Georgia Tech Procurement Assistance Center

U.S. Government issues definition of “recruitment fees” in FAR anti-trafficking regulations

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The Department of Defense (“DoD”), General Services Administration (“GSA”), and National Aeronautics and Space Administration (“NASA”) recently issued a final rule amending the Federal Acquisition Regulation (“FAR”) to clarify the FAR’s prohibition on assessing employees with recruitment fees in connection with federal contracts.  The rule provides a final definition of “recruitment fees” and clarifies the FAR’s broad prohibition on federal contractors or subcontractors assessing employees or potential employees with any such fees.  The final rule brings long-awaited clarity to the scope of the prohibition on recruitment fees, as the term has not previously been defined in anti-trafficking regulations.

Keep reading this article at: Arnold & Porter website

Bribery, fraud indictment issued for $15 million in set-asides for disabled-veteran and other small businesses

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Five men have been charged in a 71-count indictment with engaging in conspiracies to defraud several federal agencies by paying bribes and fraudulently obtaining at least $15 million in government contracts they were not entitled to though disabled-veteran set asides and other small business programs.

Indicted are: James A. Clark of Chipley, Florida, who owned several businesses, including Enola Contracting Services, Inc.; Eric L. Hogan of Bonaire, Georgia, who owned P&E Construction, LLC; Kenneth A. Latham of Albany, Georgia, who was employed by the U.S. Navy as a civilian engineering technician; James K. Alford, 55, of Bowling Green, Kentucky, who owned K&S Constructors, Inc., and Harvey Daniels, Jr. of Marianna, Florida, who owned HDJ Security, Inc.

The charges include conspiracy to commit honest services wire fraud, conspiracy to commit wire fraud, wire fraud, conspiracy to submit false claims, false claims and major fraud.

Construction projects detailed in the indictment include contracts at the Marine Corps Logistics Base in Albany, Georgia, the VA Medical Center in Louisville, Kentucky, and the NASA Plum Brook Station near Sandusky, Ohio.

According to the indictment:

  • Federal departments and agencies, as directed by Congress, work with the Small Business Administration to award portions of contracts to small businesses, with specific goals for small disadvantaged business, including service-disabled veteran-owned small businesses.
  • Businesses must register and meet a number of criteria to be classified as small disadvantaged business – also known as the 8(a) program – such as being at least 51 percent owned and controlled by socially and economically disadvantaged individuals. Businesses must also meet a number of criteria to be classified as a service-disabled veteran-owned small business, such as being at least 51 percent owned by a veteran with a service-connected disability who controls the management and daily operations of the company. Service-disabled veteran-owned small businesses are permitted to enter into joint ventures with other companies but must meet specific requirements to do so.
  • The defendants and others engaged in several criminal schemes designed to deprive the government of its right to honest services of its employees through bribes and kickbacks, and to submit false claims and defraud the United States by obtaining government contracts set aside for qualified companies to which they were otherwise ineligible to obtain by fraudulently using proxy and pass-through companies.
  • P&E, through Hogan and Clark, made false statements, misrepresentations and omissions of facts. Hogan on several occasions certified P&E was a service-disabled veteran-owned small business. It also registered as a joint venture with Enola, with Hogan listed as president and Clark as vice president of the joint venture. HDJ Security was enrolled in the 8(a) program. Daniels self-identified as the president of HDJ, the sole owner of the company and to be socially disadvantaged.

In one scheme, Latham accepted a series of bribes and kickbacks from Hogan and Clark – including cash, meals, a hunting trip,  a fence, and an all-terrain vehicle – in return for Latham using his official position with the Navy to benefit Hogan, Clark and their businesses. These benefits included assistance in finding and securing government contracts, approval of invoices for payments to pass-through companies used by Hogan and Clark to obtain set-aside contracts for which their companies were not otherwise eligible, and concealing Clark and Hogan’s use of pass-through companies to obtain bonding.

Another scheme involved defrauding the VA and the TK by fraudulently representing that P&E and Hogan independently qualified for the service-disabled veteran-owned small business program despite Clark’s involvement in providing bonding for and equity ownership in P&E.

