Contractors and former civilian employee sentenced in bribery scheme at Albany Marine Corps base

A former civilian employee and a former contractor of the Marine Corps Logistics Base (MCLB) in Albany, Georgia, as well as one outside contractor were sentenced on Thursday, September 10, 2015 to prison terms for bribery and fraud arising from their handling of military trucking contracts and theft of surplus military equipment.

Justice Dept. sealAssistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney Michael J. Moore of the Middle District of Georgia made the announcement.

Christopher Whitman, 48, of Sylvester, Georgia, co-owner of United Logistics, an Albany-based trucking company and freight transportation broker, was sentenced to 22 years in prison for his conviction of 43 counts of honest services wire fraud, five counts of bribery, five counts of obstructing justice and one count of theft of government property.  Shawn McCarty, 36, of Albany, Georgia, a former employee at the MCLB-Albany, was sentenced to 10 years in prison for his conviction of 15 counts of honest services wire fraud, one count of bribery and one count of obstructing justice.  Bradford Newell, 43, of Sylvester, a former contractor at the MCLB-Albany, was sentenced to five years in prison for his conviction of 13 counts of honest services wire fraud, one count of bribery, and one count of theft of government property.  All three were found guilty by a jury in the Middle District of Georgia on March 3, 2015, following a five-week trial.

In addition to imposing the prison terms, the court ordered each defendant to forfeit assets reflecting losses to the government attributable to the bribery and fraud schemes.  Whitman was ordered to forfeit $18,860,313.75; McCarty was ordered to forfeit $15,410,151.55; and Newell was ordered to forfeit $513,600.  Whitman was specifically ordered to surrender assets derived from the schemes, including more than 100 parcels of real property, several boats and vehicles, and rental income estimated to be worth more than $14 million.

DLAAccording to the evidence presented at trial, between 2008 and 2012, Whitman paid more than $800,000 in bribes to three former officials of the Defense Logistics Agency (DLA) at the MCLB-Albany, including McCarty, to obtain commercial trucking contracts from the base.  The evidence showed that contracts included unnecessary costly provisions, such as expedited service, expensive trailers and exclusive use (i.e., a requirement that freight be shipped separately from other equipment).  Evidence presented at trial and in a post-trial forfeiture hearing established that Whitman’s company grossed more than $37 million, and resulted in government losses and an improper benefit to Whitman of more than $20 million.

The evidence further demonstrated that Whitman paid nearly $200,000 in bribes to Newell and the former inventory control manager of the Distribution Management Center at MCLB-Albany, both of whom used their official positions to help Whitman steal from the base more than $1 million in surplus military equipment, including bulldozers, cranes and front-end loaders.  According to the trial evidence, in exchange for the bribe payments, Newell and the inventory control manager removed the surplus items from Marine Corps inventory and arranged to have them transported off the base by Whitman’s company.  The evidence showed that, after having the equipment refurbished, Whitman sold it to private purchasers.

Five other individuals have pleaded guilty to their roles in the corruption and fraud schemes.  In October 2013, Kelli Durham, the former manager of Whitman’s company, pleaded guilty to conspiracy to commit wire fraud, admitting to intentionally overbilling the United States for services the company did not perform, resulting in losses ranging from $7 million to $20 million.  In May 2013, Mitchell Potts and Jeffrey Philpot pleaded guilty to bribery for collectively accepting more than $700,000 in bribes from Whitman.  In February 2013, Shelby Janes pleaded guilty to bribery for receiving nearly $100,000 in bribes from Whitman.  These defendants have not yet been sentenced.  In February 2014, C.W. Smith, a Whitman associate who helped arrange the sale of the surplus military equipment Whitman stole from the base, pleaded guilty to theft of government property.

NCISThe case was investigated by the Naval Criminal Investigative Service, with assistance from the Dougherty County, Georgia, District Attorney’s Office; Defense Criminal Investigative Service; DLA Office of the Inspector General; and the Department of Labor Office of the Inspector General.  The case is being prosecuted by Deputy Chief J.P. Cooney and Trial Attorney Richard B. Evans of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney K. Alan Dasher of the Middle District of Georgia.  The forfeiture is being handled by Assistant Deputy Chief Darrin McCullough of the Asset Forfeiture and Money Laundering Section and the U.S. Attorney’s Office of the Middle District of Georgia.


Energy IG: Solyndra knowingly ripped-off government

There’s plenty of blame to go around in the green-energy debacle of Solyndra, but the blame begins with the executives of the solar-panel company itself.

Energy Dept.That’s a big takeaway from the Energy Department inspector general’s new report on Solyndra, a company once highly touted by the White House that collapsed in 2011 after getting a $535 million federal loan two years earlier.

The IG’s report finds that executives with the California company, ahead of winning the loan, repeatedly gave the Energy Department, the credit-rating agency Fitch, and outside analysts bad, overly rosy information about its sales contracts.

