Commerce Committee Broadens Investigation Into Allegations Of Fraud By NASA Contractors

May 6, 2009

WASHINGTON, D.C. – John D. (Jay) Rockefeller IV, the Chairman of the Senate Committee on Commerce, Science, and Transportation, broadened his committee’s investigation into fraudulent contracting at the National Aeronautics and Space Administration (NASA) yesterday by sending information request letters to the Department of Defense and the Department of Energy.  The Committee sent these two letters after reviewing documents showing that a company accused of defrauding NASA also received contracts from the Department of Defense and the Department of Energy.

The Committee opened this investigation on March 6, 2009, when Chairman Rockefeller wrote the Acting Administrator of NASA, Mr. Christopher Scolese, requesting documents related to a Florida small business called New Era Technology (NETECH).  This letter was prompted by media reports that NETECH and its owners had been accused of improperly diverting hundreds of thousands of dollars they had received through NASA’s Small Business Innovation Research and Small Business Technology Transfer programs.  According to allegations filed in federal court, NETECH officials used NASA research funds to purchase a number of luxury personal items, including a BMW automobile and a condominium in Ft. Lauderdale, Florida.

In response to Chairman Rockefeller’s March 6 letter, NASA has produced more than 1,500 pages of documents to the Committee.  Review of these documents shows that NASA awarded eight contracts and four grants totaling almost $3 million to NETECH.  The documents also show that NETECH received at least one contract from the Department of Energy and at least four contracts from the Department of Defense.  The letters sent by Chairman Rockefeller late yesterday ask these two agencies for information related to any contracts awarded to NETECH.

In the letters he sent to Secretary Gates and Secretary Chu, Chairman Rockefeller said: “I am concerned that this new evidence suggests that the alleged NETECH fraud may have been more extensive than was originally believed.”  Rockefeller’s letters also expressed his concern that, “the evidence the Committee has reviewed in this investigation suggests that federal grant funds devoted to basic scientific research may be vulnerable to fraud.”

The letters sent to DOD and DOE are attached.