Georgia Tech Procurement Assistance Center

Court grapples with Albany Marine Corps Logistics Base contractor’s bribery conviction

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The owner of a trucking company who was convicted of paying bribes to rake in more than $20 million from military contracts fought for relief last Wednesday at the 11th Circuit.

Arguing before a three-judge panel in Atlanta, attorney Edward Garland said that the evidence showed only that his client, Christopher Whitman, gave gratuities to officials.   “The defense was presented for five weeks … evidence was used on the record for, what we’ll call, ‘buttering up,’” said Garland, a partner with Garland, Samuel and Loeb.

Justice Department attorney Alex Robbins told the panel meanwhile that the proper time to raise such arguments was at trial.  “Timing is everything,” Robbins said. “You need to submit your argument to the jury. … None of that happened here.”

Robbins added: “There is nothing in the record at all that suggested these payments were gratuities.”

Garland’s argument also drew skepticism from at least one judge on the panel.  “But you never argued this, did you?” said U.S. District Judge John Antoon II, sitting by designation from the Middle District of Florida.

Keep reading this article at: https://www.courthousenews.com/court-grapples-with-defense-contractors-bribery-conviction/

See our earlier reports on this case at: http://gtpac.org/?p=10102 and http://gtpac.org/?p=7589. 

Florida and Mississippi men sentenced for bribing public officials at Albany’s Marine Corps Logistics Base

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A former agent and a former driver for a large national trucking company have been sentenced to prison for paying bribes to officials at the Marine Corps Logistics Base (MCLB) in Albany, Georgia, in order to obtain lucrative freight-hauling business, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and Acting U.S. Attorney G.F. Peterman III of the Middle District of Georgia.

Albany Marine Corps Logistics BaseIvan Dwight Brannan, 61, of Jupiter, Florida, and David R. Nelson, 55, of Lucedale, Mississippi, were sentenced to 48 months and 24 months in prison, respectively, by U.S. District Judge W. Louis Sands of the Middle District of Georgia, who also ordered each man to serve three years of supervised release.  Brannan was additionally ordered to forfeit $120,000, and Nelson was ordered to pay a $10,000 fine.

In connection with their guilty pleas, Brannan, the former agent, and Nelson, the former driver, admitted that from 2006 to 2012, they provided cash and other items of value to Mitchell Potts, a former traffic office supervisor for the Defense Logistics Agency (DLA) at MCLB-Albany, and Jeffrey Philpot, another official in the DLA traffic office, to ensure that their trucking company client was awarded millions of dollars in business at MCLB-Albany.

From 2006 to 2012, Brannan and Nelson paid at least $120,000 in bribes to Potts and Philpot.

Potts and Philpot both previously pleaded guilty to two counts of bribery of a public official for their roles in this scheme and another similar one.  Potts and Philpot were previously sentenced to 10 years and seven years in prison, respectively.

ACIS DCIS NCISThe U.S. Army Criminal Investigation Command, the Naval Criminal Investigative Service and the Defense Criminal Investigative Service investigated the case.  Trial Attorney John Keller of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney K. Alan Dasher of the Middle District of Georgia prosecuted the case.

Source: https://www.justice.gov/opa/pr/florida-and-mississippi-men-sentenced-bribing-public-officials-georgia-military-base

See earlier articles on this matter at:

Commandant plays hardball with industry on buying gear

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Marine CorpsThe top officer of the Marine Corps has a message to industry: Gear delivered to the Marine Corps must arrive faster, in working order, and with adequate parts.

Speaking at a panel of sea service chiefs Monday morning at the Navy League’s Sea Air Space expo near Washington, D.C., Gen. Robert Neller didn’t mince words, telling a crowd dense with industry leaders that a trend of contract award protests was costing the Corps time it couldn’t afford.

“There is the tension: How do you go faster in this world when you’ve got rules that are designed to allow everybody here to compete, and even if you don’t win the bid, you get to protest,” he said. “OK, I understand that; that’s business, that’s money, that’s what you need to do …  But we’ve got an obligation to men and women in our service to give them new gear as soon as we can.”

