Georgia Tech Procurement Assistance Center

Former company president settles False Claims Act case related to defective bullet proof vests

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Richard C. Davis, the founder and former president and CEO of Michigan-based Second Chance Body Armor, Inc., recently agreed to resolve claims under the False Claims Act in connection with his role in the sale of defective Zylon bullet-proof vests purchased by the United States for federal, state, local and tribal law enforcement agencies, the Justice Department has announced.

Mr. Davis will relinquish his interest in $1.2 million in assets previously frozen by the United States and will pay an additional $125,000 to the United States.  This settlement is based on Mr. Davis’ ability to pay.

Background

Second Chance sold body armor to state, local and tribal law enforcement agencies reimbursed by the Department of Justice’s Bulletproof Vest Partnership (BVP) program and to federal agencies under contracts with the General Services Administration. The United States alleged that Second Chance’s vests were defective due to the loss of their ballistic capability when exposed to heat and humidity. The United States also alleged that by 2001, Davis was aware that Second Chance’s Zylon body armor was degrading at what he described as a “disappointing” rate.

The United States further alleged that, rather than using a $6 million payment from Toyobo Co. Ltd., the manufacturer of Zylon fiber, to fix the degradation problem, Second Chance pocketed the money and Davis and other Second Chance owners began meeting with various investment bankers in an effort to sell Second Chance. These efforts to sell the company allegedly stopped after a Forest Hills, Pennsylvania police officer was shot through his Second Chance Zylon vest in June 2003. Second Chance filed for bankruptcy in 2004 and was liquidated.

Subsequent tests by the National Institute of Justice (NIJ) of Zylon-containing vests found that more than 50 percent of used vests could not stop bullets that they had been certified to stop. The performance of Second Chance Zylon vests were reported to be among the worst.  The NIJ removed all Zylon-containing vests from its list of compliant products, and Zylon is no longer used in ballistic vests.

Settlement

“The Department of Justice will pursue those who attempt to fraudulently profit at the expense of the United States, particularly when the stakes are life or death,” said Acting Associate Attorney General Jesse Panuccio.  “Bullet proof vests protect the brave men and women of our nation’s law enforcement community, and those who manufacture and sell these products have a solemn duty to ensure their safety and efficacy.”

The settlement resolves, in part, allegations filed in a lawsuit by Aaron Westrick, Ph.D., a former employee of Second Chance, 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 as to the allegations against Davis. Dr. Westrick will receive $28,750 plus a share of whatever the government ultimately recovers from the previously frozen funds.

This settlement is part of a larger investigation of the body armor industry’s use of Zylon.  The United States has previously recovered over $132 million from 18 corporations and individuals who participated in the sale of Zylon body armor. The Civil Division has transferred over $22 million of these recovered funds to the BVP program to replace BVP funds which had been used to purchase Zylon vests. The funds transferred to the BVP program will be used to fund the purchase of additional ballistic-resistant vests for state, local and tribal law enforcement officers. The United States is continuing to pursue claims against Honeywell International Inc., which allegedly sold a laminated version of Zylon for use in police armor.

The investigation and litigation of this matter were handled by the Civil Division’s Commercial Litigation Branch; the General Services Administration, Office of the Inspector General; the Department of Commerce, Office of Inspector General; the Defense Criminal Investigative Service; the U.S. Army Criminal Investigative Command; the Department of the Treasury, Office of Inspector General for Tax Administration; the Air Force Office of Special Investigations; the Department of Energy, Office of the Inspector General; and the Defense Contracting Audit Agency.

The claims settled by this agreement are allegations only, and there has been no determination of liability.  The lawsuit partially resolved by the settlement is captioned United States ex rel. Westrick v. Second Chance Body Armor, et al., No. 04-0280 (PLF) (D.D.C.).

Source: https://www.justice.gov/opa/pr/former-second-chance-body-armor-president-settles-false-claims-act-case-related-defective

Senator calls on agencies to streamline programs for entrepreneurs

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One lawmaker wants agencies to reexamine their efforts to support entrepreneurs after a watchdog group determined more could be done to streamline many often inefficient and redundant programs to assist small businesses.

On Nov. 17th, Sen. Claire McCaskill, D-Mo., sent letters to Commerce Secretary Wilbur Ross and Small Business Administration leader Linda McMahon requesting analyses of their agency’s entrepreneur assistance initiatives and information on how they measure the effectiveness of the programs.

The Government Accountability Office reported in 2012 that each of the 52 entrepreneur support programs at Commerce, SBA and other agencies overlapped with at least one other program in the type of assistance they offer or the type of entrepreneur they serve. The fragmented system was often difficult for business owners to navigate, and GAO advised agencies to collaborate to streamline the process and also create a system to monitor the performance of individual programs.

