At $12.2 billion, Georgia ranked 8th in Defense Dept. FY14 spending

In a report issued last week, the Office of Economic Adjustment (OEA) of the Department of Defense (DoD), reported that Georgia ranked 8th among the 50 states and the District of Columbia in DoD spending during FY14 (Oct. 1, 2013 – Sept. 30, 2014).

DoD spent $12.2 billion in Georgia during the fiscal year, or 2.9 percent of total DoD spending.  Georgia’s share of DoD’s total spending compared to the previous year dropped 0.1 percent.

This following charts summarize key information extracted from the report pertaining to DoD spending in Georgia.

DoD Contract Awards - FY07-FY14
DoD contract awards in Georgia of $5.9 billion in FY14 represent the lowest level since FY07. DoD awards peaked in Georgia in FY10.


DoD Contract Awards in GA by Type - FY14
More than half of all contract awards in Georgia are for supplies and equipment.


Top DoD Spending Locations in GA - FY14
DoD spending during FY14 was highest in Cobb County and lowest in Chattahoochee County.


DoD's top 10 contractors in Georgia received awards totalling $ billion in FY14.
DoD’s top 10 contractors in Georgia received awards totaling more than $3.3 billion in FY14.


Top DoD Spending Locations in US - FY14


According to the federal budget, FY15 national defense spending is expected to decline 28 percent from FY 2011 to 2019 in real terms, after increasing by more than 65 percent from FY 2000 to 2010. Sequestration went into effect in March 2013 and required across-the-board cuts to defense and non-defense programs from FY 2013 to 2021. Over this period, DoD spending will be reduced by a total of $454 billion.

DoD’s state-by-state spending report can be downloaded from this page:

GSA launches new Schedule for professional services

The General Services Administration created a new schedule for professional services — the Professional Services Schedule — consolidating the agency’s offerings into a single contract vehicle.

GSA Schedule ContractThe new schedule — the culmination of a year’s work — launched Oct. 1, 2015 and is now open for agency use.

The schedule includes contracts for advertising and marketing, business consulting, environmental solutions, financial and business solutions, language services, logistics and professional engineering. Those subcategories still exist for ease of use, however the vendor offers are now consolidated under a single contract for every company.

Previously, there were more than 5,000 professional services contracts from more than 4,500 vendors. After the consolidation, there are now 3,099 contracts under as many companies.

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Fraud lawsuit costs phony WOSB $20 million to settle

The U.S. Attorney for the Southern District of New York, the U.S. Small Business Administration (SBA), Peggy E. Gustafson, SBA Inspector General, and the Defense Criminal Investigative Service (DCIS) last Thursday (Oct. 8, 2015) settled a civil lawsuit against UFC AEROSPACE LLC (UFC) and Douglas B. Davis, the former president of UFC, for engaging in fraudulent conduct in violation of the Small Business Act.

UFC had secure numerous lucrative subcontracts with Defense Department contractors.  According to government investigators, UFC falsely certified to government contractors that UFC was a woman-owned small business (WOSB) when UFC at no point met the requirement for WOSB status under the Small Business Act.  Specifically, no women were majority owners of UFC or managed or controlled UFC’s management and daily business operations.

UFC made these misrepresentations, as the amended complaint-in-intervention alleges, because it believed that WOSB status provided a competitive advantage in obtaining contracts that it knew were funded by the United States government, and the government contractors in turn made representations to the government regarding its WOSB hiring.  In the settlement, approved in Manhattan federal court, UFC and Davis admitted and accepted responsibility for the fact that UFC never qualified for WOSB credit under the Small Business Act and will pay the federal government $20,015,956.92.

Manhattan U.S. Attorney Preet Bharara said:  “The Small Business Act serves the important purpose of increasing legitimate participation by woman-owned businesses, and when business owners engage in fraud that undermines this purpose, they need to be held to account.  I want to thank the SBA Office of General Counsel, the SBA Office of Inspector General, the Defense Criminal Investigative Service, and the Procurement Fraud Division of the Air Force Materiel Command Law Office for their invaluable work on this case.”