Keep reading this article at: http://www.dodbuzz.com/2016/05/16/marine-commandant-plays-hardball-with-industry-on-buying-gear

In Congressional testimony, PTAC association says better compliance with subcontracting requirements is needed

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aptac 2Association of Procurement Technical Assistance Centers (APTAC) President Chuck Spence appeared before the U.S. House Small Business Committee’s Subcommittee on Contracting and the Workforce last week, testifying as part of the Hearing, “Hotline Truths: Issues Raised by Recent Audits of Defense Contracting.” Spence is Deputy Director of the Utah Procurement Technical Assistance Center (PTAC).

The hearing focused on Department of Defense Office of Inspector General (DoD OIG) reports that two key Marine Corps commands failed to meet their legally-mandated requirements for small business subcontracting plans, as part of the subcommittees efforts to help small firms better compete for contracts with DoD, providing value to the taxpayer and quality to the warfighter.

“The Small Business Act contains important protections for small companies that provide services to our men and women in uniform,” said Subcommittee Chairman Richard Hanna (R-NY). “Existing law ensures that we have a vibrant community of small contractors ready to provide innovative and cost effective solutions. However, if the statutory provisions of the Small Business Act are not observed, those benefits are lost.”

“The Marine Corps’ documented failure to comply with statutory requirements concerning the approval and oversight of small business subcontracting plans has resulted in significant harm to the small business community. Continued failure to provide mandatory oversight of small business subcontracting plans has real consequences,” Hanna added.

In his testimony, Spence confirmed that such oversight failures present a real problem. “We are not surprised by the OIG findings in response to Defense Hotline allegations. On the contrary, we suspect that the problems identified – lack of adequate policies for requiring subcontracting plan submissions and reports, insufficient training for contracting officials regarding their responsibilities for evaluating and administering subcontracting plans, and failure to monitor compliance with subcontracting plans – are common across all federal agencies, because the root causes are not unique.” He cited an unrealistic overreliance on contracting officers with insufficient resources to effectively enforce subcontracting compliance, as well as an inadequate disincentives for prime contractors, noting that no firm has been penalized for failure to comply in many years.

However, Spence went on to commend the House Small Business Committee for their efforts to tackle the problems, stating “We applaud Chairman Chabot, Ranking Member Velázquez, and the House Small Business Committee for the ambitious effort to address these issues through HR. 4341, The Defending America’s Small Contractors Act of 2016. The bill’s comprehensive approach to clarifying the language and definitions of contracting provisions in the Small Business Act – as well as promoting greater transparency in goaling and accountability in execution – is much needed.”

Procurement Technical Assistance Centers (PTACs) are deeply engaged with subcontracting issues, helping small businesses identify subcontracting opportunities, connect with and market to prime contractors, and generally become responsible, “procurement ready” subcontractors, as well as assisting large prime contractors with developing subcontracting plans and locating small business vendors that can meet their requirements. In 2014, PTACs helped over 57,000 small businesses win government contracts and subcontracts valued at over $12 billion.  APTAC is the professional organization of the 98 PTACs nationwide.

Click here to view a recording of the hearing.

Source: http://www.aptac-us.org/news/aptac-president-chuck-spence-testifies-subcontracting-issues/ 

Marines could do a better job on small biz contracts, IG says

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Marine Corps Systems Command is failing to adequately ensure small business contractors get access to defense contracts, according to an Inspector General’s report.

Marine CorpsThe report found that the Quantico, Virginia-based command had not ensured small business contractors had opportunities to subcontract on 12 prime contracts valued at $221 million, offered no compliance tracking on four contracts, did not follow up on large businesses not meeting small business-goals and awarded contracts without subcontracting plans.

“As a result, small businesses may have been denied subcontracting opportunities that large businesses were required to make a good faith effort to provide,” the report said. “In addition, MCSC contracting officials did not determine whether the prime contractors are making good faith efforts to comply with negotiated subcontracting goals and whether liquidated damages should be assessed.”

Keep reading this article at: http://www.federaltimes.com/story/government/acquisition/2015/11/16/marines-could-do-better-job-small-biz-contracts-ig-says/75874242/

 

Contractors and former civilian employee sentenced in bribery scheme at Albany Marine Corps base

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A former civilian employee and a former contractor of the Marine Corps Logistics Base (MCLB) in Albany, Georgia, as well as one outside contractor were sentenced on Thursday, September 10, 2015 to prison terms for bribery and fraud arising from their handling of military trucking contracts and theft of surplus military equipment.

