Man pleads guilty to fraudulently obtaining $2.8 million in contracts meant for 8(a) and veteran-owned businesses

November 4, 2014 by

Wesley Burnett, age 54, of Hermosa Beach, California, pleaded guilty on October 24, 2014, to conspiracy to commit wire fraud in connection with a scheme to fraudulently obtain more than $2.8 million in federal government contracts through the use of the Small Business Administration’s 8(a) program, designed to assist disadvantaged businesses.

According to his plea agreement, Burnett owned and operated Confederate Group LLC and Total Barrier Works (TBW).  These companies were in the business of maintaining and installing anti-terrorist systems and vehicle control equipment such as security barriers, bollards, gates, uninterrupted power systems (UPS) and other perimeter security anti-terrorist equipment.

Burnett admitted that at various times from 2007 until 2014, he falsely represented to the government that Confederate Group LLC was a “Hispanic-American owned business,” a “minority owned business,” a “service disabled veteran owned business,” and a “small disadvantaged business,” in order to win federal contracts at military bases and federal buildings that were reserved for firms in those categories. In fact, Burnett is not a member of any racial or ethnic minority, is not a disabled veteran and is not a member of a socially disadvantaged group, as those terms are defined by the Small Business Administration, and therefore his company was not qualified to receive contracts set aside for those categories. As a result of Burnett fraudulently claiming minority and/or disabled veteran status, from 2008 through 2014, Confederate Group LLC was awarded approximately $534,315, in contracts reserved for minorities and service disabled veterans.

In order to bid on the set-aside contracts, Burnett recruited individual who were members of racial or ethnic minorities, service disabled veterans, or members of socially disadvantaged groups, and offered them a percentage of the total value of any contract he won using their companies’ name. As part of the scheme, Burnett, using the name of the minority owned company bid on federal government contracts set aside for companies owned by minorities, service disabled veterans, or members of socially disadvantaged groups.  Burnett and TBW did all of the work covered by the contract, then paid the owner of the company in whose name the contract had been awarded a fixed percentage of the gross value of the contract, usually between four and five percent. To further this “pass thru” arrangement, Burnett falsely represented that TBW was a trade name for the minority owned company in whose name the contract had been awarded, when in fact TBW was a separate and distinct company.

For example, Yogesh K. Patel was the owner of United Native Technologies, Inc. (“UNTI”), which, according to its articles of incorporation, was formed to “perform information technology services to federal, state and local government, as well as commercial.”  In 2005, Patel applied for and was granted certification as a minority or socially disadvantaged owned business under the SBA’s 8(a) program. In addition to a broad scope of assistance from SBA, participants in the 8(a) program can receive sole source government contracts that are reserved for minority or socially disadvantaged owned companies.

Burnett met Patel at a business conference and the two agreed to use UNTI to bid on 8(a) set aside contracts at federal government installations, including military bases and federal buildings, with Burnett, TBW and individuals at Burnett’s direction actually performing the work necessary to fulfill these contracts. Burnett also agreed to pay Patel approximately 4.5% of the total value of any contract awarded to UNTI. As a result, between January 2010 and November 2013, UNTI was fraudulently awarded more than $1.8 million in 8(a) set-aside U.S. government contracts, while the work on the contracts was actually performed by Burnett’s company and employees.

Burnett admitted that he had similar arrangements with the owner of an 8(a) firm that did electrical and other work for government and commercial clients, and with the owner of a service-disabled veteran owned small business. Burnett also fraudulently obtained the personal identifying information of a service-disabled veteran, which he then used when bidding on federal government contracts.

Burnett faces a maximum penalty of 20 years in prison for the wire fraud conspiracy. U.S. District Judge Deborah K. Chasanow has scheduled sentencing for February 2, 2015, at 10:00 a.m.

Yogesh K. Patel, age 47, of Gaithersburg, Maryland, previously pleaded guilty to his role in the scheme and is scheduled to be sentenced on January 12, 2015, at 12:00 p.m.