SBA General Counsel Melvin F. Williams, Jr., said: “This case represents the cooperative effort of SBA’s Offices of the General Counsel and the Inspector General and the Department of Justice to uncover and remedy fraud in our procurement programs.  Uncovering and pursuing fraud cases is one of SBA’s highest priorities.”

SBA Inspector General Peggy E. Gustafson said: “This settlement sends an important message that falsely certifying a company’s status as a Woman Owned Small Business is unacceptable and bears a significant consequence.  We will continue to aggressively pursue parties that wrongfully obtain both prime and subcontracting opportunities for small businesses that are legitimately owned and controlled by women.  I want to thank the U.S. Department of Justice for its dedication to reaching a settlement in this case.”

DCIS Special Agent in Charge Craig W. Rupert said: “This settlement is evidence of the continuing efforts of the Defense Criminal Investigative Service and our law enforcement partners to assure integrity within the Defense procurement process.  The Department of Defense relies on numerous certifications from our contractors and any fraud in this process has a serious impact throughout this industry.  DCIS will continue to aggressively pursue allegations of fraud and corruption harmful to U.S. taxpayers and the Department.”

The following allegations are based on the amended complaint-in-intervention filed last Monday in Manhattan Federal court:

The Small Business Act, which provides that it is the policy of the United States that small businesses owned and controlled by women should have the “maximum practicable opportunity to participate in the performance of [federal] contracts,” defines a “woman owned small business” (WOSB) to mean that women own 51% of the company and “the management and daily business operations of the business are controlled” by women (15 U.S.C. §§ 637(d)(1), 632(n)).  Prime contractors that obtain federal funds are required to negotiate with the procuring authority a subcontracting plan setting forth, among other things, what percentage of the work will be given to WOSBs, and the Comprehensive Subcontracting Plan Group of the Defense Contract Management Agency (DCMA) is responsible for ensuring that Defense contractors meet all of the requirements for hiring small businesses, including WOSBs.

UFC began claiming WOSB status at least beginning in late 2001, by representing to contractors UFC knew were doing work with the federal government that it was a WOSB.  UFC falsely relied on the purported ownership interest of the wives of the actual owners, John Davis and Douglas Davis, to make these representations.  UFC continued to represent that it was a WOSB at various times until 2011, and earned millions of dollars on the contracts procured with those representations.  UFC did so because it understood that this status mattered both to the contractors and to the government, and it believed that it was obtaining a competitive advantage by claiming to be a WOSB.  However, at no time during the entire time period from 2001 to 2011 did UFC ever qualify under the Small Business Act as a WOSB.  The only ownership interest that the wives of John and Douglas Davis had in UFC was through trusts that were entirely controlled by John and Douglas Davis, and under which the women were entitled to a maximum of only 5% of the trusts’ assets.  Moreover, neither woman controlled or managed the company at any time.  In fact, neither woman had company email accounts, attended management meetings, or spent regular time in the office during the relevant time period.

In the stipulation of settlement with the Government, defendant Douglas Davis admitted, acknowledged, and accepted responsibility for the following:

  • From 2001 to 2011, he was the President of UFC and controlled the management and business operations of UFC, and UFC certified that it was a WOSB to contractors UFC knew were conducting millions of dollars of business with the United States in order to obtain a competitive advantage with those contractors.
  • At no time during the relevant period did UFC actually meet either of the statutory requirements for claiming WOSB status.

Defendant UFC admitted, acknowledged, and accepted responsibility for the fact that at various times between the years 2001 and 2011 inclusive, UFC certified that it was a WOSB to contractors that were conducting millions of dollars of business with the United States in order to obtain a competitive advantage with these contractors, even though at no point did UFC meet the statutory requirements for claiming WOSB status.



