Congress moves forward on measures for small business contractors

Under the direction of former Chairman Sam Graves (R-Mo.), the House Small Business Committee over the past six years made overhauling the federal contracting process one of its top priorities, spearheading a number of initiatives intended to funnel more work – and by extension, taxpayer money – to small businesses. When Graves stepped down from the panel at the end of last year, it was unclear whether that effort would continue, or at least whether it would remain near the top of the committee’s to-do list.

Instead, it’s like he never left.

Now led by Rep. Steve Chabot (R-Ohio), the small business committee has picked up right where Graves left off. Chabot and crew recently held a series of hearings on a number of challenges facing small contractors, and last week, the panel marked up and approved a comprehensive package of changes stemming from those conversations.

“We know that when small businesses compete for federal work, it creates jobs, improves the quality of work, and saves taxpayers’ money,” Chabot said when rolling out the proposal, calling the proposed bill – dubbed the Small Contractors Improve Competition Act – “a commonsense approach to make sure that Washington is working with Main Street.”

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Nearly half of the largest federal contractors are also receiving federal grants and loans

Forty-nine of the federal government’s top 100 contractors also won grants, loans or tax credits over the past 15 years, according to a study released last week by the nonprofit research center Good Jobs First.

Two-thirds of the $68 billion in federal business grants and tax credits since 2000 went to large corporations, said the study and update of an accompanying database that includes federal data for the first time.

The federal contractor with the most grants and allocated tax credits was General Electric, with $836 million, mostly from the Energy and Defense departments, the study found. The “double dipper” with the most loans and loan guarantees was Boeing Co., with $64 billion in assistance from the Export-Import Bank. Boeing’s “more than $18 billion in fiscal 2014 contract awards, combined with the $457 million in federal grants and $64 billion in federal loans and loan guarantees since 2000, make it exceptionally favored by Uncle Sam,” the nonprofit wrote.

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Lockheed agrees to pay $2 million to settle Air Force government-furnished fuel overcharge allegations

Lockheed Martin Corporation (Lockheed) has agreed to pay $2 million to settle allegations that it overbilled the government for fuel it used while manufacturing C-130 aircraft for the United States Air Force.  Announcement of the settlement was released on Friday, Mar. 27, 2015.

“The resources of the United States Government are limited and must be protected.  We expect companies doing business with the United States to be circumspect and forthright in billing the United States and using its resources,” said Acting U.S. Attorney John Horn.  “Here, in causing the government to pay for fuel that was the company’s financial responsibility, Lockheed failed to live up to the terms of the contracts and caused financial injury to the government.  The settlement reflects our resolve to ensure that companies that overbill or overcharge the Government will be identified and held responsible for their actions.”

“This settlement illustrates the diligent work exhibited by a joint Air Force Office of Special Investigations and DCIS investigative team, that sifted through and unwound dense and complicated data to reveal the overcharges,” said Lloyd Clark, Assistant Special Agent in Charge, AFOSI Procurement Fraud Detachment Five.

“This settlement is the culmination of the tireless investigative efforts of DCIS agents working closely with our Air Force OSI partners,” said John F. Khin, Special Agent in Charge, Southeast Field Office.  Combatting waste and abuse in Department of Defense contracts to protect the integrity of our national defense programs, remains a top priority for the Defense Criminal Investigative Service.”

Between 2006 and 2013, Lockheed manufactured C-130s for the U.S. Air Force at its Marietta, Georgia facility.  Pursuant to the underlying contracts, the Government provided Lockheed with up to 22,000 gallons of fuel (characterized as government furnished property or “GFP”) per aircraft, which could be used for the engine runs, fuel operations and test flights necessary to manufacture C-130s.  Once Lockheed exhausted its 22,000 gallon allotment on a particular aircraft, Lockheed, not the Government, was financially responsible for any additional fuel.

However, the government’s investigation indicated that between 2006 and 2013, Lockheed routinely used fuel in excess of the 22,000 gallons, but failed to reimburse the government for the excess.  Additionally, the evidence suggests that Lockheed used the fuel on other unrelated projects, where the government was either not a party, or had not agreed to furnish fuel.

This matter was investigated by the United States Air Force Office of Special Investigations, the Defense Criminal Investigative Service, and Defense Contract Audit Agency.

In addition to the C-130, Lockheed’s Marietta plant produces the center wing assembly for three versions of the F-35. The assembly is then shipped to Fort Worth, Texas, where the plane’s production is completed. The Marietta plant also supplies the stealth coating on the fighter’s horizontal and vertical tails. The plant also modernizes Air Force C-5 airlifters and builds wings for the P-3 Orion patrol aircraft.


Small business federal contracting would change under House bill

The chairman of the House Small Business Committee introduced a bill that would include more categories for small businesses to get federal contracts.

The bill (H.R. 1481), introduced by Rep. Steve Chabot (R-Ohio), would increase the number of industries small businesses can compete for contracts as well as identifying new ways to attract small businesses in those new industry categories.

