I-Team: Lucrative Government Contracts Questioned - 8 News NOW

Chief Investigative Reporter George Knapp and Chief Photojournalist Matt Adams

I-Team: Lucrative Government Contracts Questioned

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Jacob Jessop in 2006. Jacob Jessop in 2006.

LAS VEGAS -- No segment of the Nevada economy has been hit harder by the recession than the construction trade. However, at least one company in town has all the work it can handle, largely because it has enjoyed phenomenal success in bidding for government contracts.

It's competitors think something is fishy about how JNJ Engineering bids these jobs and they worry that public money is helping to support the notorious polygamist leader.

"When you look at one guy and he is getting a lot of them, everybody wonders what's the difference? How can you get that many?" said Shane Sullivan.

Like many of his fellow contractors, Shane Sullivan of Acme Underground is baffled by the bidding prowess of one particular rival -- JNJ  Engineering. The firm has shown an uncanny ability to win government contracts for things like road projects or drainage systems.

Sullivan says he and his competitors have all had to cut their bids to the bone, just to get enough work to survive, but JNJ often beats their lean bids by a large margin.

"If you see someone who is 10 or 15 percent below us, we start wondering," Sullivan said. In January, the flood district sought bids for a storm drain at Karvil Street and Tunis Circle, estimating it would cost around $272,000. Acme's bid was spot on and $2,000 under the estimate. The second lowest bid was $249,000 but JNJ's bid of $182,000 undercut that by a whopping $68,000. How is that possible if contractors pay basically the same for materials?

"The only thing that you can come up with is what the difference on the labor. That is what it comes down to," said Sullivan.

Since 2005, JNJ's winning formula won 10 contracts from the city of Las Vegas worth $13 million. The city of Henderson paid JNJ $433,000 for repairs at the water treatment plant. Clark County shelled out more than $500,000 for landscaping work at Wetlands Park. But by far, JNJ's top benefactor is the water district, which among other things, paid JNJ $2.4 million to build trails and amenities at the Springs Preserve.

Since 2005, JNJ has bid on 42 water district projects and won 15 of them, better than one out of every three. "We look at the numbers we bid. When we bid 15 projects, we get one. Now, we probably bid 60 projects to get one," Sullivan said.

What makes JNJ's local success even more impressive is that it is not a local company. It's licensed in Nevada but is based in Hilldale, Utah, otherwise known as a stronghold for the polygamist FLDS church, led by incarcerated prophet Warren Jeffs.

JNJ's owner Jacob Jessop moved into a nearly $1 million property in the northwest part of the Las Vegas valley a few years ago with -- what neighbors say --  at least three wives and 14 kids.

When the I-Team caught up to him in 2006, he was polite but succinct in describing why he relocated. "we have a lot of work to do here," Jessop said. He would not answer any questions about being in a polygamist family.

JNJ is considered the most successful company in a network of polygamist businesses operating in the Southwest. In testimony before the U.S. Senate, critics say the success is based, in part, on low labor costs made possible by using boys or teens who work but aren't paid. Polygamist critic Flora Jessop is the cousin of Jacob Jessop.

"They work day in and day out and they get their paycheck and sign it over straight back over to their boss," said Flora Jessop. Another critic is Elaine Tyler of the HOPE organization which helps youngsters escape from polygamy clans. "It really galls me to see so many millions of dollars in Clark County going strictly to the FLDS. The money the taxpayers are paying, I believe, is going to encourage the illegal lifestyle of polygamy," said Tyler. She says she saw it for herself in St. George, Utah. "I thought, oh my gosh, what is this little 10-year-old boy doing up on scaffolding framing our house? They've got these kids running heavy equipment, up on backhoes, up on roofs."

Local governments say they have seen no evidence of child labor at any of JNJ's Nevada projects, adding that the company does good work and saves money for the taxpayers. JNJ did face dozens of complaints about the work it did at the Wetlands Park, where hundreds of plants died, but that dispute was settled.

Contractors like Shane Sullivan say it is tough to compete against what seems to be JNJ's built-in advantage on labor costs. "There is something ingenious they are doing labor-wise because that is about the only place there is to work."

Not one official in local government would speak with 8 News NOW on camera about the contracts awarded to JNJ.

The water district told 8 News NOW that so long as the company is licensed, can do the work, and has no formal charges leveled against it, government's are bound by law to award contracts to the lowest bidder, even if it means public dollars could flow directly into the pockets of Warren Jeffs and his polygamist followers.

Polygamist leader Warren Jeffs reportedly performed several polygamist wedding in Southern Nevada, not from where his followers have been working on public works projects for local governments.

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