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$3.6 million settlement resolves procurement fraud investigation involving 8(a) firm

February 13, 2019 By cs

VMJ Construction, LLC (VMJ) and its owner, Colorado resident Michael T. Vigil, as well as Maryland-based Vigil Contracting, Inc. (Vigil Contracting) and its operations manager, John J. Vigil, have agreed to pay the United States $3.6 million to resolve allegations that they defrauded the Small Business Administration (SBA) 8(a) Business Development Program.

The SBA’s 8(a) Business Development Program for economically and socially disadvantaged small businesses serves dual roles.

  • First, the program helps socially and economically disadvantaged small business owners gain access to valuable federal contracts, thereby promoting economic and social mobility.
  • Second, the program saves taxpayers money by spurring a competitive marketplace.  By promoting the development of small businesses, the 8(a) Program helps prevent the formation of monopolies that would stifle innovation and restrict consumers’ ability to negotiate lower prices.

It is important that the 8(a) Program is reserved only for companies that actually meet the program’s criteria because misuse of the program deprives legitimate 8(a) Program participants of valuable economic opportunities and undermines the integrity of the program.

There are several rules that businesses in the 8(a) program must abide by.

  • The socially and economically disadvantaged owner of the business must manage the day-to-day operations of the company and have responsibility for the long-term decision-making for the company.
  • 8(a) Program applicants must also truthfully disclose any affiliation with other businesses so that SBA may accurately assess whether the applicant meets the definition of a small business, and whether the applicant shows potential for success and the ability to perform the requisite percentage of the contracts secured through the Program.
  • Businesses also cannot remain in the 8(a) Program indefinitely; after nine years, they graduate from the program and are no longer eligible to bid on 8(a) contracts.

VMJ was accepted into the 8(a) Program in 2011.  Michael T. Vigil, who is Hispanic, was the 91% owner of VMJ, and was the socially and economically disadvantaged individual upon which VMJ based its application to the 8(a) program.  John J. Vigil was a 9% owner of VMJ.  John J. Vigil was also the operations manager of Vigil Contracting.  Vigil Contracting is a 2011 graduate of the 8(a) Program.  Since 2011, Vigil Contracting has not been eligible to bid for contracts reserved for 8(a) program participants.

The United States contends that VMJ made false statements to the SBA regarding its eligibility to participate in the 8(a) program.  Specifically, VMJ relied almost exclusively upon Vigil Contracting to bid on and complete the work awarded to VMJ under the 8(a) program.  VMJ used Vigil Contracting’s bonding, office space, employees, contractors, software, computers, and vehicles.  Vigil Contracting employees and contractors, including John J. Vigil, made the high-level business decisions of VMJ and managed the day-to-day operations of VMJ.   Michael T. Vigil did not control VMJ, did not set the long-term policy, nor manage the day-to-day management of the business.  VMJ knowingly misrepresented these facts to SBA, in both VMJ’s initial application to participate in the 8(a) program and in an annual update to SBA.  As a result of the deception, the Army, the Navy, and the Department of Agriculture awarded VMJ several federal government contracts set aside for 8(a) program participants.

“The United States uses these set-aside contracts for a clear reason — to help small businesses owned by economically and socially disadvantaged individuals.  This program continues the promise of the American Dream by helping new small businesses get on their feet, and with more businesses on their feet, our markets are healthier and more competitive,” said U.S. Attorney Jason Dunn. “When companies lie about their eligibility to get these contracts, they prevent other deserving small businesses from getting the assistance that Congress intended.”

Source: https://www.justice.gov/usao-co/pr/36-million-settlement-resolves-procurement-fraud-investigation-against-colorado-and

Filed Under: Contracting News Tagged With: 8(a), Agriculture Dept., Army, DCIS, DOJ, fraud, innovation, Justice Dept., Navy, SBA, set-aside, small business, small disadvantaged business

Feds sue Navy contractor for environmental fraud

November 8, 2018 By cs

The U.S. government will prosecute three whistleblower complaints against a U.S. Navy contractor accused of widespread fraud in the $1 billion cleanup of a radiation-contaminated shipyard and site of a major redevelopment project.

Seven whistleblowers have accused the contractor Tetra Tech of falsifying soil tests that were supposed to verify the decontamination of a 400-acre site where more than 10,000 homes are slated to be built in one of the largest redevelopment projects in San Francisco history.

“It was of critical importance to the United States Navy, and the public, that Tetra Tech perform accurately and fully the radiological testing and remediation at the Hunters Point site for which it was hired,” Assistant Attorney General Joseph Hunt said in a statement on Oct. 26th.  “The Department of Justice will vigorously pursue action against those who obtain federal funds based on promises they knowingly fail to keep.”

