Grants and missile defense hit hardest in DoD’s science and technology budget request

April 25, 2014 by

Overall funding for the Defense Department’s science and technology budget undergo about a $500 million reduction in the president’s fiscal 2015 budget proposal, with grants and missile defense bearing the brunt of the cut, says a DoD official.

About $200 million of the proposed budget reduction would come from cuts to grant programs nationwide, which equates to about 1,500 grants, said Alan Shaffer, acting assistant secretary of defense for research and engineering.

The department also took about $150 million out of its Missile Defense Agency Science and Technology program, said Shaffer during an April 8 hearing of the Senate Armed Services subcommittee on emerging threats and capabilities. The decision made sense because much of the technology has matured to a level where it could be moved to other parts of the department, he added.

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Phony small businesses pay $1.9 million to settle False Claims Act charges

April 24, 2014 by

Five California-based masonry subcontractors and two individuals paid the government nearly $1.9 million to resolve allegations that they violated the False Claims Act by misrepresenting their disadvantaged small business status in connection with military construction contracts, the Department of Justice announced on April 9, 2014.  The defendants are Frazier Masonry Corp., F-Y Inc., CTI Concrete & Masonry Inc., Masonry Technology Inc., Masonry Works Inc., Russell Frazier and Robert Yowell.

“This settlement demonstrates our continuing vigilance to ensure that those doing business with the military do so legally and honestly and that taxpayer funds are not misused,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery.  “Among the rules that military contractors and subcontractors must follow are those relating to the use and hiring of small businesses.”

The case involved contracts to construct facilities at Marine Corps bases at Camp Lejeune, N.C., and Camp Pendleton, Calif.  Under the rules of the Small Business Administration, the contracts required that a certain percentage of the work be performed by disadvantaged small businesses.  This contract requirement was intended to benefit small firms owned by women, minorities and other disadvantaged groups.

The government alleged that the defendant masonry subcontractors and their principals misrepresented to the prime contractors that they were small businesses, and that these misrepresentations caused the prime contractors to falsely certify that they had complied with the small business provisions of the contracts in claiming payment.  Russell Frazier previously pleaded guilty in related criminal proceedings to causing false statements.

The settlement resolves allegations filed in two lawsuits by Rickey Howard, a former employee of Frazier Masonry Corp., in federal court in Raleigh, N.C.  The lawsuits were filed under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private individuals to sue on behalf of the government for false claims and to share in any recovery.  The act also allows the government to intervene and take over the action, as it did in this case.  Howard will receive $393,383. 

The cases are captioned United States ex rel. Howard v. Harper Construction Co., et al., Case No. 7:12-CV-215-D (E.D.N.C.) and United States ex rel. Howard v. RQ Construction LLC, et al., Case No. 7:13-CV-48-D (E.D.N.C.).  The claims resolved by the settlement are allegations only; there has been no determination of liability.   More details at:

DLA to conduct “Certified Cost and Pricing” webinar on Apr. 30th

April 23, 2014 by

The Land and Maritime unit of the Defense Logistics Agency (DLA) will conduct a “Certified Cost and Pricing” webinar on April 30, 2014 starting at 2:00 p.m. Eastern Standard Time. 

DLA Land and Maritime’s mission is to provide spare parts to America’s Armed Forces in peace and war, around the clock, around the world.  DLA buys spare parts used on tanks, Humvees, Mine-Resistant Ambush Protected vehicles (MRAPs), 5-ton trucks and other equipment.  Land and Maritime is also DLA’s lead center for Maritime (ships, aircraft carriers, submarines, etc.) and also the procurement of electronic parts for military use.  (For additional information please see

Land and Maritime has experienced an increased concern with all businesses in providing Certified Cost and Pricing data. This webinar was developed to address this issue as well as to assist both small or large businesses on how to submit complete pricing data that will be acceptable.  It is important to provide good data the first time to help streamline the evaluation process.

To register for the “Certified Cost and Pricing” Webinar, please send an email to lim.aldnull@CCB.CCSD with the following information: Name, your business CAGE code, and email address. In response, the webinar direct link address and bridge line call in information will be provided upon registration.

Prime contractor pays $2.4 million to settle DBE fraud allegations

April 21, 2014 by

U.S. attorneys, the FBI, labor and transportation officials announced on April 7, 2014 that  Connecticut-based construction company Manafort Brothers, Inc. will pay $2.4 million and implement internal reforms subject to independent monitoring to resolve a multi-agency joint criminal and civil investigation into alleged fraud committed by the company in connection with a public works project that commenced in 2007.

