Changes in False Claims Act make it easier to get in hot water with federal agencies

September 30, 2014 by

Recent changes to the federal False Claims Act have broadened the law, creating more ways for government contractors to find themselves in violation, say attorneys for Huntsville law firm Wilmer & Lee, speaking at a recent workshop for the 2014 GovCon conference at the Jackson Center.

Qui tam lawsuits, under which whistle blowers can bring charges against contractors for alleged violations, increased 15 percent in 2013, say Huntsville attorneys Richard Raleigh and Jerry Gabig.

They advised Huntsville federal contractors how to avoid a host of missteps that can cause False Claims Act lawsuits or, even worse, being banned from seeking government contracts.

The law has big teeth. Since 1987 qui tam provisions allowing whistle blowers to bring charges against companies have helped recover more than $39 billion in taxpayer money, and nearly $4 billion in 2013 alone, Raleigh says.

Keep reading this article at: http://www.al.com/business/index.ssf/2014/09/changes_in_false_claims_act_ma.html

SBA’s inspector general says agencies are overstating 8(a) and HUBZone contracting achievements

September 29, 2014 by

On September 24, 2014, the Small Business Administration’s Office of Inspector General (OIG) issued Evaluation Report 14-18, Agencies are Overstating Small Disadvantaged Business and HUBZone Goaling Credit by Including Contracts Performed by Eligible FirmsThis report presents the results of an evaluation of select Section 8(a) Business Development Program and Historically Underutilized Business Zones (HUBZone) contract awards.

The OIG identified over $400 million in contract actions that were awarded to ineligible firms, which may have contributed to the overstatement of small business goaling dollars for the Small Disadvantaged Business and the HUBZone Business preference programs in FY 2013.  Besides reporting inaccurate information in Federal Procurement Data System-Next Generation (FPDS-NG), procuring agencies may have limited contracting opportunities for firms currently participating in the 8(a) or HUBZone programs.

Further, the OIG found that HUBZone and 8(a) certification information is not consistently transmitted to the Dynamic Small Business Search (DSBS) and the System for Award Management (SAM).  As a result, the affected small businesses are not getting the visibility in the DSBS database, especially the HUBZone firms, and as a result, may impact federal agencies in meeting their HUBZone procurement goals.

Additionally, the OIG also identified over $1.5 billion dollars in contract actions for which the firms were in the programs at the time of contract award, but in FY 2013 were no longer in the 8(a) or HUBZone programs.  Specifically, SBA regulations permit procuring agencies to claim Small Disadvantaged Business and HUBZone goaling credit on certain contract actions even after firms have left the program.  In the opinion of the OIG, the amount of dollars the SBA reports to Congress and the public as being performed by 8(a) and HUBZone firms in the Small Business Goaling Report is significantly impacted by the inclusion of contract actions performed by former program participants.

The OIG made two recommendations to SBA’s Associate Administrator for Government Contracting and Business Development intended to strengthen controls between SBA databases on certification data of 8(a) and HUBZone firms and information reported in FPDS-NG. The recommendations are:

  1. In coordination with the Office of Federal Procurement Policy and the General Services Administration, the SBA should strengthen controls between the SBA’s Dynamic Small Business Search Database and the System for Award Management to ensure accuracy of 8(a) and HUBZone certification data in FPDS-NG.
  2. The SBA should modify DSBS so that a firm’s profile and certification information for HUBZone and 8(a) status remains visible and accurate to agency contracting officers, or develop an alternate list to verify a firm’s status.

The OIG reports that SBA’s management has agreed to pursue both recommendations.

Proposed rule prohibits federal contractors from firing employees who discuss pay

September 25, 2014 by

Federal contractors would have to inform their employees of their right to openly discuss pay in the workplace without fear of retaliation under new proposed rules from the Labor Department.

Firms that do business with the federal government would have to incorporate the new non-discrimination language in their existing employee handbooks and disseminate the information, either electronically or by publicly posting a copy of the requirement, according to draft rules published in the Federal Register. They also would have to include the provision in the existing equal opportunity clause in their contracts. The proposed regulations implement an executive order signed by President Obama in April that protects employees of federal contractors who disclose their pay, or the compensation of other workers, from being fired or otherwise retaliated against by employers.

