State Dept. contract officer steers $52 million to secret husband, daughter

Matthew Boyle | Investigative Reporter

A special investigation by The Daily Caller has discovered that a State Department contract specialist participated in awarding more than $52 million in taxpayer-funded contracts to a company owned and operated by her husband and daughter.

Kathleen McGrade helped their company, Sterling Royale Group, win 43 federally funded contracts over the last few years.

McGrade acted as the Contracting Officer (CO) for awards to Sterling Royale Group. McGrade’s husband, Brian Collinsworth, serves as the company’s Vice President. McGrade’s daughter, J.L. (Jennifer) Herring, is its president and CEO.

When TheDC first reached Collinsworth for comment, he denied being married to McGrade. “She is the CO on our contracts, but we are not married in any way, shape or form. That’s kind of funny, but, okay,” Collinsworth said, adding that he and McGrade have no relationship “other than a professional one of a CO to a company.”

Collinsworth also denied that Herring is McGrade’s daughter, and his stepdaughter.

But wedding photographs and other personal pictures Collinsworth posted on MySpace.com suggest otherwise. TheDC has seen Collinsworth’s MySpace profile, last updated in early 2007, which declares that he is “happily married to my beautiful wife of one year, Kathy.”

“I have four children from a previous marriage and one brand new step-daughter (see photos),” Collinsworth adds in the profile. “At the moment, I’m working in the construction business doing Embassy work for the US Government.”

When TheDC approached him with this new evidence, Collinsworth cut off communications and has not returned further requests for comment.

Since the State Department has refused to confirm or deny McGrade’s identity, TheDC presented photographs of Collinsworth and McGrade to Herring’s ex-fiancee, Keith Smithey.

Smithey confirmed that Collinsworth is married to McGrade, and that Herring is McGrade’s daughter. Smithey was at the wedding. “I was one of their groomsmen,” he told TheDC.

Smithey added that McGrade and Collinsworth covered their tracks and kept their marriage concealed from the State Department and others. “It was a big secret,” Smithey said. “In fact, they even told me it was a secret and not to tell anyone that they know that they are married, because of the whole conflict of interest and all that.”

In addition to photos documenting their marriage and their allegedly improper professional relationship, TheDC has discovered that McGrade and Collinsworth appeared as co-owners on a 2010 real estate record for a house in Stafford, Va. McGrade also publicly lists a condominium residence in downtown Washington, D.C.

When TheDC visited that building, a security guard confirmed that Collinsworth lives with McGrade at that address.

McGrade owns a boat named after Collinsworth’s and Herring’s company, too. According to records TheDC obtained, the ”Sterling Royale” is a 36.5 foot recreational boat registered to McGrade in Stafford County, Va.

Collinsworth’s name shows up on a dock space he and McGrade reserved for it at James Creek Marina in D.C. A staffer at James Creek confirms that they registered the spot but never brought that particular boat there.

Collinsworth has not responded to TheDC’s requests for comment about the shared homes and boat. Neither McGrade nor Herring responded to any requests for comment.

McGrade works for a company called ATSG, LLC, a State Department contractor that handles the disbursement of federal dollars. A secretary at ATSG and State Department spokesperson Andy Laine confirmed for The Daily Caller that McGrade works on-site at the State Department.

Laine added that, though she handles disbursement of taxpayer money, McGrade is not personally paid with taxpayer funds. ATSG writes her paychecks. The owner of ATSG refused TheDC’s request for comment for this story.

Smithey said Herring rarely did any work for Sterling Royale. He said Collinsworth and McGrade “used her” because she had security clearance and because it helped them classify the business as “woman-owned.” He said Collinsworth really ran the company.

“When I was with her, she really didn’t do anything,” Smithey said of Herring. “Every 15 days or so, she would go to D.C. [from their home in Stafford, Va.] and have a meeting with her mom and stepfather. Then, she wouldn’t even touch anything after that.”

It’s unclear whether McGrade told her ethics supervisors at the State Department that she was directing tens of millions of dollars in contracts to a company owned and operated by her husband and daughter. State Department officials won’t comment on the specifics of the arrangement, confirming only that they are investigating the matter.

“The Department of State has referred this matter to the Office of the Inspector General,” Laine wrote in an email to TheDC.

Melanie Sloan of Citizens for Responsibility and Ethics in Washington says McGrade could be criminally charged if the Inspector General’s investigation finds that she didn’t tell her ethics supervisors about her family relationships with officers of a company receiving public money on her watch.

“In the absence of disclosure and a written determination by the agency, an executive branch employee may not use her position to make decisions that financially benefit family members,” Sloan told TheDC. “The failure to disclose the conflict of interest can be criminally prosecuted.”

If McGrade’s ethics supervisors knew about her familial connections at Sterling Royale Group, rules would require them to sign an ethics law waiver in order for those contracts to proceed. State Department officials refused to confirm whether or not McGrade received such a waiver.

Sterling Royale describes itself as a company that “helps development and project owners succeed by controlling thousands of project variables, based on the collective experience of our staff.” According to official company documents, though, Sterling Royale employs only three people, two of whom are Collinsworth and Herring.

The other is a man named Steve McIlvaine. It’s unclear if McIlvaine is aware of, or involved with, any improper or unethical conduct. When TheDC contacted him, McIlvaine said he wasn’t sure what was going on. He has not responded to subsequent requests for comment.

The 43 contracts Sterling Royale procured from the State Department’s Overseas Building Operations, totaling $52,095,333, covered various design and construction projects beginning in May 2009. Sterling Royale continued to receive contracts through June 15 of this year.

Many of these contracts were for construction of “commercial and institutional building” projects in foreign countries. Others were for “site visit[s]” and “design services.”

Publicly available documents show the contracts were for embassy security, construction and maintenance. The documents don’t offer specifics about what services Sterling Royale actually performed. Only the State Department could provide details on each individual project and its status, several knowledgeable sources told TheDC.

State Department spokespersons also won’t confirm or deny whether McGrade has continued to disburse federal dollars since The Daily Caller approached them with information about her apparent conflict of interest.

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