As part of the resolution, Manafort admitted that it made false statements to the United States and the State of Connecticut Department of Transportation that disadvantaged business enterprises (DBE) performed subcontracted work on the federally and state funded relocation of Route 72 when, in fact, non-DBE performed the work.

Manafort submitted a bid to ConnDOT to serve as the general contractor on a federally and state funded road project.  All qualifying bids were required to designate a percentage of work that would be performed by DBE, a requirement designed to provide socially and economically disadvantaged contractors, who have faced historical barriers to entry in the construction industry, with fair opportunities to compete for federally funded work.

The State of Connecticut Department of Transportation (ConnDOT) determined that Manafort was the apparent low bidder for the project with bid of approximately $39,663,000.  According to the pre-award bid documents, Manafort represented to ConnDOT that a particular DBE, identified as “Company #1,” would perform work under the contract totaling approximately $3,064,372, or 70 percent of the overall DBE goal.  In its pre-award submission package, Manafort stated that Company #1 would furnish all supervision, labor and materials in respect to the work covered by the subcontract agreement.  This work involved being responsible for the project’s reinforcing steel, materials for structural steel, furnishing a pedestrian bridge that would span the new roadway and the majority of work for a large retaining wall adjacent to the new highway.

The contract for the project was officially awarded to Manafort in August 2007 based, in part, on its representations that Company #1 would perform the work described in Manafort’s pre-award submission. However, during the course of the project, it was determined Company #1 was not performing most of the work that Manafort claimed it was performing.  In fact, the investigation revealed that Manafort was utilizing Company #1 essentially as a pass-through entity.  That is, Manafort would negotiate with and supervise subcontractors that it procured to perform work that Company #1 was supposed to perform or procure and supervise.  The Government maintains that Manafort arranged to pay those contractors through Company #1 to skirt DBE regulations.

Under the terms of a non-prosecution agreement and civil settlement agreement with the government, Manafort represented that it has undertaken various remedial measures to ensure compliance with the DBE programs for its current and future federally funded construction projects.  These measures include establishing a position for an Ethics and Compliance Officer at Manafort, forming a DBE compliance committee that meets regularly to review and address DBE-related issues, mandating DBE compliance training for Manafort employees, deploying software to insure that DBE are qualified to perform the work that they bid, removing the Manafort personnel directly involved in the misconduct, and continuing to assist law enforcement in its investigation.  Manafort has also agreed to pay a civil fine of $2,460,722.02.

Manafort sought an unfair and illegal advantage over its competitors and deprived disadvantaged businesses of an opportunity to perform work on this taxpayer funded construction project.  The non-prosecution agreement announced by the U.S. Attorney’s office in Connecticut addresses only the corporate criminal liability of Manafort, not potential criminal charges for any individual.

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Executive order: Contractors must allow employees to discuss pay with each other

April 18, 2014 by

President Obama’s mandate that federal contractors must let their employees discuss compensation might be minor for most businesses, but the heavy lifting is yet to come.

By itself, the order has a “pretty small impact” on most businesses, said Alan Chvotkin, executive vice president of contractors’ trade group Professional Services Council — especially since it simply prohibits contractors from retaliating against discussions about pay, but doesn’t yet require them to report compensation data.

“Very, very few companies have an affirmative policy that prohibits conversation about pay,” he said, noting that smaller companies are more likely to feel the effects of the order “because of the often close working environment of their employees, whereas larger companies have a larger and often more distributed workforce, even if located in the same building or complex.”

In an attempt to discourage pay discrimination, Obama last week signed an executive order requiring federal contractors to allow employees to discuss their compensation with each other, known as “Non-Retaliation for Disclosure of Compensation Information.” He also signed a memorandum instructing the Labor Department to draw up regulations under which federal contractors would be required to submit compensation data by race and sex.

Once the Labor Department creates those rules — which would be used to ensure compliance with equal pay laws — Chvotkin says he expects contractors to push back. New reporting requirements could force contractors to spend money on new payroll processing systems or on new employees to collect and analyze the data. “Most company payroll systems don’t capture data that way [by sex and race],” he said.

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SBA says GSA failed to assess negative impact of office supply contract on small businesses

April 17, 2014 by

The General Services Administration (GSA) failed to assess the negative impact that the Office Supplies 3 (OS3) strategic sourcing contract would have on small businesses, a Small Business Administration (SBA) analysis says.