Clark, Hogan, Alford, Daniels and others defrauded the government by using purported service-disabled veteran-owned small businesses and 8(a) businesses as proxies to bid on and obtain set-aside contracts.

Arrow Construction, which was registered in the 8(a) program, was awarded a $2.8 million contract for work at the Marine Corps Logistics Base in Albany, Georgia, in September 2011. Clark and Arrow officials Kent Reynolds and Jennifer Dillard agreed that about 90 percent of the value of the contract was passed through to Clark and Enola, in violation of the 8(a) program.

HDJ was awarded a contract for work at the Marine Corps Logistics Base in Albany, Georgia, in September 2012. HDJ was paid approximately $2.6 million. Clark, Hogan and Daniels agreed to pass through approximately 95 percent of the value of the contract to Clark, Hogan, Enola and P&E, in violation of the terms of the 8(a) program.

The VA in June 2011 awarded a contract to P&E Construction for work at the VA Medical Center in Louisville, Kentucky. The VA paid P&E approximately $4.5 million that the company would not have received if the VA knew P&E was acting as a pass-through for K&S and that it was back-bonded by Clark and Enola.

P&E submitted a winning bid in February 2013 for a contract for construction services at the NASA Plum Brook Station near Sandusky, Ohio. NASA paid P&E approximately $5.6 million that the company would not have received if NASA knew it was acting as a pass-through for K&S and that P&E was back-bonded by Clark and Enola.

If convicted, the defendants’ sentences will be determined by the Court after review of factors unique to this case, including the defendant’s prior criminal record, if any, the defendant’s role in the offense and the characteristics of the violation.  In all cases the sentence will not exceed the statutory maximum and in most cases it will be less than the maximum.

This case was investigated by National Aeronautics and Space Administration’s Office of Inspector General, the Defense Criminal Investigative Service, Naval Criminal Investigative Service, Department of Veterans Affairs’ Office of Inspector General, Small Business Administration’s Office of Inspector General, the Defense Contract Audit Agency, and the Air Force Office of Special Investigations.

Readers are reminded that an indictment is only a charge and is not evidence of guilt.  A defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.

FAR definition of “recruitment fees”: No means no

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On December 20, 2018, the Federal Acquisition Regulation (FAR) was amended to clarify the FAR’s prohibition on assessing employees with recruitment fees in connection with federal contracts.  The rule provides a final definition of “recruitment fees” and clarifies the FAR’s broad prohibition on federal contractors or subcontractors assessing employees or potential employees with any such fees.

The final rule brings long-awaited clarity to the scope of the prohibition on recruitment fees, as the term has not previously been defined in anti-trafficking regulations.  Upon publication of a proposed rule change in January 2015, the FAR Council invited the public to comment on a draft definition of the term “recruitment fees” in a notice-and-comment process.  The final rule, which took effect on January 22, 2019, incorporates a definition that has been revised pursuant to comments received during that rulemaking process. Government contractors will need to take these new rules into account in their compliance efforts in connection with their supply chains.

Background

On January 29, 2015, DoD, GSA, and NASA issued a final rule amending the FAR to strengthen and enhance the human trafficking-related prohibitions applicable to all federal contracts. The final rule implemented Executive Order (E.O.) 13627, “Strengthening Protections Against Trafficking in Persons in Federal Contracts,” and Title XVII of the National Defense Authorization Act for Fiscal Year 2013, entitled “Ending Trafficking in Government Contracting.”  The amended FAR, which applied to all future contracts and orders under existing indefinite-delivery/indefinite quantity contracts, imposed significant responsibilities on federal contractors and subcontractors to prevent human trafficking and forced labor.

Keep reading this article at: http://www.mondaq.com/article.asp?articleid=768098

Defense companies starting to feel effect of the shutdown

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As the partial government shutdown moves into its third week, some American defense firms are starting to get multi-million-dollar IOUs instead of payments.

Even though Pentagon projects are unaffected — the Defense Department is already funded for fiscal 2019 — the shutdown is squeezing contractors who do work for NASA, the Department of Homeland Security, Federal Aviation Administration, and other federal agencies. Many companies aren’t getting paid, even as they continue to pay the salaries of employees shut out of closed government offices.