“Small business contracting policies are intended to make sure we have a broad spectrum of small firms working with the government across industries, and when those policies are undermined, it is imperative that we find appropriate solutions,” Chabot says in a March 20 statement.

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VA manager in NC involved in $4 million deal that benefited relatives

A Veterans Affairs manager in North Carolina created a conflict of interest when she participated in a project that netted millions for her family members, according to the department’s watchdog.

The VA bought 35 acres of land for $4.25 million in 2010 from the Gillis family to build a new outpatient medical facility in Fayetteville, N.C. Wendy Gillis, a VA project manager and professional engineer, was part of the team that assessed and ranked five properties owned by her extended family members for the project. Wendy married into the Gillis family in 2001; two of her husband’s cousins submitted plots of land for consideration in response to a 2010 solicitation in FedBizOpps.

“Although she was not the final selecting official, she was intimately involved in the process, discussed the sites with team members, and was in a position to influence the team,” the IG concluded. The watchdog also criticized four other high-ranking VA officials involved in the project – Daniel Hoffmann, Elizabeth Goolsby, James Galkowski and Jessica Kaplan – for failing to take sufficient action over the conflict of interest, or appearance of, when they learned about it.

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SDVOSB fraud: Large business pays $1.1 million

A large business has agreed to pay $1.1 million to resolve allegations that it created a “front company” to be awarded a SDVOSB set-aside contract–and then served as a “pass through” by performing the work itself.

In addition to the $1.1 million penalty agreed to by the large contractor, the putative SDVOSB has agreed to pay the government $50,000, plus five annual contingency payments equal to one percent of its total annual revenues.

According to a Department of Justice press release, the government alleged that W.G. Mills Incorporated created a company called Veterans Constructors Incorporated to pursue SDVOSB set-aside contracts.  The government alleged that “W.G. Mills created VCI merely as a contracting vehicle and . . . VCI’s affiliation with W.G. Mills rendered it ineligible to be awarded set-aside contracts for SDVOSBs.”

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Reverse auctions once again in lawmakers’ crosshairs

Lawmakers are marshaling arguments to restrict the contracting tool called a reverse auction, criticizing agency reliance on a practice dominated by a single private firm at a Thursday hearing of the House Small Business subcommittee.

Rep. Richard Hanna, R-N.Y., who has introduced H.R. 1444 to limit reverse auctions, said that allowing contractors to bid electronically with increasingly lower prices to provide goods and services creates “a race to the bottom” that neither assures quality nor helps channel work to small businesses. “When reverse auctions are used properly, they can save taxpayer dollars,” Hanna said. “Unfortunately, some agencies have used reverse auctions in a manner that evades vigorous competition and contractor protections.”

Use of the tool at agencies such as the Veterans Affairs Department is dominated by a single Vienna, Va.-based firm called FedBid, which has become controversial for its lobbying practices. The Office of Federal Procurement Policy has been collecting data on the practice, but has yet to issue guidance, noted the panel’s ranking member, Rep. Nydia Velazquez, D-N.Y.

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Contractors soon will be able to rate transactions with agencies

Contractors will now be able to rate their transactions with federal agencies to help those agencies improve the procurement process, says OFPP Administrator Anne Rung in a March 18 memo.

Anne Rung
OFPP Administrator Anne Rung

OFPP will use a tool called Acquisition 360, which Rung says is the first ever transaction-based feedback tool that allows agencies to identify strengths and weaknesses in their acquisition processes, according to the memo.

The memo instructs agencies to use the Acquisition 360 platform to to seek feedback from vendors and internal stakeholders – such as contracting officers and program managers – on how well certain high-dollar acquisitions perform.

But the effort to rate the contracting experience isn’t about calling out individual federal employees, Rung says.

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FBI investigates TN road building giant for DBE fraud

The FBI raided the offices of a Williamson County, Tennessee construction company as part of an ongoing investigation into nine Tennessee Department of Transportation and two Metro Nashville Airport Authority contracts.

The agents seized payroll records, contract files, work orders and computer hard drives from the College Grove offices of G&M Associates. Jones Brothers, one of the largest road contractors in the Southeast, and two of its affiliate companies are implicated in the investigation, according to a search warrant.

Jones Brothers and the two affiliated companies, Mountain States Contractors and Hot Mix Asphalt, were allegedly involved in a scheme to fraudulently land government contracts intended for companies that promise to subcontract a certain percentage of the work to women- or minority-owned small businesses, the search warrant documents state.

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Army signs up for OASIS

The Army has signed on to use the General Service Administration’s governmentwide blanket contract for professional services, called OASIS, says a March 16 GSA statement.

GSA calls OASIS, which is short for One Acquisition Solution for Integrated Services, a first-of-its kind contract vehicle for contracts that span multiple disciplines, such as management consulting, logistics and finance.

The Army is the second of the armed forces to sign on to OASIS. The Air Force agreed to use OASIS for its professional services contracts in January 2014.

In fiscal 2014, the Army’s procurement spend was nearly 17 percent, or $74.3 billion of the total federal contract spending, the statement says.

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