Under the Small Business Act, agencies must determine whether new consolidated contracts would negatively affect small businesses, and the SBA is tasked with making sure the agencies execute the determination properly.

SBA undertook the analysis at the Government Accountability Office’s request after several small businesses protested to the OS3 request for proposals, saying GSA failed to look into the economic consequences of the businesses who don’t receive an OS3 award. FedNewsRadio posted a copy (pdf) April 7.

In response to the protests, GSA argued that the OS3 contract is a follow-on contract to the OS2 and not a consolidated contract. GSA also said it’s “contrary to law” to provide an economic analysis on the negative impacts a consolidate contract would have on small businesses.

SBA disagrees on both points.

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Here comes GSA’s next government-wide telecom contract vehicle

April 16, 2014 by

The General Services Administration’s information technology contracting office is seeking industry feedback on plans for the next governmentwide contract vehicle for telecommunications and related services.

GSA is in the process of developing Network Services 2020, or NS2020, a slate of approved vendors offering everything from basic telephone and data services to niche satellite and infrastructure contracts for federal agencies. The request for information posted April 8, 2014 seeks industry feedback on how GSA should structure that global contracting vehicle.

GSA will begin soliciting bids in fiscal 2015 from vendors who want to be part of the NS2020 contract vehicle, according to the RFI. Contracts with the vendors approved under NS2020 will likely be available for 15 years or for 10 years with five option years, the RFI said.

NS2020 will replace Networx, a similar global contract vehicle for telecom services that’s set to expire soon, but will include a broader suite of services.

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With budget tightening, disputes over federal contracts increase

April 15, 2014 by

Competition for government contracts is becoming more cutthroat as federal spending shrinks by billions of dollars, with big companies swooping in on smaller ones and bid protests on the rise.

Routine contracts that in years past would have attracted just a handful of companies have become high-stakes bidding wars. Contractors are forced to make more aggressive offers, with slimmer margins. And industry officials say the gentleman’s agreement that often prevented losing companies from filing bid protests against their rivals has given way to a more desperate mentality.

The number of losing companies’ protests to the Government Accountability Office, which handles the vast majority of bid protests, has increased from 1,352 in 2003 to 2,429 last year. While that is a fraction of the total number of contracts awarded annually — less than 1 percent, by one estimate — the cases often show how tight the market has gotten and the extreme measures companies will take to win.

“Budgets are going down, which means competition for what contracts remain has increased tremendously,” said Jaime Gracia, president of Seville Government Consulting, which helps contractors win bids. Companies “are making strategic decisions about protesting because they have to. A lot of companies can’t afford to lose that contract.”

After the terrorist attacks of Sept. 11, 2001, spending on contracting soared. Fueled by the wars in Iraq and Afghanistan, it peaked in 2008 at about $541 billion, according to the Office of Management and Budget. But as the budget cuts known as sequestration went into effect, the figure dropped to $461 billion last year, and many predict it will continue to fall.

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Why the government can’t buy more like a business

April 11, 2014 by

Commonly heard issues with federal government contracting (such as, “it takes too long,” “it’s too expensive,” “it’s overly bureaucratic,” or “it’s too burdensome”) often conclude with a determination that the government should adopt commercial acquisition practices.

Government contracting does have considerable regulation associated with it. The government version of “commercial contracting,” found in the Federal Acquisition Regulation Part 12, was an attempt to address this idea and has been somewhat successful. However, additional government-unique requirements have been added over time.

In many cases, a primary hurdle is that a customer can have unique requirements, making that customer the only customer.

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Contractor misrepresented VOSB status for $152 million lease

April 9, 2014 by

he VA failed to verify the accuracy of a contractor’s representation that it was a veteran-owned small business, according to a new report issued by the VA’s Office of Inspector General.

According to the VA OIG, the VA failed to verify the claim of Westar Development Company, LLC to be a VOSB–and “[t]he evidence does not support a finding that Westar is or ever has been a Veteran-Owned Small Business.”   The VA’s failure to verify Westar’s VOSB status is just one of many serious flaws identified by the VA OIG in its audit of the award of a major VA lease to Westar.

The VA OIG’s report (which is well worth a read if you have the time) examines the VA’s award of a build-to-suit lease to Westar for the new Butler Health Care Center in Butler, Pennsylvania.  The 20-year lease had a total value of $152.7 million.

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