The National Procurement Fraud Task Force was formed in October 2006 to promote the early detection, identification, prevention and prosecution of procurement fraud associated with the increase in government contracting activity for national security and other government programs. The Procurement Fraud Task Force includes the United States Attorneys’ Offices, the FBI, the U.S. Inspectors General community and a number of other federal law enforcement agencies. This case, as well as other cases brought by members of the Task Force, demonstrates the Department of Justice’s commitment to helping ensure the integrity of the government procurement process.


Got DBE fraud skeletons?

November 3, 2014 by

Every Halloween, the cute traditional images re-emerge from our closets and the attics.  Ghosts, gravestones, plastic pumpkins, and perhaps the most common of all – skeletons.  Given the recent heightened status of Disadvantaged Business Enterprises (DBE) fraud prosecutions, the massive civil penalties, the prevalence of hotlines, and increased incentives for whistle-blowers, any contractor who participates in DBE programs should use Halloween as an annual reminder to take a closer look to see if they have other skeletons in their corporate attics.

According to recent government reports and audits, DBE fraud investigations have been on the rise, in hopes of deterring widespread abuses in the programs.  According to a 2011 report from the DOT, between 2003 and 2008, the Office of Inspector General (OIG) investigations resulted in 49 indictments, 43 convictions, nearly $42 million in recovery and fines, and 419 months of jail sentences.  Moreover, from 2009 and 2010, the number of DOT investigations increased by almost 70 percent.  Based upon the headlines each month, the number of indictments keeps climbing, along with the civil and criminal penalties.

In view of these statistics and trends, one thing should be crystal clear. To the extent that DBE compliance may be a challenge, it is far better to discover the problems sooner, rather than later.

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DBE Fraud Hotline

GSA says small businesses benefitting from reverse auctions

October 30, 2014 by

Taxpayers and small businesses are benefitting from the ReverseAuctions program, the General Services Administration said.

In fiscal 2014, 85 percent of auctions awarded through the initiative went to small businesses even though 60 percent was set aside for them, and overall, reverse auctions generated 23 percent savings off standard contract price, an Oct. 21 blog post says.

Those small-business procurements totaled more than $19 million.

Additionally, more than 21 government agencies created 900 auctions and saved more than $6 million, according to the blog.

“Competition fuels savings. GSA ReverseAuction’s fiscal year 2014 performance is a testament to this principle,” wrote Charles Wingate, chief of a branch of the agency’s Federal Acquisitions Services’ Information Technology Commodities Division, on the blog.

ReverseAuctions is an online tool for agencies to use at no additional cost to buy simple commodities and services.

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Top federal contracting vehicles offer highest value in five years

October 29, 2014 by

The top 20 federal opportunities for the 2015 federal fiscal year offer $220.3 billion in total contract value, representing the highest value of the past five fiscal years; a continued increase from a low of $92.2 billion in fiscal 2013; and a $59.6 billion increase over the top 20 combined contract value of $160.7 billion in fiscal 2014.

Information Technology opportunities total $161.5 billion, representing 73 percent of the top 20 total contract value, a shift from last year when professional services opportunities dominated.

Driving the increase in IT value are several large follow-on contract programs expected to be solicited this year. Follow-on opportunities account for 99 percent of the value in the top 20 opportunities.

The split between this year’s defense and civilian top 20 opportunities is the most even of the past five years — essentially 50/50, with near-even values and 10 opportunities each.

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Peanut butter and other spending highlighted in analysis of FY14 federal contracting

October 28, 2014 by

Would you be interested to know that federal agencies spent $27.3 million last year on peanut butter and related products?  Contracts for peanut products were among the 50,000 procurements, with a total award value of $272 billion, that the government awarded in FY14, the 12 month period ending Sept. 30, 2014.

Those facts, among others, are presented in a report released a few days ago by GovTribe, a small, Arlington, VA company whose mission is to make federal contracting information more accessible.

Among the highlights in GovTribe’s report are:

  • Contracts for services — as opposed to products — made up 35 percent of the contracts and 65 percent of the total dollar value.
  • 40% of procurements were closed in October 2013 or September 2014. The total value of contracts closed in just these two months was $103 billion – 38% of the dollars awarded for the year.
  • Second only to the Defense Department units, the Dept. of Health & Human Services awarded the highest dollar value of contracts.  Third-ranked was the VA.
  • 11% of contract awards were small business set-asides, amounting to $30.3 billion.
  • Total obligated dollars for the fiscal year will likely be closer to $400 billion, once all accounted.

