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.

Keep reading this article at: http://www.fiercegovernment.com/story/sba-says-gsa-failed-assess-negative-impact-os3-small-businesses/2014-04-08 

Business owner says soliciting government business worth the hassle

April 14, 2014 by

[Note: This article was written by Michelle Shoultz, president of Florida-based Frazier Engineering.]

For more than 20 years, Frazier Engineering had a strong commercial and municipal/county government customer base that comfortably sustained our small business.

But as the economy changed, we knew we had to change.

We decided to pursue unique certifications that would enable us to compete for federal work in a smaller competitive pool certifications such as 8(a), Disadvantaged Business Enterprise/DBE and Minority Business Enterprise/MBE).

Through the Small Business Administration 8(a) program, we were given opportunities that we would not have had before. However, if we did not already have the knowledge and manpower to support the requirements of those opportunities, our certification would only have been as good as the paper it was printed on. Our success to date has been the result of a solid team, being financially and technically sound, having a strong work history, and being actively responsive.

I’d like to share some lessons we’ve learned over time.

As a small-to-midsize, growing business leader, I would definitely recommend the time and effort involved in pursuing government contracts.

Keep reading this article at: http://www.floridatoday.com/story/money/business/2014/04/01/business-money-edge-chamber/7146529/ 

 

Controversial IT contractor charged with murder

April 8, 2014 by

Braulio Castillo, the president of IT contractor Strong Castle, was arrested April 1 by Loudon County, Va., authorities and charged with first degree murder in the death of his estranged wife, Michelle.

Castillo gained notoriety as a result of a June 2013 hearing of the House Oversight and Government Reform Committee that examined the validity of the service-disabled veteran-owned small business (SDVOSB) status enjoyed by the firm he co-owned with his wife.

Castillo’s disability arose from a sports injury incurred at the U.S. Military Academy Preparatory School. Additionally, Castillo’s firm enjoyed a special status as a HUBZone company under a Small Business Administration program that gives preference to firms located in designated neighborhoods. SBA decertified Strong Castle’s HUBZone status in May 2013, while the Department of Veterans Affairs affirmed Strong Castles SDVOSB status last September.

keep reading this article at: http://fcw.com/articles/2014/04/02/castillo-murder-charges.aspx 

Maryland man pleads guilty to defrauding SBA and IRS over $52 million in government contracts

April 2, 2014 by

Vernon J. Smith III, age 61, of Edgewater, Maryland, pleaded guilty on Mar. 28, 2014 to conspiring to defraud the U.S. government in connection with schemes to fraudulently seek federal contracts under a Small Business Administration (SBA) program to assist socially and economically disadvantaged small businesses.  Smith also pleaded guilty to conspiring to defraud the Internal Revenue Service  (IRS).

“Today’s guilty plea sends a strong message to those who lie to obtain preferences for federal contract awards,” said Inspector General Peggy E. Gustafson of the Small Business Administration. “With our interagency partners, SBA OIG will continue to pursue those who defraud the government by lying to gain access to federal set-aside contracts. We would like to thank the U.S. Attorney’s Office for its leadership and professionalism throughout this investigation.”

“Corruption of the nature uncovered throughout the course of this investigation destroys confidence in the Government’s ability to act as a fair and effective steward of taxpayer dollars. This plea today, demonstrates the commitment of the Defense Criminal Investigative Service and its law enforcement partners to prosecute fraud to the fullest extent of the law,” said Robert E. Craig, Special Agent in Charge, Mid Atlantic Field Office, Defense Criminal Investigative Service.

“Conspiring to defraud the government in a decade long scheme and filing false tax returns is unlawful,” said Thomas J. Kelly, Special Agent in Charge, IRS Criminal Investigation, Washington DC Field Office. “Bringing individuals to justice, such as Vernon Smith, who intentionally engage in this type of activity in order to defraud the IRS, ranks high on the list of IRS- CI’s enforcement priorities.”

“This complicated scheme boils down to lying and cheating to obtain government contracts,” said GSA Inspector General Brian D. Miller. “I appreciate the hard work of our special agents, law enforcement partners, and U.S. Attorney’s Office.”

According to his plea agreement, Vernon Smith was an owner and officer of Capitol Contractors, which provided roofing and construction services, primarily to U.S. government agencies. On March 3, 1993, Capitol Contractors was certified to participate in the SBA’s Section 8(a) program, which provides assistance to socially and economically disadvantaged small businesses. The majority owner of Capitol Contractors was a Native American. A small business can only participate in the Section 8(a) program for nine years before it “graduates” from the program and is no longer eligible to obtain government contracts reserved for Section 8(a) program participants. Shortly before Capitol Contractors graduated from the program in March 2002, the majority owner sold his interest in the company to Vernon Smith, who became the company’s sole owner and managed the day-to-day operations of the company. Vernon Smith did not qualify as a socially and economically disadvantaged individual under the Section 8(a) Program.