Justice Dept. sealAssistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney Michael J. Moore of the Middle District of Georgia made the announcement.

Christopher Whitman, 48, of Sylvester, Georgia, co-owner of United Logistics, an Albany-based trucking company and freight transportation broker, was sentenced to 22 years in prison for his conviction of 43 counts of honest services wire fraud, five counts of bribery, five counts of obstructing justice and one count of theft of government property.  Shawn McCarty, 36, of Albany, Georgia, a former employee at the MCLB-Albany, was sentenced to 10 years in prison for his conviction of 15 counts of honest services wire fraud, one count of bribery and one count of obstructing justice.  Bradford Newell, 43, of Sylvester, a former contractor at the MCLB-Albany, was sentenced to five years in prison for his conviction of 13 counts of honest services wire fraud, one count of bribery, and one count of theft of government property.  All three were found guilty by a jury in the Middle District of Georgia on March 3, 2015, following a five-week trial.

In addition to imposing the prison terms, the court ordered each defendant to forfeit assets reflecting losses to the government attributable to the bribery and fraud schemes.  Whitman was ordered to forfeit $18,860,313.75; McCarty was ordered to forfeit $15,410,151.55; and Newell was ordered to forfeit $513,600.  Whitman was specifically ordered to surrender assets derived from the schemes, including more than 100 parcels of real property, several boats and vehicles, and rental income estimated to be worth more than $14 million.

DLAAccording to the evidence presented at trial, between 2008 and 2012, Whitman paid more than $800,000 in bribes to three former officials of the Defense Logistics Agency (DLA) at the MCLB-Albany, including McCarty, to obtain commercial trucking contracts from the base.  The evidence showed that contracts included unnecessary costly provisions, such as expedited service, expensive trailers and exclusive use (i.e., a requirement that freight be shipped separately from other equipment).  Evidence presented at trial and in a post-trial forfeiture hearing established that Whitman’s company grossed more than $37 million, and resulted in government losses and an improper benefit to Whitman of more than $20 million.

The evidence further demonstrated that Whitman paid nearly $200,000 in bribes to Newell and the former inventory control manager of the Distribution Management Center at MCLB-Albany, both of whom used their official positions to help Whitman steal from the base more than $1 million in surplus military equipment, including bulldozers, cranes and front-end loaders.  According to the trial evidence, in exchange for the bribe payments, Newell and the inventory control manager removed the surplus items from Marine Corps inventory and arranged to have them transported off the base by Whitman’s company.  The evidence showed that, after having the equipment refurbished, Whitman sold it to private purchasers.

Five other individuals have pleaded guilty to their roles in the corruption and fraud schemes.  In October 2013, Kelli Durham, the former manager of Whitman’s company, pleaded guilty to conspiracy to commit wire fraud, admitting to intentionally overbilling the United States for services the company did not perform, resulting in losses ranging from $7 million to $20 million.  In May 2013, Mitchell Potts and Jeffrey Philpot pleaded guilty to bribery for collectively accepting more than $700,000 in bribes from Whitman.  In February 2013, Shelby Janes pleaded guilty to bribery for receiving nearly $100,000 in bribes from Whitman.  These defendants have not yet been sentenced.  In February 2014, C.W. Smith, a Whitman associate who helped arrange the sale of the surplus military equipment Whitman stole from the base, pleaded guilty to theft of government property.

NCISThe case was investigated by the Naval Criminal Investigative Service, with assistance from the Dougherty County, Georgia, District Attorney’s Office; Defense Criminal Investigative Service; DLA Office of the Inspector General; and the Department of Labor Office of the Inspector General.  The case is being prosecuted by Deputy Chief J.P. Cooney and Trial Attorney Richard B. Evans of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney K. Alan Dasher of the Middle District of Georgia.  The forfeiture is being handled by Assistant Deputy Chief Darrin McCullough of the Asset Forfeiture and Money Laundering Section and the U.S. Attorney’s Office of the Middle District of Georgia.

