- Associated Press - Thursday, July 28, 2011

An assistant secretary at the Department of Labor has resigned after an internal investigation found that he improperly steered federal contracts to friends and former colleagues.

Raymond Jefferson, who headed the department’s Veterans Employment and Training Service since 2009, used his position to coerce or intimidate other employees to make the awards without open competition, according to a July 21 report by the agency’s acting inspector general, Daniel Petrole.

Mr. Jefferson resigned his post Tuesday, said Labor Department spokesman Carl Fillichio.

A former Army officer who lost all five fingers on his left hand when a hand grenade detonated prematurely during Special Forces training, Mr. Jefferson was tapped by President Obama to head the office that helps veterans find jobs and employment training programs.

The report said that Mr. Jefferson and other lower-ranking officials engaged in conduct “which reflects a consistent disregard of federal procurement rules and regulations, federal ethics principles and the proper stewardship of appropriated dollars.”

The investigation was prompted after a whistleblower reported irregularities last year to Sen. Claire McCaskill, Missouri Democrat.

In one case, the report found that Mr. Jefferson and a deputy pressured colleagues to hire Stewart Liff, an employee management author and speaker who specializes in boosting employee performance. When that didn’t work, Mr. Jefferson told subordinates to instruct other contractors to hire Mr. Liff as a subcontractor at the highest possible rates.

Mr. Liff ultimately received about $700,000 over 16 months, twice as much as other firms were paid for similar work, according to the report.

Mr. Liff billed $275 an hour to prepare one consulting report “that talked about how you should light the workplace and what color you should paint the walls and what the furniture should be,” Ms. McCaskill said.

“The irony in this particular management consultant report was the color he told them to paint the walls was not allowed under government regulations,” Ms. McCaskill said. “This is the kind of boondoggle that taxpayers have every right to expect would come to a screeching halt.”

Mr. Liff did not immediately return a call seeking comment.

The report also found that Mr. Jefferson coerced employees into hiring Ron Kaufman, a consultant who conducted training seminars as part of his company, “Up! Your Service.” Mr. Kaufman and his wife traveled from Singapore to three U.S. cities to provide “customer service” training to veterans office employees. Mr. Kaufman has sought more than $100,000 for his services, but has not been paid.

Mr. Jefferson also violated procurement rules to hire Mark Tribus, a former West Point classmate, to provide a leadership training session, the report said. Mr. Jefferson tried to get a sole-source contract awarded to Mr. Tribus, but it was rejected.