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Senator: Pandemic makes anti-fraud law more important than ever

March 1, 2021 By Nancy Cleveland

A long-time Senate advocate for whistleblowers and strong oversight of agencies said on Wednesday that due to the historic spending for the coronavirus pandemic, the law that targets fraud against the federal government and in federal contracting is more important now than ever.

Sen. Chuck Grassley, R-Iowa, spoke at the Federal Bar Association’s fourth annual Qui Tam Conference.  Qui tam, a provision of the “The False Claims Act,” which was originally enacted during the Civil War, allows individuals or non-government organizations to file lawsuits on behalf of the government to disclose fraud that led to financial loss for the government.  They can be awarded between 15% and 30% of the proceeds collected.  Grassley co-authored updates to the act in 1986 and 2009.

“As the country continues to battle the global pandemic, the False Claims Act has never been more important than it is right now,” said Grassley at the virtual event.  “The massive increases in government spending to address the COVID crisis have created new opportunities for fraudsters trying to cheat the government and steal the people’s money.  As history has shown all of us, fraudsters thrive during times of crises and large-scale government spending.”

He said it’s important the Justice Department, Congress and whistleblowers “remain very vigilant” due to the trillions of dollars spent in pandemic relief.

Continue reading at:  Government Executive

 

Filed Under: Contracting News Tagged With: False Claims Act, fraud, waste

Renewed focus on contractor business system reviews

April 17, 2019 By Nancy Cleveland

According to a recent U.S. Government Accountability Office (GAO) report, the Defense Contract Audit Agency (DCAA) and the Defense Contract Management Agency (DCMA) have taken certain steps to improve the contractor business system (CBS) review process and are forecasting that CBS reviews will increase significantly over the next four years. Contractor business systems include a contractor’s accounting, earned value management, estimating, purchasing, material management, and property management systems.

These systems require contractors to maintain internal controls that, as GAO noted, “act as the first line of defense against fraud, waste and abuse of federal funding.” Given their importance, the renewed focus on ensuring CBS reviews are conducted in a timely and consistent manner is not surprising, and contractors should prepare for a new wave of audit activity.

Past Challenges to Completing CBS Reviews

In its report, GAO identified persistent challenges that have prevented DCAA and DCMA from performing consistent and timely CBS reviews. One key factor for DCAA is its focus on eliminating the backlog of incurred cost audits, which determine whether contractor costs are allowable prior to closing out the contract. GAO found that as a result of prioritizing incurred cost audits, Contracting Officers maintained CBS determinations as adequate even though the systems had not been audited in many years. GAO further found that lacking a mechanism to track CBS audits, DCMA and DCAA did not always comply with requirements to report CBS deficiencies or did not report the deficiencies within required timeframes.

Keep reading this article at: https://governmentcontractsnavigator.com/2019/03/21/renewed-focus-on-contractor-business-system-reviews/

Filed Under: Contracting Tips Tagged With: abuse, accounting, CBS, contractor business system, cost estimating, DCAA, DCMA, earned value, fraud, GAO, internal controls, property management, purchasing system, waste

Partner of military contractor sentenced to prison for bribery scheme related to contracts in support of Iraq war

December 7, 2018 By Nancy Cleveland

A former business partner of a U.S. military contractor was sentenced last week to 18 months in prison for his role in a years-long scheme to bribe U.S. Army contracting officials stationed at a U.S. military base in Kuwait during the Iraq War.

Finbar Charles, a citizen of Saint Lucia most recently residing in Baguio City, Philippines, was sentenced by Chief U.S. District Judge Karon O. Bowdre of the Northern District of Alabama.  Chief Judge Bowdre also ordered Charles to forfeit $228,558 in illicit gains.  Charles pleaded guilty in July 2018 to one count of bribery of a federal official.

According to admissions made in connection with his guilty plea, Charles was a business partner of a former U.S. military contractor, Terry Hall.  As Hall’s business partner, Charles admitted that he facilitated Hall and others in providing millions of dollars in bribes in approximately 2005 to 2007 to various U.S. Army officials in exchange for preferential treatment for Hall’s companies in connection with Department of Defense (DoD) contracts to deliver bottled water and construct security fencing to support U.S. troops stationed in Kuwait and Iraq.

As part of his role in this criminal conspiracy, Charles admitted that he managed bank accounts in Kuwait and the Philippines that he used to receive DoD payments and transfer illegal bribes to various U.S. Army contracting officials, including Majors Eddie Pressley, James Momon, and Chris Murray.  All of those individuals, as well as at least 10 other co-conspirators, have pleaded guilty or been convicted of crimes relating to this scheme.  Charles admitted that he falsified loan and consulting agreements to conceal the true nature of the bribe payments to the Army officers, and that he personally received over $228,000 in illicit gains as a result of his participation.

This case was investigated by the Defense Criminal Investigative Service (DCIS), the U.S. Army Criminal Investigation Command, the FBI, and the Special Inspector General for Iraq Reconstruction.  The Criminal Division’s Office of International Affairs provided substantial assistance in this matter.

