Georgia Tech Procurement Assistance Center

Infrastructure projects should include more minority- and women-owned contractors

By

The need to rebuild, repair, operate and maintain our country’s infrastructure is, and always will be, an ongoing endeavor. The problem is that minorities, women, veterans and other groups are seldom the contractors or high-wage earners on infrastructure projects.

Historically, the primary funding source for the U.S. Dept. of Transportation and its infrastructure projects is an 18.4¢-per-gallon gasoline tax and a 24.4¢-per-gallon tax on diesel fuel that millions of consumers pay at the pump. These taxes account for nearly $200 billion annually. In addition to the federal tax, states collect gasoline taxes that often are much higher, with some state rates adding as much as 57¢ per gallon to a fuel purchase. Couple these taxes with airport fees, tolls and so on, and we see that much of America’s infrastructure is supported by consumers—people who should have the right to participate in rebuilding it. The inclusion of all Americans must be a top priority for local, state and federal representatives and the companies awarded these contracts.

As financial models for these projects become more creative, including the wider use of public-private partnerships (P3s), we need to ensure that funds are being used for their intended purpose—to rebuild infrastructure—and that all Americans benefit from this funding.

Keep reading this article at: https://www.enr.com/articles/44181-infrastructure-projects-should-include-more-minority–and-women-owned-contractors

Two companies and individuals indicted for exploiting disadvantaged business program

By

Stamatios “Tom” Kousisis of Pennsylvania and Emanouel “Manny” Frangos of Ohio, along with Alpha Painting & Construction Co., Inc. of Baltimore, Maryland, and Liberty Maintenance, Inc. of Youngstown, Ohio were charged last week with conspiracy to commit wire fraud, wire fraud, and making false statements in a scheme involving the U.S. Dept. of Transportation’s Disadvantaged Business Program (DBE) in connection with Pennsylvania’s federally-funded Girard Point Bridge project and the federally-funded 30th Street Station.

Kousisis is the Project Manager of Alpha and Frangos is an owner of Liberty Maintenance, which are both bridge painting contractors, although neither is a certified DBE in Pennsylvania.  The alleged scheme involved Alpha-Liberty JV, a joint venture between defendants Liberty Maintenance and Alpha Painting, and Markias, Inc., a now-defunct certified DBE.

In September 2009, PENNDOT awarded a contract for approximately $70.3M to a triventure that included the Alpha-Liberty JV to perform structural steel painting and repairs, and concrete repairs, on the Girard Point Bridge in Philadelphia.  As part of that award, the triventure made a commitment to PENNDOT to subcontract approximately $4.7M in DBE work to Markias to supply materials to be used in performing the contract.  Under governing law, the Alpha-Liberty joint venture was only entitled to credit for work performed by a DBE that was performing a commercially useful function.  Instead, according to the indictment, the Alpha-Liberty JV and Kousisis ordered materials needed for their work on the Girard Point Project directly from suppliers that were not DBEs, and used Markias as a mere pass-through or front, to make it falsely appear that disadvantaged business enterprise requirements had been met on the Girard Point Project when those requirements had in fact not been met.  Markias did not perform a commercially useful function.

In December 2010, PENNDOT awarded a contract for approximately $50.8 million to a joint venture of two companies referred to in the indictment as Company C and Company F, to perform structural steel painting and repairs and roadway reconstruction beneath and around AMTRAK’s 30th Street Train Station in Philadelphia.  Company C and Company F entered into a subcontract, for approximately $15 million, for the Alpha-Liberty JV to perform the structural steel painting beneath 30th Street Station.  As part of the bid process, Company C and Company F committed to subcontract approximately $1.7M in Disadvantaged Business work to Markias to supply paint materials for the 30th Street Project.  Instead, according to the indictment, the Alpha-Liberty JV and Kousisis ordered materials needed for their work on the 30th Station Project directly from suppliers that were not DBEs, and used Markias as a mere pass-through or front, to make it falsely appear that the DBE requirements had been met on the 30th Station Project when those requirements had in fact not been met.  Markias did not perform a commercially useful function.

