Navajo tribe probing allegations of overbilling by Utah company 6-14-07

- A Navajo Nation investigator confirmed he is looking into claims that a Utah-based Internet services company overcharged the tribe by almost $470,000.

The comment from Frank Brown, an investigator for the tribe's Department of Justice, comes on the heels of a preliminary review of OnSat Network Communications Inc., which provides Internet service to the tribe's chapter houses and other programs via satellite.

The DOJ's White Collar Crimes Unit also is investigating whether tribal officials may have violated tribal procurement laws in their dealings with OnSat, Brown said.

OnSat Chief Executive David Stephens said he's not worried about the allegations. As far as he's concerned, they are unsubstantiated rumors, a “witch hunt,” he said.

“It's easy to throw sticks in the spokes, but we're working on some real solutions” to bring education and job opportunities to Navajo people, he said.

Stephens maintains that the complaints that prompted the review are based on a misunderstanding of the Park City, Utah, company's contract with the tribe.

“There is such a turnover in the Navajo Nation Department of Justice and accounting department that the original intentions of these agreements is lost and they're so thick now nobody reads them,” he said.

The review conducted by Navajo Office of the Auditor General analyzed all payments to OnSat between December 2001 and September 2006.

It found that OnSat overbilled the tribe's Head Start program by nearly $460,000 and charged the tribe's Special Diabetes Program $10,600 for services not rendered.

The review also alleges that the tribe made nearly $185,000 in unnecessary purchases and did not effectively review and validate OnSat invoices.

The Head Start program, for example, spent $48,500 on software and $15,200 on wireless cards that never were used. The Division of Public Safety wasted $121,000 on propriety software that never was installed, the report says.

The review, obtained by The Associated Press in advance of its release, has not been finalized.

Stephens' lawyer, Jim Fitting of Albuquerque, N.M., said he plans to sue in tribal court to block the release of the final review, contending some of the findings constitute defamation.

Brown said he requested the review two years ago after hearing numerous complaints. He said the tribe has three options in dealing with violations of its laws: refer the case to the FBI, which handles the most severe crimes in Indian Country; try the case in tribal court, which handles only misdemeanor crimes; or file ethics charges.

Brown said his main objective is to “recoup whatever the tribe is owed.”

Although Stephens does business on the reservation, the tribe does not have jurisdiction over him because he is not Navajo.

Brown suggested the FBI is “very interested” in the dealings with OnSat, but wouldn't say whether the FBI is investigating.

An FBI spokeswoman in Phoenix, Deborah McCarley, declined to comment, citing policy.

Brown said his main concerns with the OnSat contract deal lie with bidding, procurement and purchasing - potential violations that may not be crimes.

The audit alleges the tribe's Division of Public Safety and the president and vice president's office broke tribal procurement laws in buying equipment from OnSat without asking for other bids.

“It's mostly mismanagement, bad decisions, which inevitably result in the wasting of money,” Brown said.

Stephens said the $1.9 million master contract signed with the Navajo Division of Community Development allows for sole source procurement.

Patrick Sandoval, chief of staff for Navajo President Joe Shirley Jr., did not immediately return a message left this week seeking comment. He previously has disputed the review's findings, saying “there are answers to every situation” that would clear the allegations.

OnSat's contract with the tribe has been modified 10 times since 2001 to include services to the tribe's Head Start program, the Public Safety Division and the president's office. The last modification came in January 2006, bringing the contract value to $32 million.

That figure raised concern among some tribal employees, including Brown, who worry that the tribe might be wasting money on services they say could be provided free through the Navajo Department of Information Technology.

The Navajo Office of the Controller, which processes payments made to vendors, disputed the review's findings, saying OnSat's contract with the tribe was not poorly managed. The tribe's Division of Public Safety also disagreed with the review, saying the agency stayed well within the rules.

The Head Start program, however, supported the review's findings that OnSat overbilled the program by nearly $460,000.

Stephens has agreed to credit the Head Start program $43,500 because he said OnSat could not document the installation of some equipment. He also agreed to credit Head Start another $15,600 for what he called an “error in billing.”

Stephens also has offered to credit any program that can prove it has had long lapses in service as a result of satellite failure, which was cited in the review.