Keep reading this article at: http://www.govexec.com/management/2017/11/senator-calls-agencies-streamline-programs-entrepreneurs/142682

Business owner sentenced to 20 months in prison for fraudulent billing scheme against federal government

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Nikita Davis, 48, a business owner with a firm in Washington, D.C., has been sentenced to 20 months in prison for a scheme in which she improperly qualified for government contracts and then fraudulently billed the United States more than $1.1 million.

Davis pled guilty in June 2017, in the U.S. District Court for the District of Columbia, to major fraud against the United States.  She was sentenced on October 20, 2017.  The plea agreement calls for her to pay $1,189,697 in restitution to the United States. Upon completion of her prison term, Davis will be placed on three years of supervised release.

Davis was the president and chief executive officer of Federal Acquisition Consultants Inc. (FACI), a company based in Washington, D.C., that specialized in acquisition and program management support. The company was formed in 2007 as an economically disadvantaged, woman-owned, small business.

According to a statement of offense submitted at the plea hearing, Davis made fraudulent representations when she applied in March 2013 for a contract under a GSA program created to streamline the federal procurement process through pre-negotiated prices and terms. GSA provided centralized procurement for the federal government through this program, known as the GSA Multiple Awards Schedule Program (GSA MAS or simply “GSA Schedule”).

The GSA awarded Davis’s company a Schedule contract in May 2013.  Later in 2013, the Department of Commerce solicited requests for quotes from Schedule contractors for work related to the mission of the Afghanistan Investment and Reconstruction Task Force.  The Task Force, part of the Commerce Department, aimed to facilitate and coordinate activities designed to help Afghanistan develop a sustainable economy, stabilize the market, and create strong Afghan-American partnerships.

Davis’s company submitted quotes and in September of 2013 was awarded seven contracts, worth a total of more than $3.1 million.  In April 2014, the Commerce Department’s Office of Inspector General initiated an investigation into Davis and the company, based on an allegation that she submitted false invoices and made false statements to government agencies.  The investigation revealed that, in obtaining the GSA Schedule contract designation, Davis made false representations about her company’s past work experience.  It also determined that Davis’s company improperly billed and collected from the government a total of $1,189,697 under the contracts by billing improperly for travel, danger pay, insurance, security and labor.

Those investigating this case included representatives of the Offices of the Inspector General for the General Services Administration and Department of Commerce.

Source: https://www.justice.gov/usao-dc/pr/business-owner-sentenced-20-months-prison-fraudulent-billing-scheme-against-federal

‘Buy American’ order draws mixed reviews from contractors

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Last Tuesday (Apr. 18, 2017) President Trump traveled to the Snap-On Tool manufacturing plant in Kenosha, Wis., to sign a previously announced executive order that tasks agencies and contractors with ramping up efforts to “Buy American” and “Hire American.”

Combined with a crackdown on unmerited high-level work visas and unfair trade practices, the order taps procurement specialists to propose contracting reforms to be assembled over 220 days by Commerce Secretary Wilbur Ross to create a “more muscular” Buy American policy, as a senior administration official told reporters Monday.

“It’s time,” Trump told the crowd on Tuesday, for the government to “aggressively promote and use American-made goods and to ensure that American labor is hired to do the job.” The purpose of the order is to require “federal agencies to strictly uphold our Buy American laws and minimize waivers and maximize Made in America content in all federal projects,” he said. “We will fully monitor, uphold and enforce our Buy American laws, which we haven’t done.”

Keep reading this article at: http://www.govexec.com/contracting/2017/04/trumps-buy-american-order-draws-mixed-reviews-contractors/137129

For more on this topic, also see:

Counterintelligence chief: Contractors ‘kicking butt’ in combating insider threats

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Though some of the most damaging exposures of classified material have come from companies working for the federal government in recent years, the intelligence community’s 100,000 contractors overall “are kicking butt” in helping agencies head off insider threats, the nation’s top counterintelligence chief said on Monday.

Anticipating threats “is a team sport,” Bill Evanina, the government’s national counterintelligence executive, told a gathering of the Intelligence and National Security Alliance, a nonprofit group made up of contractors and former intelligence officials. “The only way to win is a partnership, a whole-of-government, whole-of-country approach” that includes contractors and the news media as well.

“We have to get back to patriotism,” he said.

Despite incidents involving National Security Agency contractors such as Edward Snowden and Howard Martin, “we need to eliminate with urgency the idea that most insider threats are contractors,” Evanina said. “There’s no evidence” either for that, he said, or for the common notion that “millennials want to be leakers.”