In addition, the indictment alleges that the Alpha-Liberty JV and Kousisis, and Frangos ordered materials to be delivered to and used on out-of-state projects while directing that the purchase invoices be sent to Markias in New Jersey.  Then, allegedly at the direction of Alpha-Liberty JV and Kousisis, and Frangos, Markias issued invoices that made it falsely appear that those supplies had been used on the Girard Point and 30th Street Projects in Pennsylvania.  Alpha-Liberty JV and Kousisis, and Frangos allegedly caused Company C to falsely report to PENNDOT that the supplies delivered to and used on the out-of-state projects qualified for DBE credit in Pennsylvania when those purchases did not so qualify.  PENNDOT awarded approximately $3.26 million in DBE credit to for the Girard Point Project and approximately $1.275 million in DBE credit for the 30th Street Station Project based on DBE work supposedly performed by a disadvantaged business (Markias). Alpha-Liberty JV paid Markias 2.25% of the face value of the invoices processed by Markias allegedly to act as a pass-through.

If convicted the defendants face a statutory maximum sentence of 170 years in prison, a possible fine, supervised release, and a $1,600 special assessment.

The case was investigated by the U.S. Department of Transportation Office of Inspector General, the FBI, the Department of Labor Office of Inspector General, and Amtrak Office of Inspector General.

An indictment is an accusation. A defendant is presumed innocent unless and until proven guilty.

Source: https://www.justice.gov/usao-edpa/pr/charges-allege-two-individuals-and-their-companies-exploited-usdot-disadvantaged

Multiple defendants charged with 22 counts of fraud and money laundering involving $200 million in small business contracts

By

A federal grand jury returned a twenty-two count indictment on April 3rd, charging three defendants with a 12-year fraud and money laundering scheme involving over $200 million in government-funded contracts intended to benefit small businesses.

The indictment names two individuals, Brian L. Ganos and Mark F. Spindler, both of Wisconsin, and the business Sonag Company, Inc. as defendants.  In a related case, Nicholas Rivecca, Sr., also of Wisconsin, agreed to plead guilty to conspiring to defraud the United States.

The indicted defendants are charged with a conspiracy to commit mail fraud and wire fraud.  The alleged conspiracy involves operating construction companies with straw owners who qualified as a disadvantaged individual or as a service-disabled veteran, but who did not actually control the companies.  The conspirators then fraudulently obtained small business program certifications to win government-funded contracts to which they were not entitled.

Specifically, court documents allege the following:

  • Nuvo Construction Company, Inc., was misrepresented in order to obtain certifications as a Small Disadvantaged Business from the U.S. Small Business Administration (SBA) and as a Disadvantaged Business Enterprise (DBE) from Milwaukee County.  However, the disadvantaged owner worked full-time for a different entity in Minnesota and did not actually control Nuvo.
  • C3T, Inc. was misrepresented to be majority owned and controlled by another individual to obtain verification as a Service-Disabled Veteran-Owned Small Business.  In reality, for long stretches, the “owner” had virtually no involvement in C3T.
  • Pagasa Construction Company, Inc. was misrepresented to be majority owned and controlled by a third disadvantaged individual in order to obtain certification as a Small Disadvantaged Business from the SBA.  In reality, the owner relied on the assistance of conspirators to form Pagasa.

The federal indictment alleges that the defendants used their certifications to obtain over $200 million in federal, state, and local contract payments.  These included federal construction contracts that were set aside for Small Disadvantaged Businesses or Service-Disabled Veteran-Owned Small Businesses.  The indictment also alleges that the scheme included using Nuvo’s DBE certification to win ready-mix concrete contracts based on the false representation that Nuvo provided ready-mix concrete independently when, in truth, Nuvo’s concrete operations depended heavily on Sonag Ready Mix.  As a part owner of Sonag Ready Mix, Nicholas Rivecca, Sr. agreed to plead guilty to that portion of the scheme.