The proposed rule would apply to all federal contractors that do more than $10,000 worth of business with the government. Approximately 500,000 contractors are registered with the General Services Administration.

Keep reading this article at: http://www.govexec.com/contracting/2014/09/proposed-rule-prohibits-federal-contractors-firing-employees-who-discuss-pay/94115/

Businessman convicted of bilking federal government of $1.4 million

September 24, 2014 by

An El Paso, TX federal jury this week convicted a Houston-area businessman on fraud charges for bilking the federal government out of nearly $1.4 million.

Jurors on Tuesday found Thomas Gregory Harris, 55, of Friendswood, Texas, guilty of 16 counts of wire fraud. Harris is the former senior vice president of Luster National Inc., a consulting company specializing in the management of capital improvement projects for government agencies and private sector organizations, according to Bloomberg Businessweek.

Federal prosecutors said that in July 2010, SBA officials approved a joint venture, Tropical Luster Joint Venture, between Luster National Inc. and Tropical Contracting LLC. Officials had previously approved Tropical Contracting as a Section 8(a) program intended to promote business development of companies owned and operated by “socially and economically disadvantaged individuals.”

However, Luster National did not qualify to become a Section 8(a) program.

Keep reading this article at: http://www.elpasotimes.com/news/ci_26559132/businessman-convicted-el-paso-bilking-1-4-million

 

SDVOSBs & GSA contractor team arrangements: “all members” must qualify

September 18, 2014 by

A procuring agency reasonably required all members of a SDVOSB set-aside GSA Contractor Team Arrangement to possess a certain Federal Supply Schedule contract and Special Item Number.

In a recent bid protest decision, the GAO held that restricting CTAs to holders of a certain Schedule and SIN was appropriate because all of the supplies to be procured fell within the identified Schedule and SIN.

The GAO’s decision in Veterans Healthcare Supply Solutions, Inc., B-409888 (Sept. 5, 2014) involved a VA procurement for vital signs monitors and accessories.  The VA issued the RFQ as a SDVOSB set-aside to holders of GSA Schedule contracts.  The RFQ specified that all of the supplies being procured must be under Schedule 65 II A (Medical Equipment and Supplies) and SIN A-50A (Vital Signs Monitors).

The RFQ stated that GSA Contractor Team Arrangements could be used to submit quotations.  However, the RFQ specified that each member of the CTA was required to have a Schedule contract under Schedule 65 II A and SIN A-50A.

Keep reading this article at: http://smallgovcon.com/service-disabled-veteran-owned-small-businesses/gsa-contractor-team-arrangement-single-sin-restriction-was-appropriate/

4 face prison for alleged fraud in claiming 8(a) and SDVOSB status for millions of dollars of federal contracts

September 15, 2014 by

Four individuals pleaded not guilty last week to three counts of fraud involving federal contracts intended for 8(a) and service-disabled veteran-owned small businesses.

A federal grand jury in Greeneville, Tennessee returned an indictment on Aug. 12, 2013, against Ricky Anthony Lanier, 47, and Katrina Reshina Lanier, 40, of LaGrange, N.C.; Latoya Montrevette Speight, 37, of Snow Hill, N.C.; and Emanuel Louis Hill, 47, of Louisville, Ky., for wire fraud, conspiracy to commit wire fraud, and major fraud against the United States.

These individuals appeared in court on Sept. 9, 2014 before U.S. Magistrate Judge Dennis Inman and pleaded not guilty. All were released on bond pending trial, which has been set for Nov. 18, 2014 in U.S. District Court, in Greeneville, Tennessee.

If convicted, they all face a term of 20 years in prison as to each wire fraud charge and up to 10 years in prison for the charges of major fraud against the United States. Additionally, they face fines of up to $250,000 and up to three years of supervised release as to each count. The indictment also seeks forfeitures of approximately $15 million as to the Laniers and Speight and approximately $5 million as to Hill.

