Pentagon’s top contracting official: Sequestration’s cuts could continue into FY14, disproportionately affecting small businesses
June 5, 2013 by cs
Sequestration spending cuts could continue into 2014, and the impact of the deep cuts will fall disproportionately on small business, the Pentagon’s top acquisition official told a Navy industry forum on Monday of this week (June 3, 2013).
“It’s a reasonable possibility that we will go into 2014 with sequestration still underway,” said Frank Kendall, undersecretary of defense for acquisition, technology and logistics. “A lot of things we planned on doing we won’t be able to do.”
Last month, Defense Secretary Chuck Hagel told Defense Department employees he could not guarantee that the budget situation would ease next year.
Kendall’s comments to the 2013 Navy Opportunity Forum in Arlington, Va., come three months into a budget sequester that is taking $41 billion out of the Pentagon budget this fiscal year, leading to cuts across the military in everything from operations and deployments to training and readiness. Furloughs are set to begin in July for about 85 percent of the Defense Department’s 767,000 civilian employees.
In the sequestration environment, Kendall said, the department needs to be more proactive in taking care of the small businesses that contract with the military.
“The cuts we are going to experience potentially will fall on small businesses,” more than on large military contractors, he said, adding that cuts in research and development worry him as well. “Potential adversaries are modernizing at a rate which makes me nervous,” he told the group, which included representatives of companies that produce advanced technologies funded by Navy programs.
Kendall said the department is about to conclude its strategic choices and management review, which Hagel ordered to provide department leaders with options given the current budget environment as well as the prospect of future spending cuts.
“What would we have to do at the department if we had to take $50 billion a year out over the long term? That would be pretty devastating,” Kendall said, mentioning one such scenario being considered by the review.
Posted by the American Forces Press Service at http://www.defense.gov//news/newsarticle.aspx?id=120200.
May 28, 2013 by cs
A majority of the top 200 government contractors made more money on federal awards last year than in 2011, despite major budgetary cutbacks, according to a report released Wednesday.
Overall, the federal government spent $516.3 billion on contracts in fiscal 2012, down 3.1 percent from fiscal 2011’s total of $532.6 billion, the largest year-over-year decline in inflation-adjusted dollars since 1997, the analysis said. Sixty-four percent of that total went to the top 200 companies doing business with the government.
Bloomberg Government, which published the report, analyzed data from 24 agencies and departments, and in 20 categories of federal purchases. Bloomberg found that many contractors were able to maintain or increase business by focusing on sectors that were not subject to “budget pressures,” such as space vehicles, drones, health information technology and cybersecurity.
May 22, 2013 by cs
Philadelphia Inspector General Amy Kurland announced last week that local contractors have used “sham minority subcontractors” on 19 projects to skirt antidiscrimination requirements.
In New York, investigations into fraudulent hiring of minority- and women-owned subcontractors are so common that they have become something of a specialty for local prosecutors. The most recent instance was a $10 million settlement reached with Siemens Electrical.
The story is the same in Chicago, Seattle and Dallas. And that’s just in the last few years. Go back further, and it’s the rare city or state that hasn’t endured a scandal or four tied to well-intentioned minority contracting regulations.
The particulars of the rules vary from city to city and state to state, but the objective is always the same: Foster economic development in minority communities by requiring (or strongly encouraging) companies awarded public contracts to hire subcontractors owned by minorities or women.
Keep reading this article at: http://nextcity.org/daily/entry/sham-minority-contractors-have-been-hired-in-your-city-probably
May 20, 2013 by cs
The General Services Administration collectively owes more than one thousand contractors more than $3 million because the agency failed to pay off vendors after kicking them out of the schedules program. The finding came as the result of an investigation by the House Small Business Committee.
The agency failed to pay some terminated contractors a $2,500 guarantee it makes to all vendors that join the schedules program.
“The General Services Administration has owned up to their mistake and will distribute payment this year,” said Committee Chairman Sam Graves (R-Mo.).
If schedule holders don’t make at least $25,000 worth of schedule sales in the first two years and $25,000 annually thereafter, GSA may cancel the contracts.