In August 1999, Vernon Smith arranged for Anthony Wright, an African-American who was a former roofer and project manager at Capitol Contractors, to form a new company to participate in the Section 8(a) program upon Capitol Contractors’ graduation from the program. On August 11, 1999, Wright incorporated Platinum One Contracting in Maryland. Wright was the president and 60% owner, and Smith’s son was vice president and owned the remaining 40% of the corporation. In reality, Vernon Smith exercised complete and undisclosed control over Platinum’s operations, including the day-to-day management and long term decision making for the company.

Vernon Smith admits that from August 1999 to June 2013, he conspired to defraud the SBA in several ways. For example, Smith directed Wright to submit an application to the SBA for certification in the Section 8(a) program which did not reveal that Vernon Smith:

  • exercised control over the company,
  • had previously supervised Wright,
  • owned more than 10% of Capitol Contractors, and
  • was related to an owner of Platinum.

From May 2004 through April 2010, Vernon Smith also caused Platinum to submit annual updates to the SBA 8(a) program that contained false information, including that the company was controlled by a socially and economically disadvantaged individual, and that no non-disadvantaged member of Platinum’s management received compensation that exceeded that received by Wright. In fact, Vernon Smith controlled the company and Platinum’s payments to Vernon Smith and other corporate officers far exceeded payments received by Wright for 2004 through 2009.  Based on the fraudulent application and annual updates, Platinum One received more than $52 million in contracts from the federal government under the 8(a) program, to which it was not entitled. The total loss to the government resulting from Vernon Smith’s illegal conduct, regarding the illicit profit he received by defrauding the SBA, and depriving a legitimate 8(a) contractor of such profit, is $6,194,828.
In addition, Vernon Smith and a co-conspirator transferred millions of dollars from Platinum to bank accounts in their own names, to Capitol Contractors, to casinos on their own behalf; and to pay for personal expenses charged to Platinum One’s credit cards. These expenses included: extensive dental work, veterinary visits for pets, lavish vacations, and limousine transportation to casinos in Atlantic City, New Jersey, among others.

Vernon Smith admits that he signed false corporate and personal tax returns for 2005 and 2006. Smith knew that the cost of goods sold and payments to contractors reported on the corporate returns were false because almost all of that money was paid to, and for the benefit of, Smith at casinos. He also knew that the income reported on his personal income taxes omitted hundreds of thousands of dollars that Capitol Contractors had paid to, and for his benefit. As a result, Smith owed additional personal income tax to the IRS totaling $264,105, and Capitol Contractors owed an additional $574,911 to the IRS for tax years 2005 and 2006. The total tax loss resulting from the conspiracy to defraud the IRS is $839,016.

Vernon Smith faces a maximum sentence of five years in prison for the conspiracy. U.S. District Judge Paul W. Grimm has scheduled his sentencing for July 2, 2014, at 9:30 a.m.

Anthony Wright, age 42, of Bowie, Maryland, pleaded guilty on June 18, 2013, to his role in the scheme and is scheduled to be sentenced on June 23, 2014.

Source: http://www.justice.gov/usao/md/news/2014/EdgewaterMarylandManPleadsGuiltyToDefraudingSBADisadvantagedSmallBusinessProgramAndIRS.html 

House committee rips SBA for unauthorized pilot programs, contracting woes

April 1, 2014 by

Members of the House Small Business Committee on Tuesday voted unanimously in favor of several revisions to the Small Business Administration’s new budget proposal, with several lawmakers criticizing the agency for committing too much money to new, unproven programs and too little to fulfilling its underlying responsibilities to small employers.

“By necessity, budgets require hard choices,” Committee Chairman Sam Graves (R-Mo.) said during a brief markup of the budget on Tuesday. “To the extent that the SBA… budget request makes hard choices, they ultimately make them in the wrong place.”

Democrats and Republicans on the panel agreed on revisions that would trim $50 million from the agency’s $710 million budget proposal that was published earlier this month as part of the president’s broader spending blueprint. The committee’s recommendations now move to the House Budget Committee for review.

SBA officials maintain that the proposal would ensure that employers have the resources they need to start and grow their businesses, and it would give the department the resources it needs to expand important exporting, capital access and other educational programs. On the agency’s blog earlier this month, Marianne Markowitz, the agency’s acting administrator, said the plan “builds on SBA’s proven track record of assisting America’s small businesses.”

Keep reading this article at: http://www.washingtonpost.com/business/on-small-business/house-committee-rips-sba-for-unauthorized-pilot-programs-contracting-woes/2014/03/26/15f84f80-b433-11e3-b899-20667de76985_story.html 

House Small Business Committee calls for $50M cut to SBA budget request

March 28, 2014 by

The House Small Business Committee recommends cutting almost $50 million from President Obama’s fiscal 2015 budget request of $864.64 million for the Small Business Administration.

Committee Democrats will present their own views on the White House request at a later date, said Ranking Member Nydia Velázquez (D-N.Y.) at a March 25 committee markup.

Although the budget request is for $64 million less than the agency’s current year spending, the March 25 majority committee report  says there’s room for more cuts.