Keep reading this article at: https://www.courthousenews.com/feds-sue-navy-contractor-for-environmental-fraud/

Filed Under: Contracting News Tagged With: DOJ, fraud, Justice Dept., Navy, radiological testing, remediation

Division of N.C. company pays $3.5 million to settle False Claims Act allegations

October 23, 2018 By cs

Indal Technologies, Inc. has agreed to pay $3.5 million to resolve allegations that it knowingly sold defective helicopter landing systems designed for U.S. Navy destroyers.  Indal, of Ontario, Canada, is a division within Curtiss-Wright Corporation of Charlotte, North Carolina.

Since the 1970s, Indal has produced the Recovery, Assist, Secure, and Traverse (RAST) system attached to U.S. Navy’s Arleigh-Burke class destroyers.  RAST systems allow helicopters to land on destroyers.

The RAST system includes a device that locks a hovering helicopter onto a trolley.  Once locked in place, the helicopter moves along a series of steel track plates into a shipboard hangar.  The trolley must remain securely connected to the track plates, because the helicopter may be required to land during rough seas and high winds.  The Navy’s contracts for RAST systems expressly required track plates made of HY100 steel due to the material’s increased strength, combat ruggedness, and protection from corrosion.

The settlement announced last week resolves allegations that Indal, without informing the Navy, knowingly substituted a different, less expensive type of steel in numerous RAST system track plates delivered to the Navy.

This settlement was the result of a coordinated effort among the Civil Division’s Commercial Litigation Branch and the U.S. Attorney’s Office for the District of New Jersey.  The investigation was conducted by the Naval Criminal Investigative Service and the Defense Contract Audit Agency.

The claims resolved by the settlement are allegations only; there has been no determination of liability.

Source: https://www.justice.gov/opa/pr/indal-technologies-agrees-pay-35-million-settle-false-claims-act-allegations

Filed Under: Contracting News Tagged With: abuse, DCAA, false claim, false claims, False Claims Act, fraud, Navy

Chinese government hackers steal massive amounts of data from Navy contractor computers

June 12, 2018 By cs

Chinese government hackers have stolen large swaths of highly sensitive data on undersea warfare from a Navy contractor’s computers, The Washington Post reports.

The stolen information includes secret plans to develop a supersonic anti-ship missile to be used by submarines by 2020, American officials told the Post.

The incidents took place in January and February, but officials did not disclose the contractor that was targeted, the newspaper reported Friday.

Although the information was highly sensitive, it was housed on the contractor’s unclassified network, according to the Post.

“Per federal regulations, there are measures in place that require companies to notify the government when a ‘cyber incident’ has occurred that has actual or potential adverse effects on their networks that contain controlled unclassified information,” Navy Lt. Marycate Walsh said in a statement. “It would be inappropriate to discuss further details at this time.”

Keep reading this article at: http://wtkr.com/2018/06/08/wapo-chinese-government-hackers-steal-massive-amounts-of-data-from-navy-contractor-computers/

Filed Under: Contracting News Tagged With: controlled unclassified information, CUI, cyber, cyber incident, cyber incidents, cyberattack, FBI, hack, hackers, investigation, Navy, network services, unclassified information, undersea warfare

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

March 13, 2018 By cs

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. 

Filed Under: Contracting News Tagged With: abuse, Albany, bribe, bribery, bribes, conviction, corruption, DLA, DoD, DOJ, fraud, gratuity, Justice Dept., Labor Dept., Marine Corps, MCLB, Navy, NCIS, sentencing, theft, U.S. Attorney

2 San Diego contractors sentenced in DoD scam

December 18, 2017 By cs

Two San Diego defense contractors were each sentenced Thursday to 15 months in custody for conspiring to commit wire fraud and file false claims, and making false statements on their federal income tax returns.

Jeffrey Harrington, 55, and Michael Mayer, 63, admitted to fraudulently obtaining money from the U.S. government by making false claims to the Department of Defense for payment on items that the defendants knew had not been sold to the Navy, but which had been substituted with other, unauthorized products.

As part of the sentence, three of the companies owned by Harrington and Mayer — San Diego-based Veteran Logistics, Industrial Xchange and Boston Laser Technology — were ordered to forfeit over $1.4 million and pay a $1 million fine for their roles in the offenses, according to the U.S. Attorney’s Office.

