Part 1: Four employees claim retaliation from SBA managers

(This is part 1 of Federal News Radio’s investigative series, Discouraged and Disrespected at SBA.)

By Jason Miller
Executive Editor
Federal News Radio

Karla Saunders has worked for the government for more than 29 years in the human resources field. She said she never received a poor or unsatisfactory performance review in all her years of service, including in senior management positions at the Small Business Administration, the Labor Department and the IRS.

But over the last three years, Saunders said she’s been treated like a complainer and a troublemaker by senior SBA officials. She said this isn’t because of the job she is doing. Rather, Saunders said SBA officials are repeatedly retaliating against her for blowing the whistle and testifying on behalf of another agency employee after accusations of mismanagement arose against three managers.

“Managers were collectively mistreating us and, after then, SBA Administrator Steve Preston conducted an investigation. Two of the three managers were removed from their positions,” Saunders said in an interview in her attorney’s office. “The one remaining manager, Darryl Hairston, ultimately became acting administrator during the 2008 presidential transition.”


Saunders claims Hairston and other senior officials have been exacting revenge against her for testifying. And, she said the reprisals continue with new SBA Administrator Karen Mills and her senior staff.

Saunders said she was sent on a detail to the Labor Department in 2008 from her job as director of training. When she returned to SBA a year later, managers did not return her to the director of training position, but put her in two positions back-to-back she was unqualified for, and tried to send her to a third position she was not suited to do. Basically, Saunders said she was turkey farmed.

Saunders is not alone. She is one of four long-time career federal employees at SBA who claim agency management is retaliating against them for blowing the whistle on allegations of assorted human resources and contracting fraud. Diane Sellers, Ethel Matthews and Stevie Gray also allege misconduct by SBA managers, and retaliation when they brought the potential illegal activities to the attention of federal HR authorities.

SBA’s Jonathan Swain, the assistant administrator for communications and public liaison, in e-mailed responses to questions said, “Many of your questions relate to ongoing personnel matters pertaining to a few employees. Out of respect for individual employee privacy and to ensure the integrity of the dispute resolution process including potential mediation or settlement, it is the agency’s policy to not discuss ongoing or pending personnel matters publicly. The agency certainly does not believe, however, that there is widespread retaliation against employees or whistleblowers, as your questions suggest.”

Bad situation

Saunders’ attorney Vincent Melehy called her situation among the worst he’s seen in 13 years practicing federal employment law.

“This agency just doesn’t get it,” said Melehy, who represents four other SBA employees who have similar experiences as Saunders. “They’ve taken my client out of her position. They did not voluntarily put her back in the position. They just kept moving her around. And when Office of Special Counsel ordered the agency to put her back, they basically gutted the position. It is an agency that is allowing these discriminatory and retaliatory actions to continue in a systemic way and it needs some swift and decisive action.”

Saunders said the retaliation started with the detail to the Labor Department, but grew worse when she returned to SBA a year later. She said SBA managers put her in positions she was unqualified for.

The first one was in the role of a senior advisor in the Office of Entrepreneurial Development.

“I would sit and read materials, I would ask for work repeatedly,” Saunders said. “One point in time, I went to the deputy director and said ‘I have nothing to do.’ She said ‘I have to find something for you to do.'”

Saunders tried to make the best of it.

“We came up with one assignment I was able to successfully complete,” she said. “Overall it was a very demeaning, wasteful experience.”

About six months later, Saunders said SBA moved her into another “created position” with the Office of Faith Based Initiatives. Again, she said she has no experience in this area but tried to make the best of it.

A few months later, Saunders said SBA wanted to move her for a third time. Eugene Cornelius, SBA’s deputy associate administrator in the Office of Field Operations, asked Saunders if she wanted to be reassigned to his office.

“I e-mailed him and said ‘I respectfully decline the offer for this position,'” she said. “Now I’ve been on two details with no meaningful work, forced to be reassigned to a position I had no experience in or background in. And now I’m being asked by another senior executive to be reassigned into another position.”

Saunders said she recognizes agency managers can move people into new positions to meet the needs of the agency. But, she said, SBA officials weren’t doing that.

“If you are going to create a position there should be some justification as the need for that position to exist and you would want the best person in the position to perform the work to get the people’s work done, which is serving America’s small businesses,” she said.

Saunders asked repeatedly for assistance from former SBA administrators as well as Mills. She wrote letters, asking for meetings and help.

But each time, Saunders said she received limited responses from senior managers.

