Vet admits fraud ‘in spades’ prompted $1.5M TX hospital contract

January 16, 2015 by

A Navy veteran has pleaded guilty to charges that he lied about his company’s qualifications to the Veterans Affairs Department to get $1.5 million in contracts for work at one of its hospitals.

Colorado resident Jonathan Patrick Saunders is president and co-owner of Saunders MEP Inc., which has been awarded government contracts around the country — including one for building construction projects at the VA Hospital in Kerrville, TX, which is at the center of his criminal case.

He was indicted by a federal grand jury in March 2013 on six counts of wire fraud and two counts of aggravated identity theft. To avoid trial, he pleaded guilty Jan. 6th to one count of wire fraud.

The indictment said that when Saunders applied in March 2008 for the Kerrville contract, he claimed that his company qualified as a “service disabled veteran-owned small business,” that certain people with engineering or architectural qualifications worked for the company and that the company had done work on a previous project. In reality, his plea deal said, none of that was true, and Saunders now acknowledges pumping up the credentials of his company.

Keep reading this article at: http://www.mysanantonio.com/news/local/crime/article/Vet-admits-fraud-in-spades-prompted-1-5M-6000085.php

Another day, another rule for federal contractors

January 15, 2015 by

As we previously noted, federal contractors have been besieged in recent months with regulatory changes and enforcement initiatives advanced by the Office of Federal Contract Compliance Programs (“OFCCP”) and various divisions within the Department of Labor (“DOL”). The holiday season has not offered any relief, as the DOL recently announced its final rule implementing Executive Order (“EO”) 13672 on December 3, 2014.

EO 13672, signed by President Obama on July 21, 2014, required the DOL to update the rules that implemented EO 11246, which previously prohibited discrimination by federal contractors and subcontractors on the basis of race, color, religion, sex, and national origin. EO 13672 called for the DOL to add gender identity and sexual orientation to the classes that EO 11246 protects. President Obama’s directive is the first federal action aimed at ensuring LGBT workplace equality in the private sector. The final rule will take effect 120 days from the date of its publication in the Federal Register, which is on or about the first week of March 2015.

The final rule applies to federal contractors holding contracts entered into or modified on or after the date the rule takes effect. In addition to updating the existing rules to include gender identity and sexual orientation, the final rule also updates the Equal Opportunity Clause included in federal contracts. That clause now states that the contractor considers all applicants for employment without regard to race, color, religion, sex, sexual orientation, gender identity, national origin, disability, or age. Federal contractors and subcontractors must also include similar statements in their job solicitations and required notices posted conspicuously at work sites.

Keep reading this article at: http://www.mondaq.com/article.asp?articleid=361034

Defense agency faulted for wrongful challenge to contractor

January 14, 2015 by

The Defense Contract Audit Agency’s decision to reject $6.6 million in a contractor’s claimed costs in fiscal 2008 did not comply with generally accepted government auditing standards, the Defense Department’s watchdog found.

The probe of a complaint received over the inspector general’s hotline substantiated a challenge to methods used by auditors in DCAA’s Central Region.

Keep reading this article at: http://www.govexec.com/contracting/2014/12/defense-agency-faulted-wrongful-challenge-contractor/102063/

What you need to know about changes to the National Defense Authorization Act

January 13, 2015 by

President Obama recently signed into law the National Defense Authorization Act (NDAA) for FY 2015, which provides new provisions that impact women-owned businesses. The U.S. Small Business Administration (SBA) also proposed to amend regulations implementing provisions of the NDAA Act that will impact small business contractors.

Bottom line: If you’re a women-owned small business or a small business doing business with the government, the NDAA includes a number of provisions that impact you.

Highlights of the proposed revisions to the NDAA include:

  1. Women-Owned Small Business Contracting Program:  Section 825 of the NDAA authorizes federal agencies to award sole-source contracts to women-owned small businesses eligible for SBA’s Women-Owned Small Business Contracting Program, providing parity in the federal contracting marketplace to other small business categories.  For more on the proposed rules, see SBA’s recent press release.
  2. Subcontracting:  Section 1651 changes the way that performance is calculated on small and socioeconomic set-aside contracts, and authorizes similarly situated subcontractors to count towards the performance requirements. 
  3. Joint Ventures:  Section 1651 makes the performance requirements consistent, regardless of whether or not a small business chooses to joint venture or perform in a prime or subcontractor relationship.
  4. Non-Manufacturer Rule:  Section 1651 changes SBA’s non-manufacturer rule and affiliation rules, including the elimination of waiver requests for procurements below the Simplified Acquisition Threshold (SAT) of $150,000.  The non-manufacturer rule allows a small business to offer a product, that it did not manufacture, under a small business set-aside if SBA has offered a waiver.  SBA defines affiliation as the ability to control. When the ability to control exists, even if it is not exercised, affiliation exists.

