Subcontractor's Story Details Post-9/11 Chaos
washingtonpost.com
Subcontractor's Story Details Post-9/11 Chaos
New Company Had Little Oversight
By Robert O'Harrow Jr. and Scott Higham
Washington Post Staff Writers
Three years ago, Sunnye L. Sims lived in a two-bedroom apartment north of San Diego, paying $1,025 in monthly rent. Then she landed a dream job, with $5.4 million in pay for nine months of work.
Now she owns a $1.9 million stucco mansion with lofty ceilings on a hilltop, featuring sun-splashed palm trees and a circular driveway.
"She really went uphill," said Jerry Collins, a maintenance man at her former apartment complex who recalled Sims talking about her ambitions.
Sims is not a Hollywood starlet. She is a meeting-and-events planner who built her fortune on a U.S. government contract. In 2002, her tiny company secured a no-bid subcontract to manage logistics on an urgent federal project to protect the nation's airports in the wake of the Sept. 11, 2001, terrorist attacks.
Sims, now 42, recruited hundreds of people to help hire a government force of 60,000 airline passenger screeners on a tight deadline. With little experience, her tiny company was asked to help set up and run screener-assessment centers in a hurry at more than 150 hotels and other facilities. Her company eventually billed $24 million.
The company, Eclipse Events Inc., was among the most important of the 168 subcontractors hired by prime contractor NCS Pearson Inc. The cost of the overall contract rose in less than a year to $741 million from $104 million, and federal auditors concluded that $303 million of that spending was unsubstantiated.
Spurred by that audit, federal agents are examining the entire contract and focusing on Eclipse, according to government officials and Pearson. Investigators at the Department of Homeland Security's Office of Inspector General are trying to determine how and why Eclipse obtained the work and whether the company overcharged the government or submitted false claims.
The story of how Sims vaulted from relative obscurity into a key role overseeing tens of millions of dollars in government spending is still unfolding. A deeper examination of the Eclipse subcontract illustrates the chaos that accompanied homeland security initiatives after the terrorist attacks and shows how contractors were allowed to operate with little government oversight.
Eclipse came out of nowhere, starting as a one-woman operation based in Sims's apartment. She was hired in a hurry, through word of mouth, recommended by someone who did not review her background in detail. She had worked for more than a decade as an event planner for the Four Seasons Hotels and Resorts. But her company, Eclipse, did not exist as a corporation until Sims got the Pearson subcontract; two weeks later, she filed incorporation papers. Over the next several months, Sims hired hundreds of freelance meeting planners, many of them sight unseen.
As the number of hotel assessment sites expanded -- the Transportation Security Administration doubled the number of screeners to be hired -- Eclipse's subcontract grew to $24 million from $1.1 million. The company's authority to spend money on behalf of Pearson and the government also expanded -- in addition to its direct billings, Eclipse approved millions of dollars more in hotel charges by Eclipse employees and spending by other subcontractors, the audit shows.
"Eclipse did not have any other work, before, during, or after the completion of this subcontract," according to the Defense Contract Audit Agency, which was hired by the TSA to examine spending under the contract. A copy of the audit was obtained by The Washington Post.
Eclipse was hired as a field manager to coordinate with hotels for meeting spaces, conference rooms and food, as well as to act as the go-between with hotels and other vendors and subcontractors, such as local security companies. Eclipse employees later said they did the best they could under the most difficult of circumstances. But they also said Sims and her colleagues seemed overwhelmed.
"Did I think money was being spent wisely?" asked Christopher Bryson, an aspiring filmmaker who worked as an Eclipse logistics coordinator. "My answer is no. It just wasn't well managed."
The auditors said $15 million in expenses submitted by Eclipse could not be substantiated. For example, auditors were able to find supporting documents for only $326,873 of the $5.8 million that Eclipse spent directly on accounting, administration, consulting, management and contract labor.
The auditors noted that Sims not only paid herself $5.4 million in compensation as "President/Owner" but also that she gave herself a $270,000 pension.
In addition to focusing on the direct Eclipse expenses, auditors raised concerns about expenses Eclipse employees charged to separate accounts at the hotels chosen by Pearson. Auditors highlighted scores of other expenses run up or approved by Eclipse: hundreds of thousands of dollars for valet parking, unexplained cash advances, dry cleaning and other spending at the hotels, many of which were high-end or resort-style establishments.
Sims and her business associate, Eclipse Vice President Nita Sullivan, declined repeated requests for interviews. A Washington lawyer hired to help the women respond to questions from federal auditors said they have cooperated with authorities and have nothing to hide. The lawyer, Pamela J. Mazza, declined to discuss the contract or the current investigation.
"Eclipse Events completed its work on time and to the satisfaction of the prime contractor at the fixed price negotiated between Eclipse Events and NCS Pearson," Mazza said in a statement.
