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Subcontractor who failed to follow the FAR finds that ‘fair’ and ‘just’ are not synonymous

April 12, 2019 By Nancy Cleveland

Inscribed over the doors of the U.S. Supreme Court are the words “Equal Justice Under Law.” It’s a reminder that judicial decisions should be just. That doesn’t necessarily mean fair.

In Aspic Engineering and Construction Company v. ECC Centcom Constructors, LLC, U.S. Court of Appeals for the 9th Circuit, Case No. 17-16510 (January 28, 2019), the 9th Circuit overturned an arbitration decision in favor of a local Afghani subcontractor seeking termination costs after it was terminated for convenience by a U.S.-based general contractor.  This, despite the arbitrator’s finding that the subcontract was “clearly drafted to give every advantage to” the general contractor, that the local Afghani subcontractor’s “experience with government contracting [was] not nearly as extensive as that of” the general contractor, and “that the normal business practices and customs of subcontractors in Afghanistan were more ‘primitive’ than those of U.S. subcontractors experienced with U.S. Government work.”

Background

Local Afghani subcontractor Aspic Engineering and Construction Company was awarded two subcontracts by ECC Centcom Constructors, the general contractor, on two projects in Afghanistan overseen by the United States Army Corps of Engineers. The first subcontract involved construction of various buildings in the Badghis province of Afghanistan.  The second subcontract involved the construction various buildings Sheberghan province of Afghanistan.  Both subcontracts included clauses from the Federal Acquisition Regulation (FAR), which were incorporated by reference, and included flow-down provisions obligating Aspic to ECC in the same manner that ECC was obligated to the U.S. government.

Keep reading this article at: https://www.jdsupra.com/legalnews/federal-subcontractor-who-failed-to-43185/

Filed Under: Contracting Tips Tagged With: ACE, actual cost, Afghanistan, Army Corps of Engineers, Court of Appeals, FAR, flow down clause, subcontracting, Supreme Court, termination for convenience, U.S. Court of Appeals

Government contractors found guilty in $11 million veteran set-aside fraud scheme

November 26, 2018 By Nancy Cleveland

A federal jury has convicted Andrew Otero and his company, A&D General Contracting, Inc. (A&D), on charges that they fraudulently obtained $11 million in federal contracts specifically set aside for service-disabled veteran-owned businesses.  The jury’s decision was rendered on Nov. 21, 2018.

The evidence demonstrated that Otero had no military experience.  Yet Otero and veteran Roger Ramsey participated in a conspiracy to defraud the government by forming a joint venture (JV) – and falsely representing that Ramsey’s firm and the JV qualified as service-disabled veteran-owned small businesses (SDVOSB).  Based on the false claim to SDVOSB eligibility, the conspirators fraudulently obtained approximately $11 million in federal government construction contracts or task orders with the Department of Veterans Affairs (VA) and the Army Corps of Engineers (ACE).

As proven at trial, the fraudulent conspiracy involved set-aside contracts that could only be bid upon by legitimate service-disabled veteran-owned small businesses – a designation that did not apply to Otero or A&D.  To appear qualified, Otero and Ramsey initially executed an agreement to create the JV, which stated that Ramsey’s company would be the managing venturer, employ a project manager for each of the set-aside contracts, and receive the majority of the JV’s profits.

However, as proved at trial, six months later, Otero and Ramsey signed a secret side agreement that made clear the JV was ineligible under the SDVOSB program. For example, the side agreement said the parties created the JV so that A&D could simply use the disabled veteran status of Ramsey’s firm to bid on contracts.  The side agreement also stated that A&D – not Ramsey – would run the construction jobs.  They also agreed that A&D would keep 98 percent of every payment.

In addition to the secret side agreement, the evidence demonstrated several ways in which the JV did not operate as a legitimate SDVOSB, but was essentially controlled by Otero and A&D.  For example, although Ramsey (a service-disabled veteran) nominally served as president of his firm and the JV, he actually worked full-time for a telecommunications company.  Otero and A&D, not Ramsey, controlled the day-to-day management, daily operation and long-term decision making of the JV. Among other things, Otero and A&D appointed an A&D employee as the project manager for every contract and task order.

“Our nation strives to repay the debt of gratitude we owe to our veterans by setting aside some government contracts for veterans with service-related disabilities,” said United States Attorney Adam Braverman.  “These unscrupulous contractors abused this program through a cynical and illegal ‘rent-a-vet’ scheme.  They are now being held fully accountable for robbing truly deserving vets of important economic opportunities.”

The defendants are also facing civil charges consisting of alleged violations of the false claims act based on the similar misconduct.  The defendants have been ordered to appear in U.S. District Court for sentencing on February 19, 2019.