May 10, 2013 by cs
Many of the government’s biggest pending contracts are encountering significant delays.
Among the 20 largest pending contracts, the Army is facing delays in awarding six procurements worth nearly $22 billion combined, according to new estimates from Deltek, a market research firm.
“We’ve noticed the delays,” said Jennifer Sakole, principal analyst for federal information services at Deltek, speaking about pending solicitations not just in the defense sector but across the government.
“We think that a number of those delays are a direct result of contracting offices waiting to receive guidance in regards to specific cuts if they’re going to impact these programs,” Sakole said. “So they’re waiting to move forward until they receive that guidance.”
Keep reading this article at: http://www.federaltimes.com/article/20130417/IT03/304170005/Sequester-delays-some-contract-awards
May 8, 2013 by cs
An interim final rule published May 7, 2013 in the Federal Register and effective immediately will amend regulations to the U.S. Small Business Administration’s Women-Owned Small Business Federal Contract Program allowing for greater access to federal contracting opportunities for women-owned businesses as a result of the National Defense Authorization Act of 2013 (NDAA) signed in January.
The interim final rule removes the anticipated award price of the contract thresholds for women-owned small businesses (WOSB) and economically disadvantaged women-owned small businesses (EDWOSB) to allow them greater access to federal contracting opportunities without limitations to the size of the contract. The rule can be accessed at: http://www.gpo.gov/fdsys/pkg/FR-2013-05-07/html/2013-10841.htm and comments can be submitted on or before June 6, 2013, at www.regulations.gov, identified by the following RIN number: RIN 3245-AG55.
As a result of the rule change, contracting officers will be able to set aside specific contracts for certified WOSBs and EDWOSBs at any dollar level which will help federal agencies achieve the existing statutory goal of five percent of federal contracting dollars being awarded to WOSBs. The SBA is currently working on the changes to the Federal Acquisition Regulations.
Prior to the rule change, the anticipated award price of the contract for women-owned and economically disadvantaged women-owned small businesses could not exceed $6.5 million for manufacturing contracts and $4 million for all other contracts.
Every firm that wishes to participate in the WOSB program must meet the eligibility requirements and either self-certify or obtain third party certification. There are four approved third-party certifiers that perform eligibility exams: El Paso Hispanic Chamber of Commerce, National Women Business Owners Corporation, U.S. Women’s Chamber of Commerce, and the Women’s Business Enterprise National Council. Additional information and links about approved third-party certifiers are available at: http://www.sba.gov/content/contracting-opportunities-women-owned-small-businesses
To qualify as a WOSB, a firm must be at least fifty-one percent owned and controlled by one or more women, and primarily managed by one or more women. The women must be U.S. citizens and the firm must be considered small according to SBA size standards. To be deemed “economically disadvantaged,” a firm’s owners must meet specific financial requirements set forth in the program regulations.
The WOSB Program identifies eighty-three four-digit North American Industry Classification Systems (NAICS) codes where WOSBs are underrepresented or substantially underrepresented. Contracting officers may set aside contracts in these industries if the contract can be awarded at a fair and reasonable price and the contracting officer has a reasonable expectation that two or more WOSBs or EDWOSBs will submit offers for the contract.
For more information on the Women-Owned Federal Small Business Contract Program or to access the instructions, applications or database, please visit www.sba.gov/wosb or contact your GTPAC counselor.
April 1, 2013 by cs
The General Services Administration moved one step closer to launching an overarching contract vehicle for professional services Thursday by releasing two draft requests for proposals.
The agency is inviting comments on the draft RFPs and through its GSA Interact system.
The contract vehicle, known as One Acquisition Solution for Integrated Services, or OASIS, would include contracts for accounting, communication, security and transportation, among other services.
OASIS would be an indefinite delivery, indefinite quantity contract that would last 10 years in its first incarnation, according to the draft RFPs. GSA’s two draft solicitions were a general RFP and another focused on small businesses.