Details of this conspiracy are included in the indictment on file with the U.S. District Court, which alleges that the Laniers, Speight, and Hill conspired from November 2005 to April 2013 to defraud the United States government through a scheme to fraudulently obtain federal contracts intended to be awarded to businesses lawfully participating in the Small Business Administration’s 8(a) Business Development program and the Department of Veterans Affairs’ Service-Disabled Veteran-Owned Small Business Concern program.

Court records state Ricky Lanier was an owner of Global Construction Inc. (GCI), which participated in the SBA’s 8(a) business development program from 1998 to 2007. Katrina Lanier and Speight worked at GCI.  From 2001 to 2007 GCI received over $23 million in federal contracts.

In 2007, however, GCI graduated from the 8(a) program and was no longer eligible to receive 8(a) set-asides.

Kylee Construction, founded in 2005, originally had a mailing address of Emanuel Louis Hill’s father’s home, then a post office box opened by Ricky Lanier, and eventually changed to Hill’s home address.   Between 2010 and 2013, Kylee Construction received over $5 million in contracts under the Department of Veterans Affairs program for small businesses owned by service-disabled veterans.

Lanier also convinced a North Carolina-based company, JMR Investments, that he would handle all of their construction business.   From 2008 to 2013, JMR received over $9 million in federal contracts designated under SBA and VA programs.

This indictment is the result of an investigation by Department of Veterans Affairs Office of Inspector General, Department of Interior Office of Inspector General, Small Business Administration Office of Inspector General, and United States Secret Service, with assistance from the National Park Service and General Services Administration Office of Inspector General. Assistant U.S. Attorneys Neil Smith and David Gunn will represent the United States.

 

SDVOSB fraud: Guilty plea In “rent-a-vet” case

September 12, 2014 by

A Nebraska man has pleaded guilty to fraud and money laundering charges stemming from a SDVOSB “rent-a-vet” scheme under which an ineligible business received 45 SDVOSB contracts.

According to a Department of Justice press release, the man faces up to 24 months in prison and financial penalties.  He and his companies also have been suspended from government contracting and face the likelihood of debarment.

 The DOJ press release alleges that beginning in 2007, Ram Hingorani and his companies, Midwest Contracting Inc. and Midwest Paving Inc., engaged in SDVOSB fraud.  According to the press release, Hingorani used the service disabled status of a business partner, Ronald Waugh, to qualify MCI as a SDVOSB.  However, an investigation “revealed MCI was a pass-through and/or front company for Hingorani’s other businesses and that Waugh was simply a figurehead or ‘rent-a-vet’ who was being used for his SDV status.”

The government’s investigation concluded that Hingorani, a non-SDV, controlled MCI and caused MCI to falsely self-certify as a SDVOSB.  As a result of the fraudulent self-certifications, MCI was awarded 45 set-aside and sole source contracts worth approximately $23.5 million.

Hingorani faces a prison term of up to 24 months, as well as financial penalties.  Hingorani and his companies are currently suspended and face the prospect of debarment.  Hingorani’s SDV business partner, Waugh, was initially charged in the case as well, but the government has agreed to drop those charges.

Keep reading this article at: http://smallgovcon.com/debarment-and-penalties/sdvosb-fraud-guilty-plea-in-rent-a-vet-case/

 

SBA proposes revisions to employee-based size standards for manufacturing and other industry sectors

September 11, 2014 by

The U.S. Small Business Administration (SBA) has published two proposed rules to revise small business size standards in North American Industry Classification System (NAICS) Sector 31-33 (Manufacturing) and industries with employee-based size standards that are not a part of NAICS Sector 31-33, Sector 42 (Wholesale Trade), and Sector 44-45 (Retail Trade).  The proposed rules were published in the Federal Register on Sept. 10, 2014.

As part of its comprehensive size standards review required by the Small Business Jobs Act of 2010, the SBA evaluated employee-based size standards for all 364 industries in NAICS Sector 31-33 and 57 industries and five exceptions that are not in NAICS Sectors 31-33, 42, or 44‑45 to determine whether they should be retained or revised.