“Our investigation confirmed that during the loan guarantee application process and while drawing down loan proceeds, Solyndra provided the Department with statements, assertions, and certifications that were inaccurate and misleading, misrepresented known facts, and, in some instances, omitted information that was highly relevant to key decisions in the process to award and execute the $535 million loan guarantee,” the report states.

“In our view, the investigative record suggests that the actions of certain Solyndra officials were, at best, reckless and irresponsible or, at worst, an orchestrated effort to knowingly and intentionally deceive and mislead the Department,” it adds.

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Latest executive order will require sick leave for contractors

In another in his stream of executive moves that don’t require congressional approval, President Obama used Labor Day and the ongoing presidential campaign to highlight his signing of an executive order requiring federal contractors to provide up to seven days sick leave for employees.

White House seal“We’ve seen that many companies, including small businesses, support these policies, because they understand it’s helpful with recruitment and retention,” Obama told a union crowd in Boston on Monday. Back in January’s State of the Union address, he had stated that, “We are the only advanced country on Earth that doesn’t guarantee paid sick leave or paid maternity leave to our workers. And that forces too many parents to make the gut-wrenching choice between a paycheck and a sick kid at home.”

The order, which would affect some 300,000 workers full- and part-time, would credit one hour of sick leave for every 30 hours worked, up to seven days annually. The time could be used to care for one’s self, a family member or domestic partner, including victims of domestic violence.

Because the order must still go through public comment, it won’t take effect until 2017 under new contracts, according to a White House fact sheet.

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Parsons to pay $3.8 million to settle False Claims Act allegations at Savannah River Site

Energy Dept.Parsons Government Services Inc. has agreed to pay the Government $3.8 million to settle allegations that the company knowingly mischarged the U.S. Department of Energy (DOE) for ineligible or inflated short-term and long-term employee relocation costs in connection with its contract on the DOE Salt Waste Processing Facility Project (SWPF) at the DOE Savannah River Site in Aiken, South Carolina.  Terms of the settlement were released  by the U.S. Department of Justice on September 2, 2015.

Justice Dept. seal“Those who expect to do business with the government must do so fairly and honestly,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “[The] settlement demonstrates that the Department of Justice will pursue contractors that knowingly seek taxpayer funds to which they are not entitled.”

Since Sept. 1, 2002, Parsons has been the primary construction contractor on the DOE’s SWPF project at the Savannah River Site.  Pursuant to the terms of the SWPF contract, Parsons was entitled to be reimbursed for the payments it made to eligible employees for moving, meals, lodging and transportation expenses incurred when the employees were relocated or transferred by Parsons to work on the SWPF project in Aiken.  In order to be entitled to reimbursement by the DOE, however, Parsons was required to take steps to ensure that the employees met certain contractual requirements of eligibility, such as maintaining a permanent residence at the location from which they were transferred.  The Government alleged that Parsons sought and obtained reimbursement for these relocation expenses under the SWPF contract even for employees it knew did not qualify for these payments under the terms of the contract.

The settlement was the result of a coordinated effort by the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office of the District of South Carolina, the DOE Savannah River Operations Office and the DOE Office of Inspector General.

The claims resolved by the settlement are allegations only, and there has been no determination of liability.


Pentagon unveils new rules requiring contractors to disclose data breaches

New sweeping defense contractor rules on hack notifications took effect August 26, 2015, adding to a flurry of Pentagon IT security policies issued in recent years.

ombThe Office of Management and Budget proposed guidelines to homogenize the way vendors secure data government-wide. The Defense Department had already released three other policies that dictate how military vendors are supposed to handle sensitive IT.

Now, industry, which is already concerned about overlapping and burdensome cyber rules, worries the Pentagon will go back and retroactively change contracts, after the White House draft is finalized.

pentagon-sealThe new Pentagon regulations for “Network Penetration Reporting and Contracting for Cloud Services” cover more types of incidents and more kinds of information than past policies. The guidelines also apply to a broader swath of the contracting community.

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GAO report is a good reminder to bidders: Agencies don’t always follow the rules!

The United States government has awarded more than $280 billion in contracts so far this fiscal year — FY2015 ends September 30.  Last year, that number was just over $445 billion on September 30.  (Data available online at  While this year’s total contracts awarded will be less than last year, the disparity reveals that the rest of August and September is likely to set a blistering pace of federal contract awards.

GAO-GovernmentAccountabilityOffice-SealIn late July, the Government Accountability Office (GAO) — tasked with investigating how the federal government spends taxpayer dollars — released what many are calling a scathing report.  The report explains that many federal agencies fail to follow the procurement regulations found in the Federal Acquisition Regulations (FAR).  The report is a good reminder for contractors who bid on federal procurements to be watchful of procurements that appear to deviate from the rules.  Data suggest not only that these agencies are breaking the rules, but also that protestors who call them on it are increasingly getting some relief.

