Tuesday, May 5, 2009

Rep. Darby on Vought's TEF Promise

Congressman Drew Darby clarified Texas' position on promised jobs by The Carlyle Group's Vought Aircraft Industries. He stated:

Vought Aircraft is required to add 3,300 jobs through 2009. I have questioned the Governor's office about the contract between the State and Vought for clarification of the contract. Vought Aircraft's first official reporting requirement under their contract will be in the Spring of 2010. If Vought does not meet this objective, the TEF grant will fall into default. The company will have two options in repaying the state, clawback or repayment plus interest. The clawback is calculated on a financial model which takes into account the amount granted and the number of jobs not met plus interest.

Rep. Darby did not give the specific terms of the contract, i.e. the penalty interest rate or the clawback formula. Vought had $35 million in taxpayer money since 2004. That's six years of earned interest prior to making their first report to the Governor. Darby's letter continued:

Since Vought was awarded the TEF grant in 2004, the Legislature has made changes to the program to bring additional financial accountability and penalties for noncompliance. In 2006, the program began disbursing funds on new TEF awards as specific goals are met or upon the closing of a successful agreement which decreases the liability to the State.

One can conclude the terms for Vought's 2004 grant were easier. However, the issue is promises. Vought had two opportunities to shift jobs to Texas. They reneged on closing Vought's Nashville operations and located new Boeing 787 production in South Carolina. Vought owes Texans 3,300 new jobs (for a total of 6,300) or our $35 million plus interest. A company shouldn't make a penny off a promise they didn't fulfill.

Thanks to Rep. Drew Darby and his office staff who graciously replied to my inquiries.