March 28, 2013 by cs
Despite a history of complaints to Congress and the Department of Veterans Affairs, veterans advocacy groups say VA is still placing far too many hurdles in front of veteran-owned small businesses in its contracting program. VA, meanwhile, says it’s making changes.
VA’s programs for preferentially awarding contracts to veteran-owned small businesses are unlike those of any other agency in government. In a 2006 law, Congress told VA to take a “veterans first” approach to procurement, making service-disabled veteran-owned small businesses its first choice for any given contract and all other veteran-owned small businesses its second choice.
But to deter fraud, Congress also told VA to set up a system to verify contractors’ veteran status before they could get set-aside contracts. That set up a careful balancing act for the agency between detecting potential fraud and making the process as easy as possible for legitimate veteran-owned businesses. And veterans groups are telling Congress VA has allowed that scale to fall way too far in one direction.
Keep reading this article at: http://www.federalnewsradio.com/65/3257550/Groups-say-veteran-owned-contracting-still-broken.
March 22, 2013 by cs
President Obama in 2009 told federal agencies that no-bid contracts were “wasteful’’ and “inefficient.’’ Four years later, his administration spent more money on non-competitive contracts than ever before.
Federal agencies awarded $115.2 billion in no-bid contracts in fiscal year 2012, an 8.9 increase from $105.8 billion from 2009, according to government data. The jump unfolded even as total contract spending decreased by about 5 percent. Lockheed Martin, Boeing and Raytheon were top recipients of sole-source contracts.
Those top Pentagon vendors and other large contractors can draw on established relationships with procurement officers to claim a greater share of non-competitive work, said Robert Burton, former acting administrator of the Office of Federal Procurement Policy under George W. Bush.
“It highlights a growing problem in the procurement system,’’ said Burton, who represents contractors as a partner at Venable in Washington. “The pie is shrinking, but at the same time, the number of non-competitive awards has increased. That’s a bad combination.”
Keep reading this article at: http://www.washingtonpost.com/business/economy/no-bid-us-government-contracts-jump-9-percent-despite-push-for-competition/2013/03/17/9f6708fc-8da0-11e2-b63f-f53fb9f2fcb4_print.html
Contractors plead guilty to illegally obtaining $31 million in contracts intended for small businesses
March 20, 2013 by cs
Executives at two Arlington, Va.-based businesses have pleaded guilty to fraudulently obtaining more than $31 million in government contract payments that should have gone to disadvantaged small businesses.
The guilty pleas were announced today by U.S. Attorney for the Eastern District of Virginia Neil H. MacBride, Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and NASA Inspector General Paul K. Martin.
“These executives used their knowledge and experience to abuse a program created to ensure minority small business owners could compete for government contracts,” said U.S. Attorney MacBride. “They not only illegally obtained millions from the United States, they also victimized legitimate minority owners who didn’t get the bids.”
“Keith Hedman and his co-conspirators fraudulently obtained valuable government contracts intended for minority-owned small businesses, and pocketed millions of dollars for themselves,” said Acting Assistant Attorney General Raman. “They abused an important government program, and will now face the consequences.”
“This investigation confirmed that these executives repeatedly took actions that gave them a fraudulent advantage in the contracting process,” said NASA Inspector General Martin. “I commend the outstanding efforts of our agents and our law enforcement partners involved in this case in protecting the integrity of the 8(a) program.”
According to court documents, Keith Hedman, 53, of Arlington, formed an Arlington-based security service consulting company in approximately 2001. Hedman formed the company, listed as Company A in court filings, with an African-American woman who was listed as its president and CEO to enable the company to participate in the Small Business Administration’s (SBA) Section 8(a) program, which enables certain small businesses to receive sole-source and competitive-bid contracts set aside for minority-owned and disadvantaged small businesses. In 2001, Hedman’s company received approval to participate in the 8(a) program on the basis of the African-American president and CEO’s listed role, but when she left the company in 2003, Hedman became its sole owner and the company was no longer 8(a)-eligible.
