitched it on merits to members of his committee without mentioning the connection to his son, according to a video and transcript of the deliberations. The House went on to pass the measure.
In an interview, Representative McKeon described his actions as “pretty transparent.”
“This program is unique in that you work with the staffing agencies — it’s an over $100 billion industry,” McKeon said. “The government doesn’t pay a penny until the veteran is working and being paid.”
McKeon said he advocated for the proposal because the Defense Department needs a more effective method to help find jobs for former service members, and for members of the National Guard and the Reserves who serve part-time.
The Pentagon foots the bill for unemployment benefits paid to people who served in uniform.
Unemployment Compensation for Ex-Servicemembers is a program administered by the Department of Labor. Each military service reimburses the Labor Department in full for any payments made to former service members, according to Lieutenant Commander Nathan Christensen, a Pentagon spokesman. The Defense Department requested about $704.9 million for unemployment benefits in fiscal year 2015, down from $819.3 million for 2014.
The Bureau of Labor Statistics tracks unemployment rates for veterans who entered the military after Sept. 11, 2001. In October, the unemployment rate for that group was 7.2 percent, higher than the 4.5 percent rate for all veterans. October unemployment nationwide stood at 5.8 percent.
Two California entrepreneurs with a job-placement business — Uhler and Daniel Talesfore, the head of Granite Bay Employment Solutions — came up with the idea of offering their services to jobless veterans.
Together, they started StaffUpUSA, an endeavor designed to “coordinate the existing marketplace,” Uhler said in a telephone interview. StaffUpUSA would serve as a program administrator “that also has the role of educating existing staffing agencies,” Uhler said. “It’s a $110 billion industry.”
Uhler said he’s been trying to get traction for the concept for at least five years.
In 2012, he met with McKeon at his district office. Uhler and McKeon’s son live in the Sacramento suburb of Granite Bay. Uhler also serves on the Placer County Board of Supervisors.
Uhler said he set up lunch with the younger McKeon, who has worked in the telecommunications and student-loan industries.
Uhler said he hired McKeon Jr. as a StaffUpUSA consultant, in part, because he “has worked successfully with the student-loan industry.”
The consultant was familiar with the federal budget process and was “instrumental in helping us draft a lot of the legislation and understanding the committee process,” Uhler said in a follow-up telephone interview.
Uhler said that McKeon hasn’t been on the payroll “in a while,” yet would be paid if he consulted again when the project takes off.
The elder McKeon said he’s comfortable with his son’s involvement in the proposed project because StaffUpUSA isn’t “somebody that said ‘give us X millions of dollars and let us go out and put veterans to work’ with no idea how to do it .”
“They’ve run tests with their own money, and it works,” McKeon said. “This is the best way. I’ve seen them getting to work and I am all for it.”
The provision wouldn’t guarantee that StaffUpUSA would be chosen for the pilot program, according to the bill text.
McKeon’s son didn’t return two phone calls seeking comment.
The Big Four negotiations probably will yield a consensus version of a military-policy bill, which then would be brought up for votes before the end of the lame-duck session that begins today.
This is to be the last legislation that McKeon manages before he retires. It’s also the last Pentagon policy bill for his Senate counterpart, Democrat Carl Levin of Michigan.
Going without enactment of an authorization measure has been all but unthinkable on Capitol Hill. It’s a point of honor among lawmakers to allow U.S. troops in harm’s way to be paid and supplied, and Congress has passed 52 consecutive defense authorizations.