In the first rule, SBA proposes to increase size standards for 209 industries in Sector 31-33.  The SBA also proposes to increase the refining capacity component of the Petroleum Refiners (NAICS 324110) size standard to 200,000 barrels per calendar day total capacity for businesses that are primarily engaged in petroleum refining.  The proposed rule also eliminates the requirement that 90 percent of a refiner’s output being delivered should be refined by the bidder.

In the second rule, SBA proposes to increase the employee-based size standards for 30 industries and three exceptions and decrease them for three industries that are not in Sectors 31-33, 42, or 44‑45.

Additionally, SBA proposes to remove the Information Technology Value Added Resellers exception under NAICS 541519 (Other Computer Related Services) together with its 150-employee-based size standard.  Similarly, SBA also proposes to eliminate the Offshore Marine Air Transportation Services exception under NAICS 481211 and 481212 and Offshore Marine Services exception under NAICS Subsector 483 and their $30.5 million receipts based size standard.  Accordingly, the second proposed rule also removes Footnotes 15 and 18 from the table of size standards.

If the changes in the two rules are adopted as proposed, nearly 1,650 more firms will become small and eligible for federal procurement and SBA’s loan programs.

Comments can be submitted on the proposed rules on or before November 10, 2014 at www.regulations.gov, identified by the following RIN numbers: (RIN 3245-AG50 for Sector 31‑33) and (RIN 3245-AG51 for employee-based size standards for industries that are not part of Sector 31-33, Sector 42 or Sector 44-45).  You may also mail comments to Khem R. Sharma, Chief, Office of Size Standards, 409 3rd St., SW, Mail Code 6530, Washington, DC  20416.

For size standards review, SBA takes into account the structural characteristics of individual industries, including average firm size, startup cost and entry barriers, the degree of competition, and small business share of federal government contracting dollars.  This ensures that small business size definitions reflect current economic conditions and federal marketplace in those industries.

An SBA-issued White Paper entitled, “Size Standards Methodology,” which explains how SBA establishes, reviews and modifies its receipts-based and employee-based small business size standards, can be viewed at http://www.sba.gov/size.

For more information about SBA’s revisions to its small business size standards for various industry sectors, click on “What’s New with Size Standards” on SBA’s Web site at http://www.sba.gov/size.

GSA Schedule sales of Chinese products result In $2.3 million false claims settlement

September 10, 2014 by

Sales of Chinese products off the GSA Schedule has resulted in a $2.3 million False Claims Act settlement.

According to a Department of Justice press release, Samsung Electronics America, Inc. has agreed to the settlement to resolve allegations that Samsung informed GSA Schedule resellers that certain products were manufactured in “designated countries” under the Trade Agreements Act, when in fact those products were manufactured in China.

GSA Schedule contracts require that vendors certify that their products comply with the Trade Agreements Act.  The TAA, in turn, generally requires that the government buy products manufactured in the United States or in a “designated country” with which the United States has a trade agreement.  Many countries are designated countries under the TAA, but China is not a designated country.

Samsung has designated resellers who hold GSA Schedule contracts.  Samsung certifies to its resellers that its products are TAA compliant, and those resellers then offer the products for sale off their Schedule contracts.

Keep reading this article at: http://smallgovcon.com/debarment-and-penalties/gsa-schedule-sales-of-chinese-products-result-in-2-3-million-false-claims-settlement/

Subcontractor’s owner sentenced in Davis-Bacon fraud case

September 8, 2014 by

Davis-Bacon Act fraud has resulted in a criminal sentence for the owner of a now-defunct construction subcontractor.

According to a Department of Justice press release, the subcontractor’s owner has been sentenced to four years of probation (including 18 months of home confinement) and ordered to pay $164,627 in restitution, after pleading guilty to charges of conspiracy to pay employees less than prevailing wages on a federal construction project in Boston.

Isreb operated Taunton Forms, a construction company based in Massachusetts.  In 2006, Suffolk Construction was awarded a GSA prime contract to renovate a federal building in Boston.  Suffolk entered into a subcontract with Taunton Forms to perform certain concrete work on the project.  Suffolk ultimately paid Taunton Forms more than $1 million under the subcontract.

Keep reading this article at: http://smallgovcon.com/debarment-and-penalties/davis-bacon-act-fraud-subcontractors-owner-sentenced/