Keep reading this article at: http://www.fiercegovernment.com/story/house-small-business-calls-50-mil-cut-obamas-sba-budget-request/2014-03-26

 

8(a) Task Orders: No Automatic Size Recertifications

March 20, 2014 by

Submitting a proposal for a task order under an 8(a) Government Wide Acquisition Contract does not result in automatic recertification of the offeror’s small business size status.

In a recent decision, the SBA Office of Hearings and Appeals held that unless the Contracting Officer expressly requires recertification, an offeror’s size for an 8(a) set-aside task order is governed by that offeror’s size status for the underlying GWAC.

SBA OHA’s decision in Size Appeal of Reliasource, SBA No. SIZ-5536 (2014involved a Homeland Security RFQ for IT support services.  The RFQ stated that DHS intended to award the contract as a task order under the 8(a) STARS II GWAC.  The RFQ was set aside for 8(a) participants under NAICS code 541513.

After evaluating quotations, the Contracting Officer announced that KNEWEBS, Inc., d/b/a Consulting Services Inc. was the apparent awardee.  An unsuccessful offeror, Reliasource, filed a SBA size protest.

Keep reading this article at: http://smallgovcon.com/sbaohadecisions/8a-task-orders-no-automatic-size-recertifications 

Webinar on surety bonds to be presented April 17th

March 18, 2014 by

The U.S. Small Business Administration’s Surety Bond Guarantee Program helps small business get bonded.  If you wish to learn about this program, you are invited to participate in a free, live webinar on Thursday, April 17, 2014 from 10:00 to 11:00 am EDT.

This webinar is ideal for  small businesses with:

  • Limited financial resources
  • No prior bonded work experience
  • Been in business less than three years
  • Desire to increase your current bonding capacity

The webinar will cover Contract Bonds, including:

  • What they are and why they are required
  • How to get pre-qualified
  • Working capital and bank support

The webinar also will provide complete information about SBA’s Surety Bond Guarantee Program, including:

  • Program eligibility
  • Required information
  • Application process and fees

Advance registration is required.  Please register online at http://events.sba.gov/eventmanagement/EventRegistration.aspx?id=9a6d088f-24b1-e311-abc5-02bfa56e2a24 

Date:                    Thursday, April 17, 2014

Time:                    10:00 am – 11 am

Internet:        https://connect16.uc.att.com/sba/meet/?ExEventID=87462470 (copy the link into your browser to attend).

Phone:            888-858-2144 and then enter meeting code 7462470# to connect by phone.

Prepare in advance for the conference at: https://connect16.uc.att.com/sba/Prepare

For more information please contact Ms. Melanie Bryant at 404-331-0100, ext. 603 or vog.absnull@tnayrb.einalem.

House committee approves bills to increase agencies’ small biz goals and more

March 10, 2014 by

The House Small Business Committee has marked up and approved a six-pack of contracting reform bills, including legislation that would raise the current agency goals for steering work to small businesses.

The package approved Wednesday would particularly affect the construction industry, women, and disabled veterans. It includes a plan to raise agencies’ small-business prime contracting goal from 23 percent to 25 percent and establish a 40 percent goal for small-business subcontractors.

“Greater small business involvement in federal contracting benefits companies and taxpayers alike,” said panel Chairman Sam Graves, R-Mo., who sponsored the bill outlining the new contracting goals. “Small firms are innovative, and increased competition often leads to savings for the taxpayers.”

A second Grave bill would “improve transparency and accountability” by discouraging bundling of contracts to give an advantage to large companies over small businesses. Bills sponsored by Rep. Richard Hanna, R-N.Y., would restrict the government’s use of reverse auctions in awarding construction contracts and increase construction companies’ access to surety bonds for use in federal procurement work.

Keep reading this article at: http://www.govexec.com/contracting/2014/03/committee-approves-bill-increase-agencies-small-biz-contracting-goals/80023 

8(a) program mentor to pay $928,000 False Claims Act settlement

March 2, 2014 by

An 8(a) Program mentor has agreed to pay a False Claims Act settlement of $928,000.  The settlement stems from the government’s claims that the mentor abused the 8(a) mentor-protege program.

According to a Department of Justice (DOJ) press release, the mentor firm performed eight 8(a) prime contracts on behalf of its protege–without an SBA-approved joint venture.  The government also contended that the mentor’s extensive role resulted in the protege firm failing to meet the applicable limitation on subcontracting.

According to the DOJ, Okland Construction Co. Inc., a large business, entered into an 8(a) mentor-protege agreement with Saiz Construction Co., an 8(a) participant.  Although the SBA did not approve joint ventures between the companies, Okland allegedly prepared the bids for the 8(a) contracts and Okland’s employees served as project managers, submitted invoices, and performed payroll and other accounting functions.

The government also alleged that Okland’s extensive involvement resulted in Saiz’s inability to meet the 15% limitation on subcontracting applicable to general construction contracts.  Okland allegedly concealed its extensive involvement in the 8(a) contracts by misrepresenting to the government that its employees were employees of Saiz.

Keewp reading this article at: http://smallgovcon.com/8a-program/8a-program-mentor-to-pay-928000-false-claims-act-settlement/