Kingdomware shocker: VA abandons goal-setting argument

In a stunning development in the Kingdomware SDVOSB/VOSB Supreme Court case, the Government has abandoned the argument that the statutory preference for veteran-owned companies applies only if the VA has not met its SDVOSB or VOSB contracting goals.

Supreme CourtAlthough this argument was hotly debated, it was successful both at the Court of Federal Claims and again at the Federal Circuit.  But now, just weeks away from oral arguments, the Government’s Supreme Court brief jettisons the Government’s own previously successful argument in favor of an entirely different rationale for refusing to honor the statutory SDVOSB and VOSB preferences.

The last-minute, wholesale substitution of arguments doesn’t say much for the Government’s confidence in its case. And on the merits, the Government’s new argument is no better than the one it has abruptly abandoned.

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SBA proposes to give credit for small business subcontracting at any tier

The U.S. Small Business Administration (SBA) is proposing to amend its regulations to  allow an “other than small prime contractor” to receive credit towards its small business subcontracting goals for subcontract awards made to small business concerns at any tier.

Federal RegisterCurrently, other than small business prime contractors establish small business subcontracting goals at the first tier level, and receive credit toward their subcontracting plan goal performance at the first tier level.

The rule also proposes to implement the statutory requirements related to the subcontracting plans of all subcontractors that are required to maintain such plans, including the requirement to monitor subcontractors’ performance and compliance towards reaching the goals set out in those plans as well as their compliance with subcontracting reporting requirements. SBA is also proposing to clarify that the size standard for a particular subcontract must appear in the solicitation for the subcontract.

The proposed rule implements Section 1614 of the National Defense Authorization Act for Fiscal Year 2014, Public Law 113-66.

In order to be considered, public comments on this proposed rule must be received on or before December 7, 2015.  The proposed rule and instructions for submitting comments may be found at:

SBA proposes to amend business loan and surety bond programs

The U.S. Small Business Administration (SBA), has proposed a rule that is says will simplify the guidelines for determining “affiliation” for eligibility based on size.

SBA logo smallIf the rule is adopted, it will affect SBA’s Surety Bond Guarantee Program; business loan programs (which consists of the 7(a) Loan Program and the Business Disaster Loan Program); the Microloan Program; and the Development Company Program (i.e. 504 Loan Program).

This proposed rule would redefine affiliation for all five Programs, affecting eligibility determinations.  Download the proposed rule here:

Public comments are due on, or before, December 1, 2015.

Minimum wage for federal contractor workers to increase Jan. 1, 2016

On February 14, 2014, President Obama issued an executive order requiring certain federal contractors and subcontractors to pay an increased hourly minimum wage as mandated by the secretary of labor, who was also to determine increases to the wage rate on an annual basis.

Dept. of LaborOn September 16, 2015, the Secretary of Labor Announced that, effective Jan. 1, 2016, new minimum wages for employees of federal contractors will be increased from $10.10 to $10.15 per hour and that the rate for tipped employees will rise from $4.90 to $5.85 per hour.

What Contracts Are Covered?

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DoD’s small biz office didn’t know about availability of cybersecurity resources

Hackers pummel small companies because they are easy targets, with poor security hygiene and network access to big business partners, say security specialists. That logic applies to small military contractors, too.

GAO-GovernmentAccountabilityOffice-SealBut the Pentagon’s Office of Small Business Programs has resources to help protect the little defense businesses – it just didn’t know it. That was the finding of a Government Accountability Office (GAO) audit released Thursday.

The office “had not identified or disseminated cybersecurity resources to defense small businesses that the businesses could use to understand cybersecurity and cyberthreats,” Joseph Kirschbaum, GAO director for defense capabilities and management, said in the report. Office employees “were not aware of existing cybersecurity resources such as those we identified when we met with them in June 2015.”

