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HUD chief denies spiking Bush critic's contract

Housing Secretary Jackson apologizes for 'anecdotal remarks'

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Jackson: "All HUD contracts are awarded solely on a stringent merit-based process."

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Department of Housing and Urban Development
Government Contracts
Frank Lautenberg

WASHINGTON (CNN) -- Housing Secretary Alphonso Jackson apologized Wednesday for telling a business forum in Dallas, Texas, he had spiked a contract bid of a critic of President Bush.

Jackson has led the Department of Housing and Urban Development since 2003.

His comments at an April 28 real estate conference have spurred calls for investigations from Democratic lawmakers, and the department's internal watchdog said it is looking into the matter.

"I deeply regret the anecdotal remarks I made at a recent Texas small business forum and would like to reassure the public that all HUD contracts are awarded solely on a stringent merit-based process," Jackson said in a written statement Wednesday afternoon.

"During my tenure, no contract has ever been awarded, rejected or rescinded due to the personal or political beliefs of the recipient."

Jackson told the real estate conference he killed a deal with a prospective HUD contractor after the owner told him he had "a problem with your president," the Dallas Business Journal reported earlier this week.

Even though the contractor had "made a heck of a proposal," Jackson reportedly said, "he didn't get the contract."

"Why should I reward someone who doesn't like the president, so they can use funds to try to campaign against the president?" Jackson was quoted as saying. "Logic says they don't get the contract. That's the way I believe."

The remarks prompted Democratic Sen. Frank Lautenberg of New Jersey to call for Jackson's head.

In a letter to Bush, Lautenberg said imposing "political litmus tests" for government contracts violates federal law, "undermines the integrity of our government and leads to the waste of taxpayer dollars."

"If the secretary's statements are an accurate report of his actions, it would be appropriate that he be asked to promptly resign from office," Lautenberg wrote.

He added, "It is abundantly clear that public confidence in government is on the wane, and swift action against this breach of law and common sense is critical."

Bush picked Jackson to lead HUD after Mel Martinez resigned as secretary to mount a successful Senate campaign in Florida.

Jackson had joined the agency as Martinez's deputy and HUD's chief operating officer in 2001 after running housing authorities in Dallas and St. Louis, Missouri, and an Austin, Texas-based utility.

The agency has a $32 billion budget and has been heavily involved in reconstruction efforts following Hurricane Katrina.

Sen. Joseph Lieberman, the ranking Democrat on the Senate Homeland Security and Governmental Affairs Committee, urged HUD's inspector general to investigate whether contracts were being awarded "without partiality or political bias."

Mike Zerega, a spokesman for the inspector general, said the HUD watchdog had received "a number of complaints from the public as well as from members of Congress" about Jackson's remarks.

"We are reviewing this matter as to the facts and any applicable law," he said.

The situation Jackson described would have been "totally improper" if true, said Jennifer Gore, a spokeswoman for the Project on Government Oversight, a Washington-based watchdog group.

"There is a list of criteria that the federal acquisition regulations say should be considered when awarding federal contracts, and political affiliation, politics, is not supposed to enter into it at all," Gore said.

Procurement decisions are supposed to be handled by career civil servants, not political appointees like Jackson, she said.

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