Take SAIC and Engility, two of the government’s largest service contractors. Executives for the soon-to-merge companies say the payroll for workers idled by the shutdown comes to $10 million every week. And just three weeks into the freeze, they say, the government is some $40 million to $50 million behind in payments.

Keep reading this article at: https://www.govexec.com/contracting/2019/01/defense-companies-starting-feel-effect-us-government-shutdown/154002

While agencies scramble to spend, SEWP may help

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The end-of-year spending spree is set to begin in about a month, as the federal government heads into the last quarter of fiscal 2018. And agencies still have tens of billions of dollars to spend on information technology products and services.

As it has in past years, much of that spending will go through the National Aeronautics and Space Administration’s Solutions for Enterprise-Wide Procurement (SEWP) V. Historical contract spending data shows that the vehicle has been heavily used at the end of the fiscal year and customers are likely to turn to it again as fiscal 2018 wraps up.

Bloomberg Government’s analysis shows about $30 billion to $35 billion in remaining IT contract obligations likely to be awarded by the end of September. IT contract obligations are on pace with those of fiscal 2017, but agencies have more money to spend this year.

Keep reading this article at: https://about.bgov.com/blog/agencies-scramble-spend-sewp-may-help/

Company and officers to pay $1.9 million to settle False Claims Act SBIR allegations

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Maryland-based MassTech, Inc., its former Chief Executive Officer, Arnold Lee, and its former Chief Financial Officer, Richard Lee, have agreed to pay the United States $1.9 million to resolve allegations that MassTech falsely certified it was a small business concern in order to obtain Small Business Innovation Research (SBIR) awards.

The settlement agreement was announced on May 3, 2018.

 

The SBIR program is a set-aside program for small businesses.  The purpose of the SBIR program is to strengthen the role of small business concerns in federally funded research and development and to increase private sector commercialization.  To receive SBIR funds, each awardee of an SBIR Phase I or II award must qualify as a small business at the time of the award as well as throughout the duration of the award.  To be eligible, the small business and its affiliates collectively must have fewer than 500 employees.  According to the settlement agreement, the government alleged that MassTech, Arnold Lee, and Richard Lee falsely represented to the National Science Foundation (NSF), to NASA, and to the Dept. of Health & Human Services (HHS) that MassTech was an eligible small business concern at the time of the SBIR application as well as throughout the lifecycle of the award.  As a result, NSF, NASA, and HHS approved and funded SBIR awards to MassTech that MassTech otherwise would not have received.  MassTech, Arnold Lee, and Richard Lee denied the United States’ allegations.

NSF’s Office of Inspector General, the NASA Office of Inspector General, and the HHS Office of Inspector General worked in the investigation.  The settlement agreement was announced by the U.S. Attorney for the District of Maryland.

Source: https://www.justice.gov/usao-md/pr/masstech-richard-lee-and-arnold-lee-pay-us-19-million-settle-false-claims-act-allegations

GAO: ‘Reasoned judgment’ required when establishing competitive range

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On May 19, 2017, the U.S. Government Accountability Office (GAO) sustained a protest filed by Pinnacle Solutions, Inc. (Pinnacle) challenging its exclusion from the competitive range in NASA procurement for aircraft logistics, integration, configuration management, and engineering services.  GAO concluded that NASA had unreasonably evaluated and assigned weaknesses to Pinnacle’s proposal and, as is relevant here, excluded Pinnacle from the competitive range based on “unreasoned distinctions[.]”

The RFP contemplated the evaluation of proposals on two non-price factors: Mission Suitability and Past Performance.  The Mission Suitability factor consisted of three subfactors, Management Approach, Technical Approach, and Safety & Health Approach which were allocated point values of 700, 150, and 150 points, respectively.  Per the source selection plan, the points corresponded to adjectival ratings: an Excellent was worth 91-100 percent of the points, a Very Good was worth 71-90 percent of the points, a Good was worth 51-70 percent of the points, a Fair was worth 31-50 percent of the points, and a Poor was worth 0-30 percent of the points.

Keep reading this article at: https://www.insidegovernmentcontracts.com/2017/07/gao-reasoned-judgment-required-establishing-competitive-range/

OPM holds 4th quarter readiness forum on July 20th

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The federal Office of Personnel Management (OPM) and Clark Atlanta University have joined forces to present a “4th Quarter Readiness Forum” at Clark Atlanta University on July 20, 2017.