The government alleges that the conspirators engaged in efforts to conceal the scheme and obstruct investigations into the matter; when interviewed, Ganos and Spindler each gave materially false statements to federal agents.

The indictment also alleges that Ganos conspired with Sonag Company, Inc. and others to launder proceeds of the fraud scheme in order to disguise and conceal the nature, source, and location of those fraud proceeds.  As a part of that conspiracy, Ganos is alleged to have transferred fraud proceeds from accounts of Nuvo and C3T to accounts that Ganos controlled.  The indictment further charged Ganos with three counts of concealment money laundering transactions, one of which involved the purchase of a Corvette with proceeds of the fraud scheme, and seven counts of spending money laundering transactions.

The maximum penalties for each of the wire and mail fraud-related charges are 20 years in prison, a $250,000 fine, and forfeiture of criminal proceeds.  The maximum term of imprisonment for conspiring to defraud the United States is five years.  The maximum term of imprisonment for the money laundering conspiracy and for each of the three concealment money laundering charges is 20 years in prison.  The maximum term of imprisonment for each of the seven spending laundering charges is 10 years in prison.  Each of the 11 money laundering charge also carries a fine of up to $250,000 or twice the amount laundered and subjects the defendant to forfeiture of all money and property involved in the laundering transaction.

Assets of the defendants — including real property, a 2014 Chevrolet Corvette Stingray Convertible, and more than $2.2 million seized from two bank accounts — are subject to civil forfeiture actions filed by the federal government.

The following agencies are participating in this investigation: the Federal Bureau of Investigation; U.S. General Services Administration, Office of Inspector General; Department of Veterans Affairs, Office of Inspector General; Department of Defense, Office of the Inspector General, Defense Criminal Investigative Service; U.S. Department of Transportation, Office of Inspector General; U.S. Small Business Administration, Office of Inspector General, Investigations Division; Defense Contract Audit Agency; and the U.S. Army Criminal Investigations Command Major Procurement Fraud Unit.

An indictment is only a charge and not evidence of guilt. The defendants are presumed innocent and are entitled to a fair trial at which the government must prove guilt beyond a reasonable doubt.

Source: https://www.justice.gov/usao-edwi/pr/multiple-defandants-charged-fraud-and-money-laundering-scheme-involving-over-200

DBE couple charged with bribery

By

A federal indictment has been unsealed in Philadelphia, charging Nazik Modawi and her husband Abboud Wali with conspiracy and bribery.

According to allegations contained in the indictment, the defendants made two bribe payments in November through December 2016 to Southeastern Pennsylvania Transportation Authority (SEPTA) employees for the purpose of expediting their application for a certification from SEPTA’s disadvantaged business enterprise (DBE) program. SEPTA employees immediately reported the cash payments to authorities.

The charge of conspiracy carry a maximum sentence of 5 years in prison and a $250,000 fine; charges of bribery concerning agencies receiving federal funds carry a maximum sentence of 10 years in prison and a $250,000 fine.

An Indictment, Information or Criminal Complaint is an accusation. A defendant is presumed innocent unless and until proven guilty.

The case was investigated by the Federal Bureau of Investigation and the United States Department of Transportation, Office of Inspector General, with assistance from the SEPTA Inspector General. It is being prosecuted by Assistant United States Attorney Denise S. Wolf of the U.S. Attorney’s Office for the Eastern District of Pennsylvania.

Source: https://www.justice.gov/usao-edpa/pr/husband-and-wife-charged-bribery

Augusta regional airport holding pre-bid conference on rehabilitation project June 20

By

A pre-bid conference is being hosted by the City of Augusta’s regional airport on June 20, 2017 for those interested in pursuing subcontracting opportunities.