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Here are some cybersecurity training resources available to businesses:

Proposed rule clarifies contractor requirements for counterfeit electronic part detection and avoidance

On September 21, 2015, the Department of Defense (DOD) published a proposed rule in the Federal Register that would amend the Department of Defense FAR Supplement (DFARS) to DFARSfurther implement Section 818 of the National Defense Authorization Act for Fiscal Year 2012 regarding counterfeit electronic parts (Proposed Rule).   (See Detection and Avoidance of Counterfeit Electronic Parts–Further Implementation, 80 Fed. Reg. 56,939.)

The Proposed Rule adds clarity on key issues under the current counterfeit electronic parts rule, DFARS 252.246-7007, Contractor Counterfeit Electronic Part Detection and Avoidance System, which was implemented in May 2014.

Comments on the Proposed Rule are due on or before November 20, 2015.

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DoD contractor to pay $4.6 million to settle false claims at Fort Benning and Fort Bliss

L-3 Communications Corporation, Vertex Aerospace LLC and L-3 Communications Integrated Systems LP (collectively L-3) have agreed to pay $4.63 million to resolve allegations that they inflated labor hours for time spent by independent contractors at the military’s Continental U.S. Replacement Centers (CRC) in Fort Benning, Georgia, and Fort Bliss, Texas, preparing to deploy to overseas posts to support U.S. military operations abroad.  The CRCs prepare individuals for deployment by providing orientation briefings, training, health screenings, payroll processing and addressing other administrative matters.

Justice Dept. seal“The Justice Department is committed to vigorously pursuing all those who knowingly submit false claims under government contracts,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “Contractors that seek taxpayer funds must be scrupulous in their billing, and invoice only for work and amounts permitted by their contracts.”

L-3 performed rotary aviation maintenance and support services for the U.S. Army in Afghanistan, Iraq, Egypt and Kuwait under contracts with the U.S. Air Force.  The United States alleges that from 2006 through November 2011, L-3 knowingly overcharged the government for time their independent contractors spent at the CRCs by billing for each individual not based on the actual time that individual spent at the CRC, but based instead on the earliest arrival or latest departure time of any other individual who also processed through the center that same day.

“Contractors owe a duty to the taxpayers to accurately bill the United States for the actual work performed,” said U.S. Attorney John Horn of the Northern District of Georgia.  “This settlement demonstrates our commitment to hold contractors accountable for false billing and restore wrongfully taken funds to the military.”

“This collaborative investigative effort reflects the Defense Criminal Investigative Service’s commitment to protecting American taxpayers’ interests by ensuring integrity and accountability throughout the Defense contracting system,” said Special Agent in Charge John F. Khin of the Defense Criminal Investigative Service (DCIS) Southeast Field Office.

“Today’s settlement is a testament to the hard work of our special agents and also highlights the importance of the whistleblower provision of the False Claims Act,” said Director Frank Robey of the U.S. Army Criminal Investigation Command’s Major Procurement Fraud Unit.  “In this particular case, a concerned citizen wasn’t afraid to speak up, alerted the proper authorities, and helped save the U.S. government millions of dollars.”

The allegations settled today arose from a lawsuit filed by a whistleblower, Robert A. Martin, a former L-3 independent contractor, under the qui tam provisions of the False Claims Act.  Under the act, private citizens can bring suit on behalf of the government for false claims and share in any recovery.  Mr. Martin will receive $798,675 from the recovery announced today.

This case was handled by the Civil Division’s Commercial Litigation Branch and the U.S. Attorney’s Office of the Northern District of Georgia, with the assistance of DCIS, the U.S. Army Criminal Investigation Command’s Major Procurement Fraud Unit and the Defense Contract Audit Agency.

The lawsuit is captioned United States ex rel. Martin v. L-3 Communications Corp., et al., 1:10-CV-1622-CAP (N.D. Ga.).  The claims resolved by the settlement are allegations only; there has been no determination of liability.