Pearson officials said they "believed that Eclipse's rates were reasonable" and "that Eclipse did a good job." In response to the audit, Pearson said, "However, TSA's frequent changes and revised requirements greatly impacted [Pearson] and its subcontractors as they both struggled to meet TSA's ever-changing demands and schedule changes."
But Pearson officials also had concerns about the Eclipse bills. Pearson officials negotiated a $1.5 million discount from Eclipse after a Pearson contracting official questioned Eclipse's expenses. Pearson officials pointed out to The Post that $6 million in Eclipse expenses were "recognized or reimbursed by the government." The Pearson officials also said that the $15 million in expenses highlighted by the auditors was factored into negotiations with the government that resulted in a reduction of Pearson's final contract amount to $741 million.
On the specific point of Sims's $5.4 million compensation, the company said that it did not have access to Eclipse's records and that it "cannot validate how much Eclipse paid to its principal. If [the $5.4 million] is accurate, the personal enrichment is outrageous."
Former Eclipse associates interviewed by The Post in recent weeks described Sims as bright, charming and capable. Her friends dismissed the possibility of impropriety, saying she and Sullivan are both devout Christians who would never take advantage of the government for personal gain.
Sullivan, who lives near Orlando, and Sims have known each other for years. Corporate records show that they have operated at least six related companies in Florida and California in the past five years, all of them registered at their home addresses or post office boxes.
When Sims got the Pearson subcontract, she turned to Sullivan and made her vice president of Eclipse, the audit said. Midway through the work, Sullivan created a new company, WJS Consulting Inc., out of her Florida home. WJS received $5.2 million in consulting fees from Eclipse, the audit said. Sullivan said she used the money to hire labor for the project.
Kathy Artandi worked with Sullivan on the passenger-screener contract out of Sullivan's Florida home. She said Sullivan now works as a youth mentor at a church and lives with her ailing mother.
"It's not like she went out and bought a million-dollar place," said Artandi, who called Sullivan one of her best friends. "That's not Nita. She's very old-fashioned."
Today, Sims helps run a program for recovering alcoholics and drug abusers at Seacoast Community Church, an Evangelical Free church by a freeway in Encinitas, Calif. Pastor Dave Simonson credits Sims with changing the lives of some church members.
"She's an extremely competent, caring and compassionate person," Simonson said. "She's very good at what she does: organizing, handling things, following through. She's very gifted. People like her. She's humble. I would characterize her as a servant-leader."
'Two or Three Names'
Sims grew up in Texas and graduated from Texas State University in San Marcos in 1988 with a degree in interior design and architecture. For more than a decade, she worked for the Four Seasons Hotels and Resorts, starting as an assistant lounge manager in Austin.
In the early 1990s, she went to work for the Four Seasons in Hawaii. She then transferred to the Four Seasons Aviara resort north of San Diego. In 1998, she moved into a two-bedroom apartment at a complex in northern San Diego County, not far from where she worked, apartment records show.
"I found California by way of Texas then Hawaii," Sims said in a biographical sketch posted on the Seacoast Community Church Web site. "My whole family still lives in Texas and they visit as often as they can. Seems there is never a shortage of visitors when you live in Southern California. I have lived in Carlsbad for 8 years and in that time God has blessed me with a special 'California family' that I have come to love as my own."
"I feel so fortunate to live so close to the Pacific Ocean and spend as much time as possible enjoying the beach and the year round sunshine!" she wrote in the sketch. "I love hiking, skiing, concerts and travel."
Sims left the Four Seasons and in 2000 began doing business as a meeting planner under the name Eclipse Events.
In early 2002, Sims was contacted by Pearson, an educational-testing division of Pearson PLC, a media and publishing company based in England.
Pearson was in a jam. It had just received a contract to test, fingerprint and medically evaluate candidates for jobs as federal airport passenger screeners. Originally, Pearson had planned to use hundreds of its own testing facilities to screen the candidates. But within weeks, TSA officials decided to change the contract and told Pearson to create assessment centers from scratch at hotels and other facilities close to airports, according to Pearson company documents and federal auditors.
Pearson suddenly needed help to carry the huge logistical load.
Sims and Eclipse were among "two or three names" passed on to Pearson by David Gallagher, an executive at HelmsBriscoe Inc., which was helping Pearson book hotel space. Gallagher said in a recent interview that he had heard Sims was sharp and that she had access to a large database with names of meeting planners around the country.
The database was the core element of a business the two women ran called the International Travel Directors Association. For a $100 fee, the association's Web site said, travel and event planners could sign up to be listed in the association's directory of member profiles.
"Established to unite Travel Directors & Meeting Planners -- worldwide!" said the Web site.
The site said the association was located in Suite 147 at 10151 University Blvd. in Orlando. The actual address was at P.O. Box 147 in the UPS Store at 10151 University Blvd. State incorporation records show the company's address at Sullivan's home outside Orlando.