Last straw

The tipping point came when SBA advertised to fill her former job as head of training.

Saunders reapplied for her job and was told by the hiring manger she earned a perfect ranking. But former SBA chief human capital officer Napoleon Avery and deputy CHCO Annie Spiczak told the hiring manager not to interview her. Avery left government in 2010 and Spiczak left SBA for the Veterans Affairs Department also last year.

“I sent Administrator Mills a request for intervention and I spelled out all the things that has happened to me,” Saunders said. “She referred my request to her general counsel Sara Lipscomb. Ms. Lipscomb and another attorney, Monique Fortenberry, met with me and I was told the administrator put a stay on the position until they could determine exactly what happened and under what circumstances I had been removed from the position.”

Lipscomb and Fortenberry asked for six months to investigate the matter and to send her complaints to the Office of Special Counsel. Saunders said OSC did not accept the case and she never heard again from Lipscomb or Fortenberry.

Saunders said she filed a separate complaint with OSC alleging wrongful removal from her job as director of training and whistleblower retaliation.

She said OSC determined in June 2010 that SBA should put Saunders back in her job as director of training.

OSC selective about cases

Debra Roth, a partner with the law firm of Shaw, Bransford and Roth and a federal HR expert, said the fact that OSC even took the case to investigation is a sign that there is enough evidence against SBA to demonstrate a violation.

Shaw, Bransford and Roth also produces the Fed Talk radio program on Federal News Radio.

The OSC referred less than 12 percent of the 2,500 complaints to investigations and prosecutions in 2009, said Darshan Sheth, OSC’s acting director of public affairs.

“We have a total staff of 110 employees and that includes all divisions at OSC,” he said. “If we accept a case, clearly, we believe there might be something there but it is important to note that there may not be something there as well. But they made a basic showing that they have enough evidence to support all legal elements to take the case forward.”

Roth said the OSC only takes the most egregious complaints to investigation and only some of those actually get a ruling.

“Disciplinary actions, reprimands, suspensions, demotions, removal, non-disciplinary actions, punitive reassignments, geographic reassignments and performance ratings are the bread and butter of what people complain about in whistleblower complaints,” Roth said. “Most federal agencies will read the OSC report with recommendations and take it very seriously. Many agencies will agree to take the recommended actions, maybe not exactly, but close enough to satisfy the OSC so they believe justice was done.”

But that was not the case for Saunders.

After the OSC determination in her favor, Saunders said SBA returned her to her position as director of training, but removed four people from her staff and reduced her budget.

She said current SBA CHCO Kevin Mahoney, who replaced Avery, tried to create another head of training position within another agency office. Saunders said this was yet another example of whistleblower retaliation that continues to go on.

In fact, Diane Sellers, the SBA director of personnel services and another whistleblower, said she told Mahoney that creating a position in another office exactly the same as Saunders’ director of training position was a prohibited personnel practice. Eventually, Mahoney backed down from creating the position only after Saunders referred the issue to the agency inspector general.

Waiting for a response

Another example, Saunders said, of retaliation is when Mahoney created a draft training strategy for the agency without any input from her-the head of training.

“I submitted an e-mail to Mr. Mahoney with a copy of the draft training program and he ignored it, he didn’t respond,” she said. “I asked for a meeting and it never happened. He never responded.”

SBA finally told Saunders to hire new staff for the training office. She said Mahoney also is delaying her ability to staff up. She said she found three qualified GS-12 and GS-13 candidates last October. But Saunders said she still is waiting for Mahoney to conduct the follow-up interviews he requested.

SBA spokesman Swain said Mills has taken steps across the agency to strengthen management and oversight of all of SBA operations.

He said Mills and Deputy Administrator Marie Johns have an open-door policy when it comes to concerns and issues employees may have and are committed to addressing those concerns and issues promptly and appropriately.

But despite Swain’s claims, Saunders said the retaliation continues in other forms. She said the reprisals come from the lack of performance standards preventing her from getting step increases and the agency looking at and deleting her e-mail, even though that violates agency policy.

“Why can’t the agency do the right thing?” Saunders said. “Why not allow for the protection of its employees who are trying to make a difference?”

Read more of Federal News Radio’s exclusive “Discouraged and Disrespected at SBA” series.

Part 2: SBA employees allege fake positions created

Part 3: SBA whistleblowers weigh resolution options

Part 4: SBA’s contracting practices under close scrutiny

Part 5: SBA responds to whistleblower series

Update: SBA assures senator it’s fixing management problems

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