Source: http://www.justice.gov/opa/pr/two-contractors-and-one-former-civilian-employee-sentenced-bribery-scheme-georgia-military

GAO: Agency need not raise offeror’s high price in discussions

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When an agency decides to hold discussions with offerors, must it discuss with an offeror the price proposed for the contract? Not unless that offeror’s proposed price is so high as to be unreasonable.

GAO-GovernmentAccountabilityOffice-SealAs the GAO held in a recent bid protest decision, unless an offeror’s price is so high as to make its proposal unacceptable, the offeror is not entitled to be informed during discussions that its price is too high–even if the price is significantly higher than competitors.

The GAO helped shed light on this issue in Joint Logistics Managers, Inc., B-410465.2, B-410465.3 (May 5, 2015). There, the United States Marine Corps issued a task order RFP seeking “Care of Supplies in Storage” services in Albany Georgia, for one base year and one option year. The award was to be made on a best-value basis, considering technical approach, past performance, and price. Price was considered significantly less important than the combined non-price factors; but, price would become increasingly more important if proposals were considered technically equal or if an offeror’s price was so high as to diminish the value of any technical superiority.

Keep reading this article at: http://smallgovcon.com/gaobidprotests/when-too-high-isnt-high-enough/

Federal Circuit’s Metcalf decision a big win for contractors

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In a recent decision, the U.S. Court of Appeals for the Federal Circuit (“CAFC”) the supervising court for the Court of Federal Claims and the Boards of Contract Appeals, among others) clarified important legal principles concerning the federal government’s duty of good faith and fair dealing and its responsibility for differing site conditions. Metcalf Construction Company, Inc. v. United States controls disputes with the federal government and also provides authority and rationale useful to contractors in disputes with any project owner, public or private.

In October 2002, Metcalf Construction, a small business based in Hawaii, was awarded a $48 million contract to design and build 212 housing units for the U.S. Navy on a Marine Corps base in Hawaii. Saying the project did not go smoothly is an understatement. Metcalf’s performance was hindered and delayed by unanticipated soil conditions and other issues made worse by the Navy’s failure to administer the contract fairly and according to its terms. By the time the Navy finally accepted the project as complete in March 2007, almost two full years after the original completion date, Metcalf had incurred costs in excess of $76 million — leaving the contractor with losses of approximately $27 million.

Keep reading this article at: http://www.mondaq.com/unitedstates/x/311802/Building+Construction/Federal+Circuits+Metcalf+Decision+a+Big+Win+for+Contractors&email_access=on

GTPAC hosts government contracting ‘coffee break’ for Albany small business

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The Marine Corps Logistics Command Small Business Program Office, along with the City of Albany and Dougherty County, held a “Coffee Break” on January 28, 2014, for Albany-area small businesses interested in doing business with the government sector.  The Georgia Tech Procurement Assistance Center (GTPAC) hosted this second in a series of quarterly Coffee Breaks.

The event was designed to help small businesses network, in an informal setting, with small business specialists and acquisition professionals from local, state, and federal agencies.

Marine Corps Logistics Command speakers included John P. McHugh, Senior Contracts Attorney, Office of Counsel; Hattie Mosely, Director, Small Business Program Office; and Sabrina Caldwell, Head, Policy Branch, Contracts Department.

Representing local governments at the event were: Joshua Williams, Buyer, City of Albany Central Services Department; Lori Farkas, Assistant General Manager for Customer Relations and Marketing, Water Gas and Light Commission; and Mike Trotter, Materials Manager, Water Gas and Light Commission.

Topics included information on the small business programs utilized at Marine Corps Logistics Command (LOGCOM) and how LOGCOM purchases from small businesses.  Also discussed was the Contractor Performance Assessment Reporting System (CPARS) and Past Performance Information Retrieval System – Statistical Reporting (PPIRS-SR).  Upcoming bid opportunities in city/county government and the water-gas-light commission also were discussed.

Approximately 50  small and large contractors from the area attended the two-hour event.

Fifty Albany-area businesses participated in the Jan. 28th "coffee break" hosted by GTPAC.
Fifty Albany-area businesses participated in the Jan. 28th “coffee break” hosted by GTPAC.

If you would like more information on how to do business with LOGCOM, or services offered in Albany, Georgia by GTPAC, go to:  http://www.logcom.usmc.mil/sbpo/sba.gov  or contact GTPAC’s Bridgett Bennett at 229-430-4189.