To see the full report, visit:

Subcontractor wants out of shipping contract; hearing set for Oct. 30

October 27, 2014 by

A key subcontractor wants to stop shipping troops’ privately owned vehicles for the Department of Defense, further threatening a system that has been plagued by long delays and complaints from troops.

A U.S. District Court on Sunday enjoined Liberty Global Logistics of Lake Success, N.Y., to stick to its agreement to ship vehicles to and from Europe. Liberty is a subcontractor to Brunswick, Ga.-based International Auto Logistics, which in May took over a DOD contract to ship the personal vehicles of servicemembers and DOD civilian employees.

The temporary injunction will be the subject of a Thursday hearing at the U.S. District Court for the Southern of Georgia, Brunswick Division.

Liberty, of Lake Success, N.Y., has questioned whether International is financially capable of servicing a contract it won in May to ship the personal vehicles of DOD personnel when they transfer duty stations. In documents filed with the court by International, Liberty said that International had taken out an $8 million line of credit last year, which expired in July.

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Huge bidder pile-on for VA’s $22.3 billion tech deal

October 23, 2014 by

The number of companies that have expressed interest in bidding on the Department of Veterans Affairs’ Twenty-One Total Technology Next Generation contract — known as T4NG — hit 635 vendors Tuesday, according to a VA spreadsheet.

The list of interested bidders ranges alphabetically from A1C Partners LLC to Yakshna Solutions and is dominated by small-business hopefuls. VA plans to award up to 20 indefinite-delivery, indefinite-quantity contracts.

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Contractors, expect 72-hour rule for disclosing corporate hacks

October 22, 2014 by

Look for the whole government to take a page from the Pentagon and require that firms notify their agency customers of hacks into company-owned systems within three days of detection, procurement attorneys and federal officials say.

Right now, vendors only have to report compromises of classified information and defense industry trade secrets. The trade secret rule is new and covers breaches of nonpublic military technological and scientific data, referred to as “unclassified controlled technical information.”

That new reporting requirement kicked in Nov. 18, 2013 and applies to all military contracts inked since.

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GAO task order protests: Protester’s price does not establish jurisdiction

October 21, 2014 by

The Government Accountability Office’s jurisdiction over task order protests turns on whether the award price of the task order exceeds $10 million–not whether the protester’s proposed price exceeds $10 million.

GAO-GovernmentAccountabilityOffice-SealIn a recent bid protest decision, the GAO held that it lacked jurisdiction over a task order protest because the award price was under $10 million, even though the protester had proposed a price of approximately $11.4 million.

The GAO’s decision in Goldbelt Glacier Health Services, LLC, B-410378, B-410378.2 (Sept. 25, 2014) involved an Army National Guard task order solicitation for psychological health services.  After evaluating competitive proposals, the agency issued the task order to National Sourcing, Inc. in the amount of $9,620,556.42.

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As the Army’s future takes shape, so does the Defense market

October 20, 2014 by

For two years, the U.S. Army has been pitching new ways it could stay relevant and play a more prominent role in the Pentagon’s pivot to the Pacific, a region where the Navy and Air Force are expected to play a more prominent role. Now, after a turbulent year in which Russia invaded Ukraine over land and Army soldiers have deployed on high-profile missions to Iraq and Africa, there is a wider-spread recognition that the ground service will have a significant role to play after Afghanistan.

But despite this resurgence in missions, that doesn’t mean work will be easy to come by for defense companies. Defense firms descend on Washington this week for the Association of the United States Army, or AUSA, annual convention and arms exposition. This year’s gathering comes after the Army announced major changes to its makeup, including cutting tens of thousands of soldiers from its ranks. But it lands right when a leader like Army Chief of Staff Gen. Ray Odierno has signaled he will revisit those plans to shrink the force – and the budget — thanks to ISISand Russia.

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