Keep reading this article at: http://www.govexec.com/defense/2017/04/counterterrorism-chief-contractors-kicking-butt-combating-insider-threats/136904

Georgia Tech to receive $13.5 million to continue support for Georgia manufacturers

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This map shows where the Georgia Manufacturing Extension Partnership (GaMEP) assisted Georgia manufacturing companies during 2015.
This map shows where the Georgia Manufacturing Extension Partnership (GaMEP) assisted Georgia manufacturing companies during 2015.

The Georgia Institute of Technology will receive $13.5 million in federal funding over the next five years to continue a program that has assisted small- and mid-sized manufacturing companies in Georgia for more than half a century. The funding will be used by the Georgia Manufacturing Extension Partnership (GaMEP), which serves manufacturers through a network of 10 regional offices and more than 30 extension personnel statewide.

In fiscal 2015, the GaMEP assisted nearly 2,000 Georgia manufacturers, helping them create or save 2,149 jobs, invest $106 million in facilities, reduce operating costs by $25 million and increase sales by more than $200 million. Established in 1960, the GaMEP is a program of the Enterprise Innovation Institute, Georgia Tech’s business assistance and economic development unit.

“Manufacturing is a key component of Georgia’s economy, and this funding will allow us to continue serving the companies that provide jobs, investment and new economic activity across our state,” said Karen Fite, director of the GaMEP program. “We are proud to be part of the national Manufacturing Extension Partnership helping companies expand their top-line growth and reduce bottom-line cost. The Georgia MEP helps our state’s manufacturers grow and remain competitive in world markets.”

GaMEP offers assistance in such areas as lean and process improvement, quality management, energy management, sustainability and business growth – which includes new customer development, new market expansion and new product development. GaMEP also connects companies to resources and expertise at Georgia Tech, which is ranked among the top U.S. public universities.

The funding, announced September 1, will take the form of a five-year cooperative agreement in which federal funds will be matched by state funds and contracts with manufacturers requesting assistance with a broad range of technical, managerial and marketing issues. The federal funding is provided by the U.S. Commerce Department’s National Institute of Standards and Technology (NIST), which awarded more than $180 million to organizations in 11 states and Puerto Rico, as part of its efforts to enhance the competitiveness of U.S. manufacturers.

“The MEP centers connect local manufacturers with the resources and services necessary to meet new market challenges,” said U.S. Secretary of Commerce Penny Pritzker. “The Department of Commerce supports these public-private partnerships that improve this sector’s global competitiveness, strengthen our economy and create jobs in communities across the nation.”

The awards will go to organizations in Alabama, Arkansas, California, Georgia, Louisiana, Missouri, Montana, Ohio, Pennsylvania, Puerto Rico, Utah and Vermont. Continued funding is subject to the availability of annual appropriations and successful annual reviews.

“Every day, the MEP system demonstrates the value of strong public-private partnership,” said Under Secretary of Commerce for Standards and Technology and NIST Director Willie E. May. “This funding will support the continuation and expansion of important efforts in outreach, education and collaboration that provide real benefit to thousands of manufacturers annually.”

Proposals were reviewed by government and independent experts and evaluated against a number of criteria, including demonstration of a thorough understanding of market needs and how proposed service offerings would meet those needs. The reviewers also looked at the proposed business models, performance measurements and metrics, partnership potential, staff qualifications and program management, as well as financial and nonfederal cost-share plans. The new agreement reduces the centers’ cost-share burden by reducing the amount of required matching funds from nonfederal sources.

For every dollar of federal investment, MEP clients generate nearly $17 in new sales, which translates into $2.3 billion in new sales annually. And for every $1,900 of federal investment, MEP creates or retains one U.S. manufacturing job. Since 1988, MEP has worked with more than 86,000 manufacturers, leading to $96.4 billion in sales and $15.7 billion in cost savings, and it has helped create nearly 800,000 jobs.

As a non-regulatory agency of the U.S. Department of Commerce, NIST promotes U.S. innovation and industrial competitiveness by advancing measurement science, standards and technology in ways that enhance economic security and improve our quality of life.

For more information on GaMEP, please visit gamep.org.

U.S. Commerce Department awards 5-year grant to MBDA Business Center-Atlanta

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MBDA Business CenterThe U.S. Department of Commerce Minority Business Development Agency (MBDA) named Georgia Tech Research Corp. as a grant recipient to continue to operate an MBDA Business Center in Atlanta.

The federal funding will be distributed during a five-year period that ends in 2021. The funding amount per year is $298,255 for a total of $1.49 million.