For updates on these proposed changes, visit the SBA’s website at www.sba.gov.

SBA proposed rule would let small businesses join together for single contract

January 12, 2015 by

The Small Business Administration issued a proposed rule that would let two or more small businesses join together to bid on single small business contracts, a Dec. 29, 2014 Federal Register notice says.

The proposed rule comes as part of an update in the 2013 National Defense Authorization Act that changed some provisions in the Small Business Act.

“SBA proposes to remove the restriction on the type of contract for which small businesses may joint venture without being affiliated for size determination purposes,” the proposed rule says.

SBA says it’s proposing the change because it would encourage more small business joint venturing and would help agencies meet goals for small business participation in federal contracting.

Keep reading this article at: http://www.fiercegovernment.com/story/sba-proposed-rule-would-let-small-businesses-join-together-single-contract/2015-01-08

Businesses, Pentagon agree this program doesn’t work — Congress saved it anyway

January 9, 2015 by

Over the past quarter century, the Defense Department has been testing a contracting program that was intended to help small businesses obtain a larger share of federal work. However, Pentagon officials and small business leaders say the initiative has not only failed to help small contractors, it’s actually hurt them.

In other words, neither those running the program nor those it was supposedly intended to help believe the program works. Thus, many expected the experiment to come to an end when its most recent congressional approval expires on Wednesday.

But that’s not happening.

In what critics are calling another victory for Washington’s massive contracting darlings at the expense of small businesses, Congress has approved legislation extending the contracting initiative, called the Comprehensive Subcontracting Plan Test Program (CSPTP), for another three years. It’s the eighth time the program has been revived.

Keep reading this article at: http://www.washingtonpost.com/business/on-small-business/businesses-pentagon-agree-this-program-doesnt-work-congress-saved-it-anyway/2014/12/30/80d72aa0-9066-11e4-ba53-a477d66580ed_story.html

For government contractors, 2015 is in full swing

January 8, 2015 by

Contractors with their eyes on hot-button issues such as cybersecurity legislation, information technology (IT) acquisition reform, and strategic sourcing policy have plenty to consider in the 2015 National Defense Authorization Act (NDAA) and a recent policy memorandum issued by Office of Management and Budget (OMB) Administrator Anne Rung. Some key items to consider:

  • Cybersecurity: In 2015, the Department of Defense must issue rules requiring “operationally critical contractors” to report cyber incidents in their network and information systems.
  • IT Acquisition Reform: Under the Federal Information Technology Acquisition Reform Act (FITARA), Chief Information Officers in Federal agencies will take key roles in the acquisition process, which could affect the nature of IT-related acquisitions for years to come.  FITARA also sharpens the Government’s FOCUS on strategic sourcing.
  • Strategic Sourcing and Category Management: In an initiative that complements strategic sourcing, OMB has established “category management” as a key Federal acquisition strategy, which will foster Government-wide purchasing of items, such as IT hardware and software, by one source instead of through multiple agencies.

For a broad array of contractors, those “operationally critical contractors” working with the DoD, providers of IT-related supplies and services, and those supplying “categories” of supplies throughout the Federal government, these changes will affect their daily operations and how they market and sell to their Federal customers in 2015 and beyond.

Keep reading this article at: http://www.mondaq.com/article.asp?articleid=362362

SBA announces new HUBZone designations effective Jan. 1, 2015

January 5, 2015 by

The Small Business Administration (SBA) has announced changes to the geographic HUBZone designations, effective January 1, 2015.

The SBA says the changes reflect several new data sources. These data sources include:

  • American Community Survey 2009-2013 five year estimates,
  • 2013 OMB metropolitan area delineations, and
  • 2015 lists of Difficult Development Areas and Qualified Census Tracts, released by HUD in October 2014.