Source: https://www.justice.gov/usao-sdca/pr/government-contractors-found-guilty-11-million-veteran-set-aside-fraud-scheme

Filed Under: Contracting News Tagged With: abuse, ACE, Army Corps of Engineers, DOJ, false claim, false representation, fraud, joint venture, Justice Dept., rent-a-vet, SDVOSB, set-aside, VA, veteran owned business, Veterans First

Indictment in $40 million alleged fraud case signals increased scrutiny of SDVOSB contractors

January 3, 2018 By Nancy Cleveland

On December 1, 2017, the U.S. Department of Justice (DOJ) announced the federal grand indictment of an army veteran for allegedly engaging in major government program fraud by using his status as a service-disabled veteran to obtain contracts set-aside for service-disabled veteran-owned small businesses (SDVOSBs), despite the fact that he did not control the management and daily operations of the company to which the contracts were awarded.

In the case, U.S. v. Dial Jr., the veteran has been charged with four counts of major program fraud as well as wire fraud in connection with his company United Medical Design Builders, LLC (“UMDB”) receiving over $40 million in government contract funds from the U.S. Army Corps of Engineers between 2008 and 2015.

Specifically, the Government alleged that Dial, who is a disabled Army veteran, acted only as a “figurehead” of UMDB in order for UMDB to obtain a SDVOSB set-aside contract to build health care facilities.

Keep reading this article at: https://www.lexology.com/library/detail.aspx?g=9b298da1-560e-43ad-86b2-2768bc5ba765

Filed Under: Contracting News Tagged With: abuse, ACE, Army Corps of Engineers, DOJ, fraud, front, Justice Dept., Kingdomware, rule of two, SBA, SDVOSB, service disabled, sham, VA, veteran owned business, VOSB, wire fraud

The lineman got $63 an hour — the utility was billed $319 an hour

November 16, 2017 By Nancy Cleveland

The small energy outfit from Montana that won a $300 million contract to help rebuild Puerto Rico’s tattered power grid had few employees of its own, so it did what the Puerto Rican authorities could have done: It turned to Florida for workers.

For their trouble, the six electrical workers from Kissimmee are earning $42 an hour, plus overtime. The senior power linemen from Lakeland are earning $63 an hour working in Puerto Rico, the Florida utility said. Their 40 co-workers from Jacksonville, also linemen, are making up to $100 earning double time, public records show.

But the Montana company that hired the workers, Whitefish Energy Holdings, had a contract that allowed it to bill the Puerto Rican public power company, known as Prepa, $319 an hour for linemen, a rate that industry experts said was far above the norm even for emergency work — and almost 17 times the average salary of their counterparts in Puerto Rico.

A spokesman for Whitefish, Chris Chiames, defended the costs, saying that “simply looking at the rate differential does not take into account Whitefish’s overhead costs,” which were built into the rate.

“We have to pay a premium to entice the labor to come to Puerto Rico to work,” Mr. Chiames said. Many workers are paid overtime for all the time they work. Overtime pay varies by type of worker, union membership, mainland utility company and many other factors.

Keep reading this article at: https://www.nytimes.com/2017/11/12/us/whitefish-energy-holdings-prepa-hurricane-recovery-corruption-hurricane-recovery-in-puerto-rico.html

Filed Under: Contracting News Tagged With: ACE, Army Corps of Engineers, DHS, FEMA, PREPA, wage rates

Tips for disaster recovery contracting

September 9, 2017 By Nancy Cleveland

If you are seeking to do business with the Federal Emergency Management Agency (FEMA) in support of a disaster recovery effort, please be aware that in accordance with the Robert T. Stafford Act, FEMA seeks out local companies to perform contract work within the disaster area for goods and services related to a specific disaster.

The Army Corps of Engineers, and its contractors, actually do a lot of disaster response and recovery work such as debris removal. Use this link to access more information on contracting with the Corps in emergency situations: http://www.usace.army.mil/Missions/Emergency-Operations/Contracting-in-Disasters.

You can use this link — www.moveit.gsa.gov — for access to the General Services Administration (GSA) Transportation Management Services Solution (TMSS).   FEMA procures many of its transportation needs through GSA including: truckload services, air charter, barges, air freight, air ambulance, heavy hauler, rail, vehicle rental, truck rental, travel trailers, and mobile homes.