The grant program is designed to help minority-owned firms across the nation create jobs, develop their business, and compete in the global economy.

“We are extremely pleased and honored the U.S. Department of Commerce has renewed our funding for another five-year term,” said Donna Ennis, director of the MBDA Business Center-Atlanta. “Our team has been busy working with businesses across Georgia and the Southeast helping to build not only the strength of minority-owned businesses, but the state’s and region’s economy as a whole.”

A key component of MBDA’s Business Center Network is providing minority firms with access to technical expertise and resources to grow their businesses.

In the five-year period ending in 2015, MBDA Business Center-Atlanta helped 462 minority-owned businesses:

  • secure more than $577 million in contracts and procurement
  • access $177 million in capital
  • create or save 4,987 jobs

Ennis leads the MBDA Advanced Manufacturing Working Group, which is building a nationwide community of Minority Business Enterprise (MBE) manufacturers through its national network of 44 MBDA Business Centers. As part of that initiative, she launched the Connecting Advanced Manufacturing Program (CAMP) focused on providing contracting opportunities; assistance with launching new technologies, and building a nationwide ecosystem of MBE manufacturers. That led to the National MBE Manufacturers Summit 2016 at Georgia Tech this past March 24.

According to the U.S. Census Bureau’s 2012 Survey of Business Owners, minority-owned firms in the United States increased to 8 million in 2012 from 5.8 million in 2007. Those 8 million businesses employed 7.2 million Americans.

In Georgia, there are 371,588 minority-owned firms that contribute more than $38.4 billion annually in economic output. These firms employ more than 202,000 Georgians.

Since 2009, MBDA Business Centers have assisted minority firms with gaining access to more than $31 billion in capital and contracts, while creating and retaining nearly 142,000 jobs.

About the MBDA Business Center-Atlanta

Established in 2004 and part of the Georgia Institute of Technology, the MBDA Business Center-Atlanta is a member of the national network of the U.S. Department of Commerce Minority Business Development Agency. The MBDA Business Center-Atlanta provides business and technical assistance to help emerging and existing minority business enterprises achieve significant growth and sustainability and create long-term economic impact through increased jobs and revenue.

OPIC to hold small business outreach event May 3rd in Atlanta and June 16th in Houston

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OPICAs more U.S. small businesses participate in the global marketplace, they are facing new questions and challenges.  Lack of knowledge about government programs available to support overseas investment, limited access to private sector-capital to pursue opportunities abroad, or concern over political risks in emerging markets can prevent small business from expanding overseas.

The Expanding Horizons workshop is the premier outreach event conducted by the Overseas Private Investment Corporation (OPIC).  The event is coming to Atlanta on May 3, 2016 to be held at This event is at the Omni Atlanta Hotel at CNN Center.  OPIC is the U.S. government agency responsible for supporting private-sector investment in developing countries. This is a unique opportunity to learn about:

  • How expanding overseas can benefit your business at home.
  • U.S. government programs offering assistance to small and medium sized enterprises planning to go global.
  • Political risk insurance and how it can protect your business.
  • Accessing capital for your overseas project.
  • Current opportunities in the renewable energy and clean technology sector.
  • OPIC’s special finance products for small businesses.

Speakers include senior government officials from OPIC, as well as from the Small Business Administration, the Export-Import Bank of the U.S., the U.S. Trade and Development Agency, the U.S. Department of Commerce, including the U.S. Commercial Service and the Minority Business Development Agency; and other agencies and representatives from businesses investing overseas who will share their insights and experiences.

Additionally, excellent networking opportunities will be available and participants will have the opportunity to arrange one-on-one meetings with OPIC and other government officials.

To learn more and to register for the May 3 event go to: https://www.eventbrite.com/e/opic-workshops-for-small-businesses-entering-emerging-markets-registration-21090960631.  There is a $50 registration fee for this day-long event.

To receive e-mail updates about Expanding Horizons Workshops, you may sign-up through OPIC’s mailing list.

For questions or more information, please contact:

Dr. Lawrence Spinelli
Director of Outreach and Public Affairs
Office of External Affairs
Lawrence.Spinelli@opic.gov
(202) 336-8690

Ms. Alison Germak
Director of Corporate Development
Small & Medium Finance Enterprise
Alison.Germak@opic.gov
(202) 336-8651

Defense contractors to pay $8 million to settle False Claims Act allegations involving defective equipment sold to Army

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False Claims ActThe Department of Justice (DOJ) announced last week that Kilgore Flares Company and one of its subcontractors, ESM Group Inc., have agreed to pay a total of $8 million to resolve allegations that they violated the False Claims Act by selling or conspiring to sell defective infrared countermeasure flares to the U.S. Army and, in the case of ESM, knowingly evading customs duties owed to the United States.