“This is a perfect time to meet the Procurement staff, the Airport staff, contractors, and sub-contractors,” says Risa A. Bingham, the airport’s Disadvantaged Business Enterprise Liaison Officer.

To find details on this contracting opportunity, and all upcoming City of Augusta contracts, visit http://www.augustaga.gov/686/Demand-Star-Online-Bids and click on the link marked “View Augusta’s Online Bids.”

The pre-bid conference will be held at the Augusta Procurement Dept., 535 Telfair St., Suite 605, Augusta, GA 30901.

The commodity codes associated with the upcoming airport work are:

016-929-75 – Taxiway and Runway Maintenance and Testing Equipment Maintenance and Repair
022-913-10 – Construction: Airport Roadway, Runway and Taxiway
022-913-64 – Maintenance and Repair: Airport Roadway, Runway and Taxiway
029-905-60 – Removal of Rubber Deposits from Runways
029-905-66 – Runway Grooving Services, Airport
029-905-67 – Runway Services (Not Otherwise Classified)

Woman in DBE front scheme gets 12 months in federal prison

By

The former owner of a suburban Chicago construction business convicted of acting as an illegal front so another company could secure a lucrative city airport contract was sentenced Thursday (Mar. 16, 2017) to 12 months in federal prison.

Lawyers for Elizabeth Perino had sought probation and home confinement, but U.S. District Judge Gary Feinerman said he opted for prison to send a message to “an industry that needs to clean up its act.”

Perino’s conviction is the latest turn in an eight-year saga sparked in 2008 when Perino’s former project manager filed a whistleblower lawsuit alleging misconduct in massive projects run by industry giant McHugh Construction, a century-old company that reported more than a half-billion dollars in revenue in 2015.

That sparked a joint investigation by federal prosecutors and Illinois Attorney General Lisa Madigan resulting in the criminal charges.

Perino’s company posed as a legitimate woman-owned business, allowing Chicago-based Diamond Coring Co. to meet its requirements for hiring disadvantaged businesses in order to win a multimillion-dollar runway repair contract at O’Hare International Airport. Perino did no work for the bills submitted by her company.

Keep reading this article at: http://www.chicagotribune.com/news/local/breaking/ct-phony-woman-business-owner-sentencing-met-20170316-story.html

DBE contracting opportunities under the Trump Administration

By

good-time-for-dbes-01-2017With President-elect Trump’s promise to turn America’s crumbling infrastructure into an opportunity for accelerated economic growth, there are likely to be significant investments in the next four years in transportation, construction, and other similar projects.

The new administration’s plans are likely to have a particularly big impact on the highway construction industry, which stands to ultimately receive billions in federally-financed dollars. State and local governments will be first in line to receive the funds so they can be trickled down to create thousands of new jobs. Those dollars will be filtered through prime contractors and their disadvantaged business enterprise (DBE) partners, which will be performing many of these federally-funded projects. With billions of dollars likely to hit the streets, this is a good time for firms to look into the DBE program.

While not as well-known as the Small Business Administration’s 8(a) and other small business programs, the Department of Transportation’s (DOT) DBE program has been around for some time. It was established by Congress in 1983 with legislation that required that at least 10 percent of the funds authorized for highway and transit federal financial assistance programs be expended with DBEs. The three agencies with those programs are the Federal Highway Administration, Federal Aviation Administration, and Federal Transit Administration.

Keep reading this article at: http://www.jdsupra.com/legalnews/dbe-contracting-opportunities-under-the-95974/

Court of Appeals affirms lengthy prison sentences for men engaging in DBE fraud 

By

USDOTThe U.S. Attorney’s Office for the Middle District of Pennsylvania has announced that Joseph W. Nagle of Deerfield Beach, Florida and Ernest G. Fink, Jr. of Orwigsburg, Pennsylvania, the former owners of Schuylkill Products Inc., (SPI) had their sentences affirmed by the Third Circuit Court of Appeals.