Please Note: There are companies that mimic services of Federal agencies, and these companies typically charge fees for services that your business can typically accomplish yourself.  Be aware that most, if not all, Federal Government services are free of charge.  If you are approached by letter, email or phone to buy access to federal contracting opportunities, always make it a practice to reach out to the appropriate Federal agency first to inquire about the validity of the service, specifically if a fee is associated with it.  An excellent source of no-cost assistance associated with navigating the government contracting process is the Georgia Tech Procurement Assistance Center (GTPAC).  You may contact GTPAC via email at: gtpacatl@innovate.gatech.edu.  If your business is located outside the state of Georgia, you can find similar no- or low-cost help at: http://www.aptac-us.org/find-a-ptac.

Helpful Tips For Contractors:
  • Get to know the Federal Business Opportunities website www.fbo.gov (known as FedBizOpps or FBO). FedBizOpps is the single point-of-entry to search, monitor, and retrieve Federal procurement opportunities. You will also find subcontractor, supplier and teaming opportunities here.
  • Monitor the Department of Homeland Security’s planned contract opportunities on the DHS Acquisition Planning Forecast System (APFS) located at: http://apfs.dhs.gov/.
  • Accept the government purchase card or credit card. The government buys more than $5 billion in goods and services annually using purchase cards.  In emergency contracting situations, a great many government purchases are micro-purchases less than $3,500.  (Note: Effective Aug. 29, 2017, the micro-purchase threshold for disaster recovery contracting was raised to $20,000.  See details at: http://contractingacademy.gatech.edu/2017/09/05/micro-purchase-and-simplified-acquisition-thresholds-raised-for-hurricane-harvey-response.)
  • Promote your business in electronic catalogs. If you are a GSA Schedule contractor, GSA Advantage and other electronic commerce initiatives will allow you to list your products or services for government browsing.
  • Publish your catalog listings on your company website. Having a website allows interested buyers to access additional information regarding your company (experience, past performance record, financial stability) after reviewing product descriptions.
  • See other helpful information at: http://gtpac.org/2017/08/31/register-free-if-you-want-to-provide-debris-removal-supplies-reconstruction-and-other-disaster-or-emergency-relief.

Filed Under: Contracting Tips Tagged With: ACE, APTAC, Army Corps of Engineers, DHS, disaster response, emergency contracting, emergency response, federal contracting, FEMA, FEMA registration, fraud, free SAM assistance, free SAM help, free SAM registration, Georgia Tech, GSA, GTPAC, PTAC, recovery, SAM, SAM assistance, SAM registration, scam, vendor database, vendor registration

Contractor’s lackadaisical proposal preparation sinks its claim for costs

July 24, 2017 By Nancy Cleveland

To federal construction contractors, the true legwork may seem to begin only after the government has accepted a proposal and performance has begun. However, a recent Armed Services Board of Contract Appeals (ASBCA) decision reinforces that federal construction contractors’ work often should begin long before contract award.

In Zafer Construction Company, ASBCA No. 56769 (2017), the ASBCA rejected a construction contractor’s allegations of unilateral mistake, unconscionability, and differing site conditions (among other claims for additional costs). The problem? The contractor did not attend a government scheduled site visit, conduct an independent site visit, review technical drawings, submit any inquiries during the proposal stage, or otherwise take reasonable steps necessary to better ascertain the nature of the work prior to submitting a multimillion dollar proposal on a complex project.

By way of background, the contract in Zafer involved the U.S. Army Corps of Engineers’ procurement of renovation work at the Afghanistan National Military Hospital in Kabul, Afghanistan. In 2004, the buildings at this site had fallen into varying states of disrepair. In preparation for issuing the solicitation, the government employed an assessment team (called the Baker team) to survey the site, assess the condition of the buildings and infrastructure, and prepare a report for the government’s use in budgeting and defining the scope of work.

Keep reading this article at: http://smallgovcon.com/claims-and-appeals/contractors-lackadaisical-proposal-preparation-sinks-its-claim-for-costs/

Filed Under: Contracting Tips Tagged With: ACE, allowable costs, Armed Services Board of Contract Appeals, Army Corps of Engineers, ASBCA, claim, GAO, mistake, site conditions

VA aims to unsnarl $1.4 billion in delayed projects

June 13, 2017 By Nancy Cleveland

The Dept. of Veterans Affairs is seeking congressional approval for a plan to get moving on $1.4 billion in major construction projects that have been stalled because of differences in funding projects at VA and at the Army Corps of Engineers — which is handling design and construction for VA at those delayed projects.

More broadly, VA also is studying what to do about its hundreds of vacant or underused facilities.

Dr. David Shulkin, confirmed in February as the VA’s new secretary, told reporters in a May 31 White House briefing that 11 VA projects have been held up because the VA and the Corps “still are trying to work through very difficult processes and interpretation of appropriation rules.”