Georgia men charged in contracting corruption schemes at Albany Marine Corps base

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Three Georgia men have been charged in a 51-count indictment for their alleged participation in fraud and corruption schemes at the Marine Corps Logistics Base (MCLB) in Albany, Ga., resulting in the loss of millions of dollars to the United States government.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and U.S. Attorney Michael J. Moore for the Middle District of Georgia made the announcement after the indictment was unsealed in the Middle District of Georgia today.

Christopher Whitman, 48, co-owner of United Industrial of Georgia Inc. (also known as ULOC), an Albany-based trucking company and freight transportation broker , was indicted on 43 counts of money, property and honest services wire fraud, five counts of bribery and one count of theft of government property.  Shawn McCarty, 36, of Albany, a former employee at the MCLB-Albany, was charged with 30 counts of money, property and honest services wire fraud and one count of bribery; and Bradford Newell, 43, of Sylvester, Ga., also a former employee at the MCLB-Albany, was charged with 13 counts of money, property and honest services wire fraud, one count of bribery, and one count of theft of government property.

The three men were arrested earlier today and appeared before U.S. Magistrate Judge Thomas Q. Langstaff.   Judge Langstaff ordered the three men detained pending further hearings next week.

According to the indictment, Whitman paid nearly $1 million in bribes to Mitchell Potts, the former traffic office supervisor for the Defense Logistics Agency (DLA) at MCLB-Albany, Jeff Philpot, the former lead transportation assistant in the traffic office, and Shawn McCarty, another transportation assistant in the traffic office, to obtain commercial trucking business from the DLA.   The indictment alleges that Potts, Philpot and McCarty used their official positions to defraud the government and benefit ULOC by helping ULOC obtain transportation contracts loaded with unnecessary premium-priced requirements – including expedited service; removable gooseneck trailers, which do not require a loading dock and are therefore more expensive than standard trailers; and exclusive use, which requires that freight be shipped separately from other equipment – even if that results in a truck not being filled to capacity.  The indictment alleges that Whitman and ULOC brokered these shipments for service without the premium specifications and on fewer trucks than requisitioned by DLA, but they billed the government at rates approved by the corrupt officials.   These actions are alleged to have resulted in ULOC profits grossing more than $20 million over less than four years.

Whitman is accused of orchestrating a scheme to steal and sell surplus equipment from MCLB-Albany worth more than $1 million.   Whitman allegedly paid approximately $200,000 in total bribes to Shelby Janes, the former inventory control manager of the Distribution Management Center (DMC) at MCLB-Albany, and Newell, an assistant to Janes, who used their official positions to help Whitman steal surplus equipment from the base, including bulldozers, cranes and front-end loaders.   The indictment alleges that Whitman improved and painted the stolen equipment.

An indictment is merely a charge and the defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

If convicted, the defendants face up to 20 years in prison for each wire fraud count and 15 years in prison for each bribery count.   The theft count carries a maximum prison term of 10 years.  Each charged count carries a maximum fine of $250,000 or twice the gross gain.

Prior to this indictment, one former ULOC employee and three DLA officials pleaded guilty in connection with the fraud and corruption schemes alleged in the indictment.   On Oct. 10, 2013, Kelli Durham, ULOC’s former manager, pleaded guilty to conspiracy to commit wire fraud, admitting to intentionally overbilling the United States for services ULOC did not perform, resulting in losses ranging from $7 million to $20 million, and for receiving $905,685 for her role.   She faces a maximum penalty of five years in prison.   In May 2013, Potts and Philpot pleaded guilty to bribery for collectively accepting more than $700,000 in bribes; and in February 2013, Janes pleaded guilty to bribery for receiving nearly $100,000 in bribes.   The three former officials each face up to 15 years in prison.

The case is being investigated by the Naval Criminal Investigative Service, with assistance from the Dougherty County District Attorney’s Office Economic Crime Unit, Defense Criminal Investigative Service, DLA Office of the Inspector General, and the Department of Labor Office of the Inspector General.   The case is being prosecuted by Trial Attorneys Richard B. Evans and J.P. Cooney of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney K. Alan Dasher of the Middle District of Georgia.

Source: http://www.justice.gov/opa/pr/2014/January/14-crm-066.html 

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