Nagle was sentenced to 84 months’ imprisonment on November 30, 2015, and Fink was sentenced to 41 months’ imprisonment on February 24, 2016, for their roles in a massive conspiracy to defraud the U.S. Department of Transportation’s Disadvantage Enterprise (DBE) program.

According to USDOT, their scheme, which lasted for over 15 years and involved over $136 million in government contracts in Pennsylvania alone, is the largest reported DBE fraud in the nation’s history.

In April 2012, after a four-week jury trial, a jury convicted Nagle on 26 charges relating to the scheme, including conspiracy to defraud USDOT, mail fraud, wire fraud, and money laundering.  Fink previously pleaded guilty to conspiracy to defraud the USDOT in August 2010.

In 2014, three other former executives associated with SPI were sentenced for their roles in the scheme.

  • Romeo P. Cruz, of Westhaven, Connecticut, the former owner of Marikina Construction Corp., which operated as a front for SPI, was sentenced to 33 months’ imprisonment.
  • Timothy G. Hubler, of Ashland, Pennsylvania, SPI’s former Vice-President in charge of field operations, was sentenced to 33 months’ imprisonment.
  • Dennis F. Campbell, of Orwigsburg, Pennsylvania, SPI’s former Vice-President in charge of sales and marketing, was sentenced to 24 months’ imprisonment.

The investigation was conducted by the FBI, USDOT’s Inspector General’s Office, the U.S. Department of Labor Inspector General’s Office, and the Criminal Investigation Division of the IRS.

Source: https://www.justice.gov/usao-mdpa/pr/third-circuit-court-appeals-affirms-lengthy-prison-sentences-two-men-who-executed

 

DBE program ruled burdensome but constitutional

By

idotThe federal program that offers advantages for minority and women-owned businesses on highway construction contracts may disproportionately burden subcontractors, but it is still constitutional, the Seventh Circuit ruled.

Midwest Fence, a specialty contractor focused on guardrails and fencing, challenged the federal government’s program that offers help for disadvantaged business enterprises (DBEs), small businesses owned and managed by racial minorities and women.

The DBE program, in effect since 1983, establishes a goal of spending at least 10 percent of federal highway funds on contracts with disadvantaged businesses.  DBE business owners must certify their disadvantaged status, and qualify only if their net worth does not exceed $1.32 million.

Participation in the federal program is a requirement for states that want to use federal highway funds.

However, the program offers the states significant flexibility.  Contractors bidding on highway construction work in Illinois cannot be automatically rejected for failure to meet diversity goals, and quotas are flat-out prohibited. Instead, the state must determine if the bidder has made good faith efforts to find DBE subcontractors that could perform 10 percent of the work.

Keep reading this article at: http://www.courthousenews.com/2016/11/07/perks-for-minority-owned-businesses-upheld.htm

Georgia DOT opens small business help center

By

Eligible small firms that want to pursue business opportunities with the Georgia Department of Transportation (GDOT) now have a resource specifically designed to enable them to do just that.

GDOTGeorgia DOT’s State Supported Funding Program has opened a Business Resource Help Center to assist eligible disadvantaged business enterprises, and registered small and veteran-owned businesses in identifying and responding to business opportunities funded by the Transportation Funding Act of 2015. These include a backlog of statewide routine maintenance projects like crack sealing; pothole repair; concrete slab repair; drainage work; roadway striping; guardrail repair; right-of-way clearing; vegetation maintenance; tree trimming; mowing; litter pick-up and more. These routine maintenance activities offer DBEs and small and medium-sized businesses—who may have not previously worked with Georgia DOT—the opportunity to establish themselves as a qualified contractor to bid on projects.

Keep reading this article at: http://metroatlantaceo.com/news/2016/08/georgia-dot-opens-small-business-help-center/

Learn more about GDOT’s State Supported Funding Program at: http://gdotstateprojects.com/ 

Contracting News

Read More

Contracting Tips

Read More

GTPAC News

Read More

Georgia Tech News

Read More