Shulkin, a physician by training, added, “We’re waiting for congressional approval on a joint proposal to move forward, which would allow these projects to move ahead.”

Keep reading this article at: http://www.enr.com/articles/42108-va-aims-to-unsnarl-14b-in-delayed-projects

Filed Under: Contracting News Tagged With: A-E, ACE, appropriations, Army Corps of Engineers, construction, VA

GTPAC-hosted Jan. 22 event to aid Georgia small businesses

January 13, 2015 By ei2admin

On Thursday, Jan. 22, 2015, the Georgia Tech Procurement Assistance Center (GTPAC) will play host to six federal agencies holding an industry day forum directed at small businesses in Georgia.  NOTE: As of Jan. 16, 2015, this event is booked to capacity, and no further registrations are being accepted.

NCMA logoThe event is being sponsored by the Atlanta chapter of the National Contract Management Association (NCMA) and the regional office of the U.S. Small Business Administration (SBA).

The event, billed as “Building Partnerships and Collaborating for Success, a Small Business Industry Day and Matchmaking Event,” is open to all businesses in the region who wish to learn more about doing business with  the Centers for Disease Control and Prevention (CDC), the Environmental Protection Agency (EPA), the General Services Administration (GSA), the U.S. Army Corps of Engineers, and the Department of Veterans Affairs (VA).

In addition to federal agencies, representatives of major prime contractors also are expected to be present, including Northrop Grumman, Lockheed Martin, ICF International, RTI International, WYLE, Westat, Deloitte, and DB Consulting Group, Inc.

Businesses interested in participating in this event must preregister at: http://gtpac.ecenterdirect.com/ConferenceDetail.action?ID=7954.

More than 200 vendors are expected to attend.  Matchmaking events will be scheduled by vendors based on NAICS code requirements of government agencies and prime contractors. Details for the matchmaking aspect of the event will be promulgated separately to confirmed registrants.

All vendors participating in this event are expected to have the following completed prior to attending:  SAM and DSBS registration, business cards, an elevator speech, and a capability statement. See web link above for more information.

Filed Under: GTPAC News Tagged With: ACE, Army Corps of Engineers, CDC, EPA, government contract training, GSA, matchmaking, NCMA, outreach, SBA, small business, small business goals, subcontracting goals, VA

Family relationship, revenues and subcontracts caused affiliation, says SBA

September 5, 2014 By ei2admin

A small business was affiliated with companies owned by the business owner’s father and siblings, based on the family relationship and the companies’ ongoing history of doing business together.

In a recent size appeal decision, the SBA Office of Hearings and Appeals held that the small business had not successfully rebutted the regulatory presumption that companies owned by close family members are affiliated, because the small business had earned substantial revenues from the alleged affiliates, and intended to issue a subcontract to both affiliates with respect to the procurement at issue.

SBA OHA’s decision in Size Appeal of Industrial Support Service, LLC, SBA No. SIZ-5576 (2014) involved an Army Corps of Engineers solicitation seeking a contractor to provide certain repair work.  The solicitation was issued as a small business set-aside under NAICS code 238290 (Other Building Equipment Contractors).

Keep reading this article at: http://smallgovcon.com/sbaohadecisions/family-relationship-plus-revenues-subcontracts-caused-affiliation-says-sba-oha/

Filed Under: Contracting News Tagged With: ACE, affiliation, appeal, NAICS codes, OHA, revenue, SBA, size standards, small business

A faster way for contractors to recover on claims

September 4, 2014 By ei2admin

Filing claims against the government is not contractors’ preferred method of resolving problems on a federal project, but often contractors are left with little choice with federal procurement officials spread thin. For example, the U.S. Army Corps of Engineers has not moved on a significant number of pending changes and refused to pay the contract balance because the Corps has assessed an equal amount in liquidated damages for delay. The delay was caused by a differing site condition, for which the contractor submitted a claim for time and money. After waiting 60 days, the Corps responded by stating that it will issue the contracting officer’s final decision in seven months. Meanwhile, the contractor continues to spend money trying to close out the project. 

How can contractors speed up the claims process, recover on favorable terms, and avoid throwing good money after bad on a multiyear dispute resolution process?   The answer: Unbundle your claims and file as many under $50,000 or $100,000 as possible to take advantage of the various board of contract appeals’ expedited or accelerated procedures. Then consolidate all expedited appeals and push aggressively toward a fast and cost-effective global resolution.

Keep reading this article at: http://www.foxrothschild.com/newspubs/newspubsArticle.aspx?id=15032395091

Filed Under: Contracting Tips Tagged With: ACE, appeal, Board of Contract Appeals, claim, contract dispute, Contracting Officer's Decision, disputes, FAR, recovery

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