  • Tennessee-based Kilgore Flares manufactures and sells electronics and energetic products, such as flares, to the U.S. military.
  • ESM Group, located in New York, manufactures magnesium powder supplied to the chemical, welding and pyrotechnics industries.  ESM imported magnesium powder used in the flares from the People’s Republic of China (PRC), which it sold to Kilgore Flares.

The U.S. military uses infrared countermeasure flares to divert enemy heat-seeking missiles away from U.S. military aircraft.  A primary component of these flares is ultrafine magnesium powder, which combined with other materials, provides ignition and enables the flares to burn at high temperatures and at rates that mimic an aircraft’s engine.  Kilgore’s contracts with the Army prohibited the use of magnesium powder from foreign countries (except Canada) in order to maintain domestic manufacturing capability in the interest of national defense.

Justice Dept. seal - CopyDOJ alleged that from July 2003 through May 2005, ESM knowingly misrepresented the content of ultrafine magnesium powder imported from the PRC in order to avoid paying antidumping duties owed to the United States.  Antidumping duties protect against foreign companies “dumping” products on the U.S. market at prices below cost.  The U.S. Department of Commerce assesses and U.S. Customs and Border Protection collects these duties to protect U.S. businesses and level the playing field for domestic products.  At the time of the imports alleged in this case, ultrafine magnesium powder from the PRC was subject to a 305 percent antidumping duty.

DOJ further alleged that from March 2005 through August 2006, Kilgore used the illegally imported Chinese magnesium powder purchased from ESM in the countermeasure flares it sold to the U.S. Army.  The Chinese magnesium powder allegedly violated both the requirement for domestically produced powder and engineering specifications required by the contracts.

Kilgore and ESM agreed to pay $6 million and $2 million, respectively, to resolve the government’s allegations.

Prior to the civil settlements with Kilgore and ESM, five former employees and agents of ESM pleaded guilty to criminal offenses related to the magnesium importation scheme, including ESM’s former president, Charles Wright.  The criminal defendants were ordered to pay more than $14 million in restitution.

DOJ’s settlement with ESM resolved a lawsuit filed under the whistleblower provisions of the False Claims Act.  The act permits private parties to sue on behalf of the United States those who falsely claim federal funds or, as in this case, those who avoid paying funds owed to the government.  The lawsuit was filed by Reade Manufacturing Company, a domestic manufacturer of magnesium powder.  The act also allows the whistleblower to receive a share of any funds recovered through the lawsuit.  Reade Manufacturing received $400,000 as part of the settlement with ESM.

The lawsuit against ESM is captioned United States ex rel. Reade Manufacturing Co. v. ESM Group, Inc., Civ. No. 10 – CV – 504-S (W.D.N.Y.).  The claims resolved by these settlements are allegations only; there has been no determination of liability except as admitted by the individual defendants in the criminal proceedings.

Source: https://www.justice.gov/opa/pr/tennessee-and-new-york-based-defense-contractors-agree-pay-8-million-settle-false-claims-act

Government meets goal set in 1994 for women’s business contracts

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After more than 20 years of effort, the federal government has, for the first time, met its goal of awarding 5 percent of the money it spent on contractors to businesses owned by women.

SBA logoSmall companies captured 25.8 percent of the government’s contracting dollars last year, representing $90.7 billion, the Small Business Administration announced last week.

About $17.8 billion of that total went to businesses owned by women during the fiscal year, which ended in September.

The news comes on the heels of a Commerce Department analysis showing that businesses owned by women are 21 percent less likely to win government contracts than otherwise similar companies. Companies owned by women tend to be younger and smaller than other businesses, but even accounting for those differences, the disparity remains, the agency found.

Commerce Dept.The government set its 5 percent target in 1994 for spending on women-owned businesses, which are defined as those that are at least 51 percent controlled by women. It repeatedly fell short.

Keep reading this article at: http://www.nytimes.com/2016/03/02/business/government-meets-goal-set-in-1994-for-womens-business-contracts.html

See Related stories:

Fortune 500 firms continue to receive billions in federal small business contracts – http://gtpac.org/2016/02/22/fortune-500-firms-continue-to-receive-billions-in-federal-small-business-contracts/

Commerce Dept. says odds of women-owned businesses winning federal contracts are off by 21 percent – http://gtpac.org/2016/02/19/commerce-dept-says-odds-of-women-owned-businesses-winning-federal-contracts-are-off-by-21-percent/ 

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