House investigators are probing allegations that a Commerce Department agency has retaliated against numerous whistleblowers who spoke out against financial mismanagement by agency officials, Scribe has learned.

The allegations involve the National Institute of Standards and Technology’s Manufacturing Extension Partnership (NIST MEP) program. In a September letter to Commerce’s inspector general, House Oversight and Government Reform Chairman Darrell Issa (R-CA) said his committee is investigating allegations “that NIST MEP is targeting certain state centers by withholding matching federal funds to which they are entitled by statute.”

Issa was referring to state-based MEP Centers, which receive federal funds for consulting services provided to local manufacturing businesses. NIST provides one-third matching grants to 59 regional MEP Centers, meaning for every two allowable dollars an MEP Center spends, it receives one dollar in federal matching funds. The goal of the program is to spur American manufacturing by empowering smaller companies.

But whistleblowers claim that NIST MEP leadership, under director Roger Kilmer and deputy director Aimee Dobrzeniecki, has misspent agency money and denied MEP Centers matching funds to which they are entitled in order to boost or maintain NIST MEP’s “home office” budget. What’s more, they claim that NIST MEP retaliated against MEP Centers that spoke out against that financial mismanagement.

“[D]ocuments and information provided by whistleblowers show a range of misconduct by NIST program managers,” Issa wrote, “including: misuse of government credit cards; misuse of appropriated funds for lobbying; retaliation, and; preferential treatment for certain contracts.” Scribe has also obtained documentation supporting the allegations.

NIST MEP’s budget has increased dramatically over the past five years, but the amount of money going to the MEP Centers themselves has actually declined. In fiscal year 2006, NIST enjoyed $108 million in federal funding for MEP program, of which more than $90 million was disbursed to MEP Centers. By fiscal 2012, its budget was $128 million, with only $87 million marked for those centers.

Some MEP Centers allege that NIST has avoided sending more money to the centers in order to boost the share of its budget that remains in Washington. “Whatever federal monies these Centers are unable to draw down remains with the NIST home office,” one MEP Center director told Issa in a May letter. “This outcome appears to be intentional on the part of NIST.”

The tensions between NIST MEP leadership and the MEP Centers came to a head in 2010, when three centers — in Maine, Massachusetts, and Florida — filed a lawsuit attempting to force NIST MEP to implement sections of the 2007 America COMPETES Act designed to boost the share of NIST MEP’s budget going to regional centers.

The American Small Manufacturers Coalition, a 501(c)6 lobbying organization created by a number of regional MEP Centers, managed to spur congressional action on the issue as well. Twenty-nine senators sent a letter to then-Commerce Secretary Gary Locke in February 2010 noting that NIST MEP was apparently “diverting some of the funds [authorized by America COMPETES] from existing MEP Centers” even though “it is clear that Congress intended this funding to go to” those centers.

The effort by MEP Centers to expose NIST’s attempts to shore up its home office budget earned those centers the ire of the program’s leadership, they claim. In retaliation, according to a 2009 letter from three MEP Center directors to Commerce’s general counsel, “the NIST MEP Director and officials within the [Commerce Department’s Office of the Inspector General] have coordinated excessive audits on those MEP Centers and their partners that have been leaders in the congressional efforts to restore funding to the MEP Program.”

“Although there are 59 MEP Centers, the OIG, in the past two years has conducted extensive audits of the Massachusetts MEP Center, the Florida MEP Center, the Texas MEP Center, the South Carolina MEP Center, and the California MEP Center,” the letter notes. “Each of these centers had individuals serving on the original Board of the American Small Manufacturers Coalition…which was the organization that sought to restore MEP Center funding through congressional action.”

The Center directors claim those audits “were far beyond ‘reasonable’ and were designed instead to harass and intimidate both the MEP Centers and their partners.”

NIST MEP denies any involvement in the OIG’s audit decisions. “Per standard protocol, NIST MEP was not consulted by the OIG regarding the selection of which centers to audit,” an agency spokesperson told Scribe in an email.

But one Center director noted that NIST MEP leadership had openly targeted uncooperative MEP Centers. Kilmer and Dobrzeniecki “expressed to more than one ASMC Board member that they were targeting uncooperative individuals by going directly to the MEP Centers where those individuals were employed and threatening those MEP Centers with a loss of funding if they did not take action they demanded,” that director told Issa in an undated letter.

Other directors noted a similar pattern. “Resources and support [are] not being provided equally to all Centers, but to those who are ‘friends,’” one MEP Center head wrote in May. Another complained of “vindictive and targeted retribution” designed to “punish” that Center “for voicing concerns about the way the national program has been run.”

Here is Issa’s full letter announcing his committee’s investigation:

Issa Letter