The changes reflect:

  • eight newly qualified counties,
  • 47 counties that have been re-designated until January 2018,
  • 1,479 newly qualified census tracts, and
  • 1,319 census tracts that have been re-designated until January 2018.

All current HUBZone designated areas can be found by downloading this document: HUBZone Designations – effective 01.01.2015

Please note that these new changes have not been incorporated into SBA’s interactive HUBZone map yet.  SBA says it will make another announcement about revisions to the map when it is updated.

For more information about the HUBZone program, please see: https://www.sba.gov/content/understanding-hubzone-program

Lax oversight allows women-only contracts to go to men

December 31, 2014 by

Jennifer Dickerson spent more than 40 hours of work over three months to get her Orlando environmental consulting company certified as a women-owned business, a designation that would help her win federal contracts intended to go to disadvantaged businesses. She and her assistant assembled legal documents and tax records, responded to multiple questions, and paid a $275 processing fee to a third-party agency to prove that her small company is majority woman-owned and operated.

“It was important to me to make sure I adhered to all the requirements” of the federal program established in 2000 to set aside a percentage of government contracts for women-owned small businesses, Dickerson says.

Not every business owner shares Dickerson’s sense of responsibility. A recent report critical of the U.S. Small Business Administration’s program revealed that more than 40 percent of companies that got government contracts as women-owned businesses in the last two years were not actually eligible.

Keep reading this article at: http://www.businessweek.com/articles/2014-11-20/lax-oversight-lets-men-pose-as-women-to-win-government-contracts

Construction company to pay $2.15 million, admits abuse of DC’s certified business enterprise program

December 30, 2014 by

Forrester Construction Company has agreed to pay $2.15 million to the United States and implement internal reforms to resolve a criminal investigation into alleged fraud committed by the company in connection with the use of Certified Business Enterprises (CBEs) in the procurement of more than $145 million in District of Columbia government contracts. The internal reforms will be subject to independent review and reporting.

As part of the resolution, Forrester Construction admitted that it improperly entered into written letter agreements and “Action of Management Committee” memoranda with the CBE participants to joint ventures that were not disclosed to the District of Columbia during the contract procurement process. As a result, the company admitted, both Forrester Construction and the CBE partners failed to follow the required CBE rules and regulations.

The announcement concludes a two-year investigation into Forrester Construction, a firm based in Rockville, Md., as well as its CBE partners on the joint venture projects.

Under the terms of a non-prosecution agreement reached with the U.S. Attorney’s Office for the District of Columbia, Forrester Construction agreed to pay $2.15 million to the United States and accepted and acknowledged responsibility for its improper conduct, as described in a Statement of Facts. The company also agreed to undertake various remedial measures to ensure compliance with the requirements of the District of Columbia’s CBE program (or any such equivalent on federal government projects) and the U.S. Small Business Administration’s 8(a) program, insofar as the company undertakes projects involving CBEs or 8(a) companies in the future.

Both the District of Columbia’s CBE program and SBA’s 8(a) program are meant to help small, disadvantaged businesses access government procurement markets.

The remedial measures include the hiring or designation of a CBE and 8(a) Compliance Officer, as well as an Ethics Officer; the implementation of a comprehensive training program for all company personnel regarding compliance with the CBE and 8(a) programs; maintaining an effective compliance and ethics program, and continuing cooperation with law enforcement. Significantly, individual employees directly associated with the inappropriate conduct are no longer employed by the company.

Additionally, the company agreed to undertake community service intended to develop improvements in the CBE and 8(a) programs going forward. Forrester Construction agreed to offer workshops, either individually or in collaboration with an industry trade association, aimed at providing training with respect to the rules and regulations of the CBE and 8(a) programs, among other topics relating to the construction industry.

This case is the latest example of law enforcement efforts to protect the integrity of CBE programs. Michael A. Brown, a former member of the Council of the District of Columbia, pled guilty in 2013 to a federal bribery charge stemming from an undercover investigation in which he accepted $55,000 from FBI agents posing as employees of a company that purportedly wanted CBE approval and contracting opportunities. Brown is serving a 39-month prison term.

“By changing the terms of joint ventures with small disadvantaged businesses and not reporting them to the D.C. government, Forrester Construction circumvented the foundation of the CBE program and used their proceeds to increase their own bottom line,” said Assistant Director in Charge McCabe.