Keep reading this article at: https://timesofsandiego.com/crime/2017/12/14/2-san-diego-contractors-sentenced-in-department-of-defense-scam/

Filed Under: Contracting News Tagged With: abuse. tax evasion, fraud, IRS, Navy, non-conforming parts, parts

Sealift Command contractor charged for taking $3 million in bribes

May 18, 2017 By cs

A contractor who worked on the Navy’s supply and transport arm is facing a five-count indictment for his alleged role in a bribery scheme that allegedly netted him $3 million.

Scott B. Miserendino Sr., 58, was charged on May 4 on charges that he accepted bribes over 15 years while working for a contractor at the Military Sealift Command.

The indictment alleges that Miserendino, while employed as a contractor for Military Sealift Command, assisted Joseph P. Allen and his contracting company “in obtaining and expanding a commission agreement with a telecommunications company” that provided satellite services to MSC.

Officials said that Miserendino used his position to influence MSC to take “official acts” that benefited the telecommunications company, and Allen through the commission agreement, from 1999 until 2014.

Keep reading this article at: http://www.federaltimes.com/articles/military-sealift-command-contractor-charged-for-taking-3m-in-bribes

Filed Under: Contracting News Tagged With: bribe, bribery, fraud, Navy

Defense contractors see end of budget decline

April 12, 2017 By cs

The Pentagon, as the government’s largest buyer of goods and services, is ending a seven-year drawdown of acquisition spending, according to a study released last Wednesday.

“The tide has definitely turned in the direction of contract spending,” wrote a team directed by Andrew Hunter of the Center for Strategic and International Studies.

Defense Department fiscal 2016 contract obligations increased by 7 percent over the previous year, “far higher than predicted,” said the analysis of the outlook for spending on research and development, defense acquisition reform and procurement performance-based data from the Federal Procurement Data System.

Significant boosts in spending commitments were recorded by the Missile Defense Agency, the Air Force and the Navy, “driven primarily by increased obligations for large procurement programs like the C-130J transport aircraft, the KC-45A tanker aircraft, and the Trident II missile program,” CSIS said. “Even the Army, which had declined far more steeply than DoD overall throughout the budget drawdown, was virtually stable between 2015 and 2016.”

Keep reading this article at: http://www.govexec.com/contracting/2017/04/defense-contractors-see-end-budget-decline/136788

Filed Under: Contracting News Tagged With: Air Force, budget cuts, Defense Innovation Initiative, DoD, FPDS, industrial base, industry, MDA, Navy, spending

Missing JV agreement sinks offeror’s proposal

April 11, 2017 By cs

A small business joint venture’s proposal was excluded from the competition because the joint venture failed to submit a signed copy of its joint venture agreement, as required by the solicitation.

In a recent bid protest decision, the GAO held that the procuring agency acted properly in excluding the joint venture’s proposal, even though the joint venture’s price was more than $300,000 lower than the lowest-priced awardee’s.

The GAO’s decision in CJW Desbuild JV, LLC, B-414219 (Mar. 17, 2017) involved a NAVFAC solicitation for construction services.  The solicitation was issued as a small business set-aside, and contemplated the award of up to six IDIQ contracts.

The solicitation called for NAVFAC to make award on a best value basis, taking into account both price and non-price factors. The three non-price factors were construction experience, safety, and past performance.

Keep reading this article at: http://smallgovcon.com/uncategorized/missing-jv-agreement-sinks-offerors-proposal/

Filed Under: Contracting Tips Tagged With: bid protest, GAO, joint venture, NAVFAC, Navy, set-aside, small business

Feds say Navy contractor stole $13 million, but U.S. government still works with it

March 8, 2017 By cs

A North Carolina-based defense contractor defrauded the U.S. government of more than $13.6 million over the course of a decade, according to documents filed in U.S. District Court in Norfolk.

But the government is still doing business with the company: Global Services Corp. of Fayetteville, N.C.

Two men – one of whom lives in Hampton Roads – have pleaded guilty, but federal prosecutors have worked the past several months to keep secret the identity of the contractor and its owner.

Court documents do not name the firm or two Newport News-based companies that they say were integral to the conspiracy. They are identified only as Firm G, Company A and Company B.

In most cases, the documents also do not name the president of the defense contracting firm – who prosecutors say was the primary beneficiary of the fraud. The documents generally identify him only by the initials “PAM.”

On one occasion, however, prosecutors filed a document in connection with an accomplice’s case that identified him as Philip A. Mearing – the president of Global Services Corp.

Keep reading this article at: http://pilotonline.com/news/local/crime/feds-say-navy-contractor-stole-million-but-u-s-government/article_f0e96b82-c45c-5577-b9f9-6a2cc5ffdfbc.html 

Filed Under: Contracting News Tagged With: abuse, civil investigative demands, conspiracy, DoD, fraud, IG, invoicing, Navy, waste, wire fraud

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