Because he was pressed for time, Gallagher said, he did not thoroughly check Sims's credentials before passing her name along to Pearson officials. At the time, in March 2002, Pearson and HelmsBriscoe had to open passenger-screener assessment centers in Los Angeles, Chicago and Memphis on tight deadlines.
"I honestly don't remember who recommended her," Gallagher said.
Pearson said it tried out both Eclipse and one other recommended company at a few sites and selected Eclipse based on cost and performance. Pearson officials said they did not hire Eclipse to meet any obligation to include businesses owned by women.
Auditors describe Eclipse's subcontract as a no-bid arrangement.
On March 13, 2002, Pearson struck a deal with Sims estimated at the time to be worth $1.1 million.
According to the government audit, the assignment was to "provide on-site logistical support for each assessment location," including "managing arrangements with hotel staff, ground suppliers and other vendors" and "services for security, communications, and supplies."
It was a tall order. Eclipse did not yet exist as a corporation. Sims formally incorporated the company as Eclipse Events Inc. on March 28 -- two weeks after she had the subcontract in hand. On state incorporation papers, she used her apartment north of San Diego as the company's address.
'The Pressure Was On'
Over the course of the nine-month project, as the work expanded beyond the first three assessment-center cities, Eclipse hired more than 700 freelance event and meeting planners to help manage more than 150 centers where 328,051 passenger-screener candidates were assessed and 63,681 were hired.
Several Eclipse employees said in interviews that Sims seemed polite, caring and attentive. When someone needed to go home, Sims made sure he got a ticket and had a job upon return, they said.
Patrick Murray, a meeting planner in San Francisco, said he was impressed with Sims, though he never met her face to face. Murray said Sims dealt with extraordinary demands with aplomb and was always available to talk on the phone about logistical troubles.
"The pressure was on," said Murray, who oversaw logistics at 40 assessment centers. "She was asked to get all these staff, and she got them. I have nothing but the highest respect for her."
Others described the project as chaotic and lacking in oversight and accountability. Some of the workers had years of experience, but others had little or none. One former employee, Andrea Schulte, said the circumstances created opportunities for waste and abuse. Schulte worked in Ohio, Kansas and Michigan. She said some of the hotels took advantage of the situation.
"There's a lot of blame to go around," Schulte said. "There was too much pressure, and there was a lot of money flying around."
Bryson, the aspiring film director and former Eclipse employee, was among those who said Sims hired him over the phone. Although he was happy with the money he made working seven-day weeks, Bryson said he was not impressed by Eclipse's management.
He also said the hotels added charges at every turn: for setting up banquet rooms, for sodas that had not been ordered, for unnecessary podium rentals and cleaning crews. One hotel tried to charge Eclipse $800 in rental fees for a slide projector, a charge Bryson said he refused to accept.
"It was crazy," Bryson said.
Others said they were uncomfortable with Sims's tendency to approve first-class tickets and other apparent extravagances, such as the valet parking and dry cleaning bills, cited in the audit report.
"It was like Roosevelt's New Deal," said Roger Manson, an Eclipse contract employee from California. "The tech bubble burst. 9/11 happened. No one was flying. Hotels were empty. This was a way to put a lot of people back to work. It wasn't really done in the best possible way, but it sure was good to be working again."
For Manson, the passenger-screener contract couldn't have come at a better time. He had been laid off by an information technology company and received a call from a friend about a logistics firm that was hiring hundreds of people.
Manson had experience in the customer service field, so he called an Eclipse representative and sent over his résumé. "He called me back and said, 'When can I put you on a plane?' There was no background check. No formal interview. The next thing I knew, I was on a plane to Birmingham, Alabama."
Manson said some Eclipse workers would fly home for weekends and keep their hotel rooms, billing the company, and ultimately the government, for unused rooms. He said Eclipse workers were permitted to take out cash advances from the hotels.Eclipse workers charged the advances against a government account and used the cash as tip money for hotel staffers and others.
Some former Eclipse workers said that the practice is commonplace in the events-planning business and that they were careful to account for the cash. But Manson and others said they were not sure that others were as vigilant with the advances because there were so few financial controls.
Midway through the Pearson contract, Sims, Sullivan and several of their colleagues decided to leverage their new contacts and experience to create a more ambitious meeting-and-planning company. Called Eclipse Partners Inc., the new company was registered in January 2003, listing the company address as a post office box north of San Diego.
Richard Weaver, who listed himself as "chief inspiration officer" of his own company, was hired as a consultant to help guide Eclipse Partners into the future. Weaver said in a recent interview that he arranged for the founders of Eclipse Partners to meet at a "dreams and vision" session in San Diego in 2003, months after the work on the passenger-screener contract had been completed.
But he said that Sims seemed to lose interest and that the new company never got off the ground.
"She wanted to go in another direction," Weaver said. "I had heard she wanted to focus on her life in her church."
Researcher Madonna Lebling contributed to this report.
Photo by By Chip Somodevilla, Getty Images
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