Business owner sentenced for fraudulently obtaining $2.6 million in government contracts

Yogesh K. Patel, age 48, of Gaithersburg, Maryland, was sentenced August 3, 2015 to 21 months in prison followed by three years of supervised release for conspiring to commit wire fraud in connection with a scheme to fraudulently obtain more than $2.6 million in federal government contracts through a Small Business Administration (SBA) program designed to assist disadvantaged businesses.  Patel also was ordered to forfeit $554,541.07.

SBA logo smallAccording to his plea agreement and court documents, Patel owned 91% of United Native Technologies, Inc. (UNTI), which purported to perform information technology services to the government and commercial clients.  In 2005, Patel applied for and was granted certification as a socially and economically disadvantaged owned business under SBA’s program.  In addition to a broad scope of assistance from SBA, participants in the program can receive sole source government contracts that are reserved for socially disadvantaged owned companies.

In 2007, Patel met co-defendant Wesley Burnett at a business conference in Costa Rica. Burnett, who was not a member of any economically or socially disadvantaged group, had experience constructing and maintaining barriers at military and government installations.  Patel and Burnett agreed that they would use UNTI to bid on SBA set aside contracts for barrier-related work. Burnett would perform the work under the contracts and would pay Patel 4.5 percent of the value of the contracts. In preparing a bid for a contact at Andrews Air Force, which was ultimately awarded to UNTI, Burnett and Patel exchanged emails in June 2011 in which they made statements indicating that they knew this arrangement was illegal.

In 2011, Patel met another individual identified as N.P., and they agreed to a fraudulent pass-thru arrangement similar to the one Patel had entered into with Burnett.

From October 2010 to July 2013, UNTI was fraudulently awarded $2,682,430 in set-aside U.S. government contracts.

In 2011, 2012 and 2013, Patel falsely certified to the SBA that no outside entity or individual provided financial support to UNTI when in fact Burnett and N.P. provided financial support to UNTI; and that Patel ran UNTI full-time, when in fact he did not because he was receiving disability compensation from the Social Security Administration in each of those years.

From November 2012 to October 2013, Patel received $973,407.37 in government funds under the fraudulently obtained set-aside contracts.  Patel kept a portion of these funds and turned the majority of them over to Burnett.  Prior to November 2012, payments under contracts went to Burnett, who provided a portion of the funds to Patel.

Wesley Burnett, age 46, of Hermosa Beach, California, previously pleaded guilty to his role in the scheme.  Burnett was sentenced to 42 months in prison and ordered to forfeit $694,893.99.

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.

The SBA’s Office of Inspector General (OIG), the U.S. Air Force Office of Special Investigations, and the Department of the Interior’s OIG participated in the investigation.

White House preps new cyber policy dealing federal contractors

The Obama administration is preparing to release a new policy to homogenize the way vendors secure agency data.

Federal RegisterThe proposal, which could be published as early as today, follows hacks at two background checkers and the Office of Personnel Management that potentially compromised the security of personnel who handle U.S. secrets.

“The increase in threats facing federal information systems demand that certain issues regarding security of information on these systems is clearly, effectively, and consistently addressed in federal contracts,” states a notice posted Thursday, July 30, 2015 in the Federal Register.

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S.C. contractor agrees to repay $77,000 involving false claims for DBE work

On July 7, 2015, Freeman Bell, as president and on behalf of Premier Constructors (Premier), a South Carolina based highway contractor, entered into a Civil Settlement Agreement with the United States related to allegations that Premier submitted false claims for work performed under the USDOT Disadvantaged Business Enterprise (DBE) program.

USDOTThe investigation alleged that Premier falsely certified it had completed the DBE work on the federally-funded Stenhouse Road project in Greenville, South Carolina, knowing that the work was actually performed by a non-DBE contractor. The investigation further alleged that Premier Constructors knowingly submitted false payroll certifications for the project that included employees of the non-DBE company and used equipment and other resources from the non-DBE contractor.

According to the terms of the Agreement, Premier agreed to repay the U.S. Government a total of $77,335 to settle the allegations, but does not admit wrongdoing. In May 2015, Premier and Bell entered into a three year Administrative Settlement Agreement with the FHWA, whereby they accepted responsibility for the alleged misconduct. In the agreement they agreed to the implementation of a Corporate Compliance Program, appointment of a Corporate Compliance Officer, and retention of an independent monitor to evaluate the company’s performance of the agreement.


Proposed contract bundling changes aim to increase small business contracting

As required by the Small Business Jobs Act of 2010, on June 3, 2015, the FAR Council introduced a proposed change to the FAR contract bundling requirements. 80 Fed. Reg. 31,561-01. The proposed rule aims to improve small business participation in federal contracting by clarifying existing FAR regulations that discourage agency utilization of contracting bundling. The proposed rule would require increased reporting, parses the definitions of “bundling” and “consolidating” of contracts, and requires agencies to publicly justify their decisions to bundle requirements or consolidate contract vehicles. This definitional distinction between bundling of requirements and consolidation of contracts is intended to discourage agencies from combining unrelated requirements or contracts into a single award.