Hedman admitted that in 2003 he created a shell company, listed as Company B in court records, to ensure he could continue to gain access to 8(a) contracting preferences for which Company A was not qualified. Prior to applying for the shell company’s 8(a) status, Hedman selected an employee, Dawn Hamilton, 48, of Brownsville, Md., to serve as a figurehead owner based on her Portuguese heritage and history of social disadvantage, when in reality the new company would be managed by Hedman and senior leadership at Company A. To deceive the SBA, they falsely claimed that Hamilton formed and founded the company and that she was the only member of the company’s management. They continued to mislead the SBA through 2012, even lying to the SBA to overcome a protest filed by another company accusing Hedman’s former company and the shell company of being inappropriately affiliated.
From Company B’s creation through February 2012, Hedman – not Hamilton – exercised ultimate decision-making authority and control over the company by controlling its finances, allocation of personnel and government contracting activities. Hedman nonetheless maintained the impression that Hamilton was leading the company, including through forgeries of signatures by Hamilton to documents she had not seen or drafted. Hedman also retained ultimate control over the shell business’s bank accounts throughout its existence. In 2011, Hedman withdrew $1 million in cash from Company B’s accounts and gave the funds in cash to Hamilton and three other co-conspirators. In total, Hedman and Hamilton secured through the shell company more than $31 million in government contract payments, which generated more than $6 million in salary and payments for the conspirators that they were not entitled to receive.
In addition, Hedman admitted that he agreed to pay a $50,000 bribe through the shell business to a U.S. government contracting official for the official’s help in securing contracts for Company B.
Hedman and Hamilton pleaded guilty on March 13 and March 15, 2013, respectively, in U.S. District Court for the Eastern District of Virginia to major government fraud and face a maximum penalty of 10 years in prison and a multimillion-dollar fine for that charge. Hedman also pleaded guilty to conspiracy to commit bribery, which carries a maximum penalty of five years in prison. Hedman agreed to forfeit more than $6.3 million, and Hamilton agreed to forfeit more than $1.2 million. Hedman is scheduled to be sentenced on June 21, 2013, before U.S. District Judge Gerald Bruce Lee. Hamilton’s sentencing is scheduled for June 21, 2013, before U.S. District Judge T. S. Ellis, III.
In addition, the following individuals have also pleaded guilty to major fraud or conspiracy to commit major fraud:
• David George Lux, 62, of Springfield, Va., pleaded guilty today before U.S. District Judge Leonie M. Brinkema. Lux served as the chief financial officer at Company A from 2007 through February 2012 and performed work for Company B throughout that time while officially on Company A’s payroll. He is scheduled to be sentenced on June 14, 2013, by Judge Brinkema.
• Joseph Richards, 51, of Arlington, pleaded guilty on March 14, 2013, before U.S. District Judge Brinkema in the Eastern District of Virginia. Richards served as the chief operating officer and chief of staff for Company A from 2005 through 2008 and then vice president from 2010 through February 2012. He also served as Company B’s chief of staff from 2008 through 2010. According to court documents, Richards performed work for Company B throughout his time at both companies. He is scheduled to be sentenced on June 14, 2013, by Judge Brinkema.
• David Sanborn, 60, of Lexington, S.C., pleaded guilty on March 13, 2013, before U.S. District Judge Claude M. Hilton in the Eastern District of Virginia. Sanborn served as vice president at Company A from 2001 through 2009 and the company’s president from 2010 through February 2012. According to court documents, Sanborn performed work for Company B from its inception while on Company A’s payroll. He is scheduled to be sentenced on June 28, 2013, by Judge Hilton.
This case was investigated by the NASA Office of the Inspector General (OIG), the SBA OIG, the Defense Criminal Investigative Service, the General Services Administration OIG and the Department of Homeland Security OIG. Assistant U.S. Attorneys Chad Golder and Ryan Faulconer, a former Trial Attorney for the Criminal Division’s Fraud Section, are prosecuting the case on behalf of the United States.
– News release from U.S. Dept. of Justice – Mar. 18, 2013 – http://www.justice.gov/opa/pr/2013/March/13-crm-323.html