The Naval Sea Systems Command announced April 26th that it had suspended all contracting authority at the Naval Undersea Warfare Center, Newport Division, in Rhode Island in the wake of a $9.2 million kickback scheme over technology services contracts.
The Naval Undersea Warfare Center (NUWC) is a shore command of the U.S. Navy within the Naval Sea Systems Command (NAVSEA) Warfare Center Enterprise, which engineers, builds and supports America’s fleet of ships and combat systems.
After waiting six months for Congress to agree on this year’s federal budget, local companies in Newport, RI thought defense dollars would finally begin flowing back into the area.
Even with the budget in place, their wait may be longer because of the Navy’s decision to take away the authority of Newport’s NUWC to issue both new contracts and delivery orders on existing ones.
Most contractors could deal with a few weeks’ delay, said Gary Bennett, who ran the former Analysis & Technology Inc. in North Stonington, but a longer holdup could mean employers may have to delay hiring new staff or even lay people off.
On Friday, the Navy suspended the contracting authority of NUWC in the wake of a kickback scheme allegedly involving a senior systems engineer at the warfare center accepting bribes from millions in funds from Navy contracts.
The contracts that would have gone through the warfare center now have the extra step of review at the Naval Sea Systems Command in Washington, D.C., which some fear will cause delays in funding allocations.
The timing is terrible, Bennett said Wednesday, because some companies are already operating at thin margins because it took so long to pass a federal budget. These companies are “going to be faced with some tight times,” said Bennett, who in 1999 sold his engineering services company, which employed 1,700 people, and worked extensively with NUWC.
Bennett said it’s a shame that the actions of a few “now affect the whole contracting community.”
U.S. Rep. Joe Courtney, D-2nd District, called the suspension “appropriate but infuriating at the same time” since there were many projects that would have moved quickly with the budget’s passage.
“Any spillover to companies that play by the rules is just so unfair and unfortunate,” Courtney said. “But we’re certainly going to stay in close contact with NAVSEA to ensure that the disruption is minimized to the greatest extent possible.”
Local contractors will inevitably have to wait to receive funding that some may have expected six months ago, since the “contracting activity moved to a Washington office, staffed for Washington contracts,” said John Markowicz, a former president of Sonalysts Inc. and now executive director of the Southeastern Connecticut Enterprise Region.
Several companies with contracts through NUWC said Wednesday they were closely following developments but did not expect major disruptions.
Electric Boat in Groton has contracts with NUWC, primarily for research and development. Company spokesman Robert Hamilton said that because the contracting office at NUWC remains operational, with final review and approval coming from NAVSEA, “we don’t expect any impact on those contracts.”
Yardney Technical Products Inc. had not yet heard anything from NUWC about the suspension, but Kris Johanessen, director of business development, said he believed it would “have little impact on our day-to-day business.” Yardney’s contracts through the center, he said, are “not by any means the majority of our backorders.”
The Pawcatuck-based company is working on a battery for a lightweight torpedo in development at NUWC.
Jane Goldsmith, corporate spokeswoman for Sonalysts Inc., said funding may come through more slowly but the company does not expect a large impact. Sonalysts, headquartered in Waterford, provides analysis of submarine sonar systems and a variety of airborne, surface, subsurface and land-based naval systems.
The warfare center is a command within NAVSEA responsible for submarine warfare systems. This is the first time NAVSEA has suspended the contracting authority of a command, according to the Navy.
It did so because of failures to “sufficiently describe work ordered, effectively account for work ordered and received, and to provide proper surveillance and oversight of that work,” a Navy statement said. To regain its authority, the warfare center must present a detailed plan addressing the issues that led to the suspension.
Joe Marino, president of Rite-Solutions, an information technology company with an office in Pawcatuck that has worked with NUWC, said, “There are still a lot of things up in the air. And we’re still trying to get our arms around what the impact is.”
Anjan Dutta-Gupta, 58, founder and president of Advanced Solutions for Tomorrow, is expected to plead guilty today in U.S. District Court in Providence to paying bribes to Ralph Mariano, a civilian program manager and senior systems engineer at NUWC, and to others, according to U.S. Attorney Peter F. Neronha. Advanced Solutions for Tomorrow had offices in Middletown, R.I., and Georgia.
According to court documents, Dutta-Gupta’s company paid Mariano, Mariano’s family and others at least $8 million from 1996 to 2011, largely through subcontractors. In addition, at least $1.2 million was funneled to a corporation Dutta-Gupta owned, the documents say.
In exchange for the kickbacks, Mariano made sure that millions of dollars in additional funds were added to the contracts, the documents state. Mariano, 52, of Arlington, Va., has been charged with participating in the alleged kickback scheme and is awaiting trial. He remains free on a $50,000 bond.
— from Connecticut’s TheDay.com – Apr. 28, 2011