Georgia Tech Procurement Assistance Center

ASBCA addresses contractor’s burden in submitting “or equal” product

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In Carothers Construction, Inc.,1 the Armed Services Board of Contract Appeals discussed the contractor’s burden in submitting an “or equal” product.  The contract incorporated FAR 52.336-5, Material and Workmanship, which provided in part that:

The Contractor may, at its option, use any [sic] equipment, material, article, or process that, in the judgment of the Contracting Officer, is equal to that named in the specifications, unless otherwise specifically provided in this contract.  (emphasis in original)

The contractor sought to substitute a type of acoustical deck roof product that was different from that called out in the solicitation structural drawings.  The Government rejected the substitution request, and the contractor ultimately provided the specified decking and sought the increased costs of supplying such material.  The Government took the position that it was entitled to strict compliance with the specified specifications.

Continue reading at:  Davis, Wright, Tremaine LLP

Accept no imitations: Contractor cannot recover for claim based on brand name products

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When a contractor delivers goods to the government that do not conform to the precise requirements of the contract, the results are usually . . . not good.  When the agency specifies certain products in the contract, the contractor should plan to satisfy the exact specifications (or prepare to suffer the consequences).

A straightforward example arose recently on a GSA construction contract.  The contract called for the installation of products from specifically named manufactures (with limited sources identified).  The contract also expressly called out that the agency would not permit substitutions for those named products.

After award, the contractor proposed substitutions for what it considered “equivalent” products from a manufacturer that did not appear on the agency’s approved source list.  The agency declined to consider the contractor’s requested exceptions.

The contractor wisely proceeded to provide the brand name products – but also filed claims seeking the excess costs associated with those products (as compared to the lower-priced equivalents that it suggested to the agency).  The contractor argued that the agency improperly rejected the substitution.

Not surprisingly, the Civilian Board of Contract Appeals granted the agency’s motion to dismiss.  The Board found that the contract language clearly did not provide for substitutions – and that GSA did not breach the contract by refusing to consider the contractor’s proposed equivalents.

Continue reading at:  Fox Rothschild

Contractor forfeits $1.7 million in assets, pleads guilty to delivery of cheap versions of products

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Jim A. Meron, owner of California-based WOW Imaging Products LLC and Time Enterprises LLC, has pled guilty to wire fraud related to a procurement fraud scheme involving the General Service Administration (GSA) Federal Supply Schedule program and a Department of Defense (DoD) electronic ordering system.

According to court documents, between May 2011 and July 2017, Meron used his two office supply businesses to defraud federal government agencies out of as much as $3.5 million — involving thousands of transactions — by substituting and delivering cheaper, generic versions of expensive, name-brand products his customers ordered, and pocketing the price difference. As part of his plea, Meron agreed to forfeit more than $1.7 million in assets seized during the investigation of his crimes.

Meron’s companies contracted to sell office supplies to federal agencies through two web-based government sales portals, GSA Advantage and DoD eMall.  After Meron received payments for the premium products his customers ordered, he obtained compatible products from his suppliers that cost him a fraction of what his customer paid for the brand-name products they ordered.  Meron then substituted and delivered those cheaper products for the more expensive products his customers ordered, and retained the difference in cost.  Over time, Meron extended his substitution scheme to nearly all orders for those name-brand products, and never intended to deliver what his customers ordered.

This case is the product of an investigation by GSA’s Office of Inspector General and the Defense Criminal Investigative Service.

Meron is scheduled to be sentenced on February 4, 2019.  Meron faces a maximum statutory penalty of 20 years in prison and a $250,000 fine on each count of conviction. The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.

Source: https://www.justice.gov/usao-edca/pr/granite-bay-man-pleads-guilty-multi-million-dollar-product-substitution-fraud-federal

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