“These joint ventures principally served the interests of Forrester Construction Company to make money and to obtain contracting opportunities otherwise unavailable to them,” said SBA Inspector General Gustafson. “Joint ventures involving SBA program participants should be structured and executed to give the small business an opportunity to gain experience and technical knowledge and to further develop their business. I want to thank the U.S. Attorney’s Office for its leadership in reaching this agreement.”

According to the Statement of Facts agreed to by the company, between 2008 and 2009, Forrester Construction formed multiple joint ventures with CBEs for the purpose of bidding on construction contracts in the District of Columbia.

Three joint ventures formed by Forrester Construction and one of the CBEs, EEC of D.C., Inc., were awarded construction contracts from the District of Columbia. These contracts, including change order amounts, totaled approximately $64 million for construction of a new headquarters building for the Department of Employment Services; approximately $5.4 million for construction of a Senior Wellness Center in Ward 1, and approximately $56 million for the renovation and modernization of the existing Anacostia Senior High School building.

Forrester Construction also formed joint ventures with another CBE, and those joint ventures were also awarded construction contracts from the District of Columbia, which were, over a period of approximately three years, in an aggregated amount in excess of $20 million.

In each of these various projects, the joint venture formed by Forrester Construction and the respective CBE partner received the maximum amount of contracting preferences for which the CBE partner was eligible, which provided Forrester Construction and the respective CBE partner with a competitive advantage during the bidding process.

As part of its joint venture submissions to the District of Columbia Department of Small and Local Business Development (DSLBD), Forrester Construction and its respective CBE partner represented that the CBE partner would be the majority partner and maintain a 51% interest in the joint venture, entitling the CBE partner to 51% of the net operating profits of the joint venture. Each joint venture agreement also established a “Management Committee,” consisting of two representatives from the CBE partner and one representative from Forrester Construction, which provided the CBE partner with majority control of the joint venture.

After each joint venture for the projects was submitted to, and certified by, the DSLBD, however, Forrester Construction and the respective CBE partner signed a memorandum entitled “Action of Management Committee” or signed a letter agreement, which related to the operations of each joint venture. The memoranda and/or letter agreements effectively increased Forrester Construction’s control over the day-to-day operations of the projects and reduced the CBE partner’s share of the profits or losses in the projects—notwithstanding the requirements of the joint venture agreements and the CBE rules and regulations. Forrester Construction and the CBE partner did not disclose these “Action of Management Committee” memoranda or the letter agreements to the District of Columbia government during the procurement process.

The “Action of Management Committee” memoranda also revised the respective scope of work and services that Forrester Construction and the CBE partner would provide to certain of the projects. In each instance, the “Action of Management Committee” memorandum applicable to the particular project identified a small scope of work for the CBE partner to complete and provided that Forrester Construction would provide all remaining general conditions, subcontract work, and all other work required to fulfill the requirements of the project.

For example, with respect to the Anacostia Senior High School joint venture, the applicable “Action of Management Committee” memorandum provided that the scope of work for the CBE equated to approximately $2.75 million, while the scope of work for Forrester Construction equated to approximately $46 million. The “Action of Management Committee” memoranda also established a pre-determined profit for the joint venture that specifically excluded any profits earned or losses sustained by either Forrester Construction or the CBE partner for their respective scope of work. Moreover, Forrester Construction and the CBE partner agreed that only the pre-determined profit, exclusive of each partner’s individual “scope of work,” would be split in the proportions agreed to in the joint venture agreement (i.e., 51% for the CBE partner and 49% for Forrester Construction). All other profits or losses generated through an individual scope of work would belong to the respective entity.

All of the work was performed under the various contracts. However, as a result of the letter agreements and “Action of Management Committee” memoranda, the CBE participant for each of the projects did not maintain majority control of the projects and did not receive 51% of the profits or losses associated with the projects, as required by the joint venture agreements and in accordance with the CBE rules and regulations.

This investigation was conducted by the FBI’s Washington Field Office; the Criminal Investigation Unit of the U.S. Attorney’s Office for the District of Columbia; the District of Columbia’s Office of the Inspector General, and the SBA Office of Inspector General.

Source: http://www.fbi.gov/washingtondc/press-releases/2014/forrester-construction-company-agrees-to-pay-2.15-million-admits-abuse-of-certified-business-enterprise-program