Under the proposed rule, agencies that bundle contracts or requirements in excess of $2 million will face greater notification and reporting requirements. If an agency wants to bundle two existing contracts, it must first notify small businesses at least 30 days beforehand of its intent to bundle its contracts. Agencies will also be required to provide public notice of the agency’s bundling policy and a list of and rationale for any bundled requirements for which the agency solicited offers or issued an award. If adopted, the proposal’s enhanced notification requirements may afford small business contractors an opportunity to protest an agency’s improperly bundled contracts.

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Here are the 50 fastest growing small businesses in government contracting

Washington Technology has just issued its annual “Fast 50” rankings — the 50 fastest growing small businesses in the government market.  The listing is based on calculations of each businesses’ compound annual growth rate from 2010 to 2014.

The rankings include prime and subcontracting revenue at the federal, state and local levels.  Depending on the company, some international public sector work is factored in as well.

The companies submitted this information to Washington Technology during a call for nomination period earlier this summer. Click here to see the rankings, where you can view the Fast 50 and learn who are these companies with explosive growth.

Read our analysis of what the 2015 Fast 50 says about the current market, and where it is headed.

Washington Technology Senior Staff Writer Mark Hoover will be presenting a free webinar on the Fast 50 on August 19.  Click here for more information and to register.


Armed Services Board of Contract Appeals reaffirms only a CO can modify a contract

A construction contractor was unable to recover the costs of performing changed work allegedly ordered by the government’s project engineers because the engineers did not have authority to modify the contract.
asbca sealAs demonstrated in a recent Armed Services Board of Contract Appeals (ASBCA) decision, only a contracting officer or the contracting officer’s designated representatives may modify a contract, and a contractor bears the risk of non-payment by performing changed work directed by an unauthorized government employee.

The ASBCA’s decision in Circle, LLC, ASBCA No. 58575 (July 1, 2015) involved a contract between Circle, LLC and the U.S. Army Corps of Engineers, pursuant to which Circle was to construct a concrete flume on the Two Mile Canal in Jefferson Parish, Louisiana. As part of its scope of work, Circle was to erect a Temporary Retaining Structure to stabilize the site while the flume was constructed.

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Four ways to prep for fourth-quarter contracting

As of July 15, there were 55 shopping days left in fiscal 2015, Bill Gormley, president of the Gormley Group, reminded the audience at BGOV’s July 15 Next/Edge event, The Race to the Finish. The Coalition for Government Procurement cosponsored the session.

The fourth quarter is the busiest season of the year for federal contractors. Here are four ways companies can prepare to maximize business in the fourth quarter, gleaned from the event.

  1. Identify Your Closing Strategy
  2. Look for Set-Aside and Sole-Source Work
  3. Have a ‘Black Friday’ Plan
  4. Dot Your I’s and Cross Your T’s

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Queue set up for SBA 7(a) loans until more money is found

The Small Business Administration (SBA) has instituted a waiting list for its flagship 7(a) loans because the program hit its annual lending cap of $18.75 billion on Thursday (July 23, 2015).

SBA logo smallSBA officials, lenders and small business groups are urging Congress to raise the program’s authorization to $23.5 billion in order to free up loans for small businesses. Demand for the program is high because the government-guaranteed loans are the primary source of long-term loans, which feature lower monthly payments, for small businesses.

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Actions foreshadow uniform cybersecurity regulations for federal contractors

Two recent Executive Agency actions lay the groundwork for a FAR cybersecurity clause in 2016.

  • Government contractors should expect an amendment to the Federal Acquisition Regulation in 2016 that mandates cybersecurity clauses and standards.
  • Companies can prepare now by comparing new government standards to their existing system protections.
  • As part of this process, companies should not just be reviewing the capabilities of their information systems, but also their written information assurance policies, training materials, and employment and third-party agreements.

cyber securityFederal government contractors handling Controlled Unclassified Information (CUI) should take notice of two recent executive agency actions. Combined, they lay the groundwork for a new cybersecurity clause to be added to the Federal Acquisition Regulation (FAR) in 2016.

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White House wants agencies to prioritize emerging tech in next year’s budget

The White House plans to prioritize emerging technology and big data in the fiscal year 2017 budget, according to a memorandum published last week.

ombWhen submitting budget requests to the Office of Management and Budget, federal agencies should “prioritize investments in enabling technologies that benefit multiple sectors of the economy, such as nanotechnology, robotics, the Materials Genome Initiative, and cyber-physical systems and their application to smart cities,” the memo said.

General topics mentioned in the memo include “advanced manufacturing and industries of the future,” and “information technology and high-performance computing,” in addition to other science-related subjects such as climate change.

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