The session is designed to offer the small business community marketing and contracting tips to consider when marketing to federal agencies during the federal government’s 4th quarter (July, August and September).

Representatives from the National Aeronautics and Space Administration (NASA), General Services Administration (GSA), the Centers for Disease Control (CDC), the Education Dept., the Small Business Administration (SBA) and other agencies will be available to discuss how they utilize various contracting tools and vehicles to award contracts in this often challenging 4th quarter time frame in the government’s calendar.

Attendees also will be provided research tips on how to use the Federal Procurement Data System-Next Generation (FPDS-NG) data base to help you research procurement opportunities.

The session will be held at Clark Atlanta University, Cole Science Research Center at 223 James P. Brawley Dr., SW, Atlanta, GA  30314 from 9 a.m. until 3 p.m.

Box lunches will be available for purchase at this event.

Here’s a link to what OPM buys: https://www.eventbrite.com/o/us-office-of-personnel-management-14499326759

Attendees are required to register at https://www.eventbrite.com/e/4th-quarter-readiness-forum-tickets-35946174977.

For more information, feel free to contact Ms. Cherina Hughes at cherina.hughes@opm.gov or Art Brown at 770-732-9392 or art@lescot.com.

5 steps for contractors to meet the FAR’s cyber requirements

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With major data breaches and system hacks dominating the headlines over the past few years, cybersecurity has become a top consideration for anyone operating a business. Although these breaches affect companies from all industries, the government remains a top target for cybercriminals across the globe.

Widespread attempts to take down government systems and steal data have officials scrambling to eliminate risk from all angles.

Recognizing the devastating impact of data breaches, especially considering the sensitive nature of their respective data, the Department of Defense, NASA, and the General Services Administration collaborated on developing safeguards for contractors who store, transmit, and process federal data – a new subpart and contract clause to the Federal Acquisition Regulation (FAR).

The proposed FAR Rule was first issued in August 2012, but the ruling was not finalized until May 2016 – nearly four years later.

The requirements settled upon in the final ruling outline 15 categories of security controls meant to protect government information stored on contractor IT systems. With the federal government spending over $400 million on almost 4 million contracts in 2015 alone, this regulation will affect businesses of all types.

Keep reading this article at: https://washingtontechnology.com/articles/2017/03/07/insights-dunbar-understanding-far-cyber-rules.aspx

Update on government contracts ramifications of the Trump administration

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In December 2016, Jones Day issued “ Government Contracts Ramifications of the Trump Election,” a Commentary in which we discussed several likely impacts of the Trump Administration in the government contracts arena. Specifically, we discussed that the new Administration would:

  • Seek repeal of numerous Executive Orders affecting government contractors.
  • Reject some Obama Administration procurement policies, such as: the preference for fixed-price type contracts; the preference for lowest-price technically acceptable (“LPTA”) evaluation schemes; and the preference against outsourcing government jobs to private companies.
  • Embrace Commercial Item contracting.
  • Increase government spending for defense, cybersecurity, infrastructure, and immigration-related activities.
  • Decrease spending by many agencies, including the Department of Education, Environmental Protection Agency, and Internal Revenue Service.
  • Focus on compliance issues such as rooting out fraud, waste, and abuse, and ensuring compliance with the Buy American Act and Trade Agreements Act.
  • Withdraw from, or renegotiate America’s participation in, certain trade relationships, which could affect companies’ supply chains.
  • Decrease the federal workforce, which could result in understaffing and undertraining within the acquisition workforce.
  • Appoint the members of the FAR Council, including the Office of Federal Procurement Policy (“OFPP”) Administrator, Secretary of Defense, Administrator of National Aeronautics and Space Administration, and the Administrator of General Services Administration.

Since the issuance of our earlier Commentary, President Trump has taken several actions that provide additional insight into the impact his Administration will have on government contractors.

Keep reading this article at: http://www.mondaq.com/unitedstates/x/564798/Government+Contracts+Procurement+PPP/Update+On+Government+Contracts+Ramifications+Of+The+Trump+Administration

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