The percentage of protesters obtaining relief—either through a protest being sustained or voluntary action taken by an agency—is called the effectiveness rate. From FY2001 to FY2014, the effectiveness rate of GAO protests grew from 33% to 43% (see Figure 2). Over the last five fiscal years the effectiveness rate has remained relatively stable, averaging 42%.
The percentage of protesters obtaining relief — either through a protest being sustained or voluntary action taken by an agency — is called the effectiveness rate. From FY2001 to FY2014, the effectiveness rate of GAO protests grew from 33% to 43% (see above). Over the last five fiscal years the effectiveness rate has remained relatively stable, averaging 42%.  Source: Congressional Research Service at


Congress typically funds federal agencies through annual appropriations.  An elementary principle of federal fiscal law is that if an agency’s appropriations are not obligated by the end of the fiscal year in which the appropriation was made, those funds expire and generally become unavailable to the agency.  Often, agencies spend their appropriated funds late in the year in an effort to save some “dry powder” early on in case an unforeseen need arises.

With Congress always looking for ways to cut spending, agencies do not want to end a fiscal year with unobligated funds.  In Washington it is hard for an agency to justify to lawmakers the need for more money if the money Congress appropriated last year — money the members of Congress had to explain to their constituents was needed then — was not used.  Accordingly, at the end of each fiscal year agencies resolve this dilemma by finding ways to close the gap between the portion of their appropriation obligated and the portion faced with becoming expired on September 30.  Too often that solution is a less than ideal procurement.

With only a little over $280 billion in federal contract awards to date, federal agencies look posed to make another year-end dash to spend our cash.

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GSA to test pre-competed IT products through AdvantageSelect portal

The General Services Administration (GSA) has announced its plans to test two types of pre-competed information technology products through the GSA AdvantageSelect online portal.

Erville Koehler, regional commissioner for the Federal Acquisition Service at GSA, wrote in a blog post published last Wednesday that GSA AdvantageSelect is a category management-based tool designed to help contracting officials place orders for IT products without the need to undergo competition.

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Supreme Court case shines light on veteran-owned business certification, but contractors want more due diligence

Service-disabled, veteran-owned small businesses are anxiously waiting on a U.S. Supreme Court ruling expected in October to determine whether the U.S. Department of Veterans Affair is doing its part to help vets get government contracts.

But as SDVOSBs (as I’ll call them from here on out) wait for the high court’s decision in Kingdomware v. U.S. Kingdomware v. U.S., higher-level discussions on the certification process for SDVOSBs have been quiet, despite the community’s continued calls for a change.

Right now, there are two sets of rules governing contract set-aside awards for SDVOSBs among federal agencies.

CVE badgeFrom one end, there is the Department of Veterans Affairs’ way. Operating under a “veterans first” mandate outlined in the Veterans Benefits, Health Care, and Information Technology Act of 2006, the VA subjects all SDVOSBs to an extensive 90-day, multi-step verification process with the Center for Veterans Enterprise to ensure that they are, in fact, an SDVOSB eligible for those contract set-asides.

Then there is nearly every other agency, not including the Federal Aviation Administration, that requires no formal certification. SDVOSBs vying for contracts in all other agencies need only to submit a self-certification of their status along with their bids.

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PSC asks for wage updates for federal contractors

The Professional Services Council (PSC) is looking for an update to the Services Contract Act, one that may be six years overdue.

Professional Services Council - PSCThe PSC sent an Aug. 24 letter to Department of Labor Secretary Thomas Perez, and Wage and Labor Administrator David Weil, asking for updates to the SCA’s rules for determining prevailing wage rates for federal contractors.

The wages, set by the SCA, are constructed to reflect the rates of a specific locality in which the contract work is being done. The Department of Labor updates those rates through survey data to determine the average and median wages of a locality.

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New regulations will change business for Government contractors

The Administration has been active in promulgating Executive Orders (E.O.) that affect the stakeholders in the Government contracting process.  On July 31, 2014, the President signed Executive Order 13673, “Fair Pay and Safe Workplaces.”  The E.O.states that it “improve[s] the federal contracting process.” But it will create a burden for prime contractors, subcontractors, and their agency customers. It will place increased importance on avoiding any type of adverse ruling involving an employment-related or safety-related claim.

Dept. of LaborAs all Government contractors are aware, a contract may be awarded only after a federal agency determines that the prospective contractor is “responsible” in accordance with Part 9 of the Federal Acquisition Regulation (FAR). Under this E.O., a company’s compliance with 14 federal labor statutes, as well as unnamed state labor statutes, will now be a factor that agencies and prime contractors must consider prior to awarding a contract or subcontract over $500,000.

The FAR Council issued a proposed rule (FAR Case 2014-025) on May 28, 2015, amending the FAR to implement E.O. 13673.  80 Fed. Reg. 30548. On that same day, the Department of Labor (DOL) issued extensive “guidance” on the E.O.  80 Fed. Reg. 30573.  Comments on the proposed regulations were originally requested by July 27, 2015, but that deadline has been extended twice and is now August 26, 2015. Your company, or an association representing your industry, may have already filed comments on the proposed regulation; regardless, it is very important that your company focus on the requirement and take immediate steps to prepare for its implementation.

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