Source: https://www.justice.gov/opa/pr/former-business-partner-us-military-contractor-sentenced-prison-bribery-scheme-related

Filed Under: Contracting News Tagged With: abuse, ACIC, Army, DCIS, FBI, fraud, Special Inspector General for Iraq Reconstruction, waste

How contractor fraud is reported shouldn’t affect how it gets investigated

October 11, 2018 By Nancy Cleveland

While the vast majority of federal contractors are dedicated to their craft and their country, a very few wrongdoers occasionally cast a shadow on the industry as a whole. Unfortunately, the way that the government resolves fraud allegations is often dictated not by the egregiousness of the fraud but rather by how the government learns of suspected wrongdoing.

Given this inconsistency, we suggest a more uniform approach to addressing whistleblower allegations.

As many defense contractors have painfully learned over the years, the world of federal procurement regulations is complicated, evolving, and perilous. Even technical violations of procurement regulations can bring stiff consequences. And, more and more, employees at federal contractors are speaking up when they see wrongdoing. We applaud these employees for taking their job responsibilities seriously. And, when an employee sees wrongdoing, he or she should report it.

The traditional way to blow the whistle is to report internally up the chain and—if that does not work—the whistleblower could report suspected wrongdoing to federal contracting officers or to Defense Department hotline numbers.

Keep reading this article at: https://www.govexec.com/contracting/2018/10/how-contractor-fraud-reported-shouldnt-affect-how-it-gets-investigated/151771

Filed Under: Contracting Tips Tagged With: abuse, DoD, fraud, qui tam, waste, whistleblower

Companies barely had to compete for half of the federal contracts awarded in Puerto Rico so far

November 27, 2017 By Nancy Cleveland

Now that Puerto Rico is moving into recovery and rebuilding after the Hurricane Maria disaster, billions of dollars in federal disaster spending are flowing to the island.  Estimates put hurricane damage at $95 billion, and Puerto Rican Gov. Ricardo Rosselló is asking various federal agencies for $94 billion in grants.

With this much public money on the line, monitoring how U.S. tax dollars are spent in the recovery will be crucial to prevent waste, fraud, and shoddy work. The best way to do that is by awarding contracts through the open bidding process, which allows the largest number of businesses a chance to compete to offer the best deal. These types of contracts generally require more scrutiny and oversight than no-bid deals.

So far, competitive bidding hasn’t been a top priority for federal agencies responding to Hurricane Maria. Nearly half of the 540 federal contracts signed so far (as of November 16), totaling $252 million, were awarded outside the open bidding process, according to federal procurement data.

Keep reading this article at: https://www.vox.com/policy-and-politics/2017/11/17/16618476/puerto-rico-federal-contracts

Filed Under: Contracting News Tagged With: abuse, competition, competitive bid, contract oversight, emergency contracting, emergency response, FEMA, fraud, monitoring, NDAA, PREPA, Puerto Rico, sole-source, waste

Defense contractor billed government for Porsches, million-dollar salaries and secret guns

August 16, 2017 By Nancy Cleveland

A contractor providing intelligence and training services to the Defense Department billed luxury cars to the government, sought reimbursements for the salaries of well-connected secretaries who did little in the way of actual work and exceeded statutory caps for executives’ pay, according to a new audit.

All told, the Defense Contract Audit Agency (DCAA) questioned $50 million the British company New Century Consulting billed to the Pentagon, according to a report summarized in a letter from Sen. Claire McCaskill, D-Mo., to Defense Secretary Jim Mattis. The vehicles, including Porsches, a Bentley and an Aston Martin, were used exclusively by the CEO and other top executives at the company, DCAA found.

New Century operated as a subcontractor for Imperatis Corp., which has an extended history of problematic dealings with the federal government. Last year, Imperatis abruptly quit a cybersecurity contract it had with the Office of Personnel Management and the Homeland Security Department, citing “financial distress.” Defense contracted with Imperatis on its Legacy East project to provide “counterinsurgency intelligence experts” to train Afghani security forces.

Keep reading this article at: http://www.govexec.com/oversight/2017/08/defense-contractor-billed-government-porches-executives-million-dollar-salaries-and-secret-guns/140131/

Filed Under: Contracting News Tagged With: abuse, Army, DCAA, DHS, DoD, fraud, OPM, waste

Fraud indictment returned in connection with technology sale to Bibb County school district

June 19, 2017 By Nancy Cleveland

The U.S. Attorney for the Middle District of Georgia has announced that an indictment charging Isaac J. Culver, III, age 47, Lizella, Georgia, Dave Carty, age 48, Macon, Georgia, and their business, Progressive Consulting Technologies, Inc., with conspiracy to commit wire and mail fraud, ten counts of wire fraud, one count of mail fraud, and conspiracy to launder the proceeds of unlawful activity was unsealed on June 14, 2017.

The charges against Culver, Carty, and Progressive Consulting Technologies, Inc. stem from the sale of 15,000 Ncomputing devices to the Bibb County School District in 2012.   Culver and Carty were arrested and made their initial appearances in the U.S. District Court on June 14th.  They were released on $15,000 bond for each man.

Each of the charges against Culver, Carty, and Progressive Consulting Technologies, Inc. carry a maximum possible sentence of 20 years imprisonment. The fine on the conspiracy to launder the proceeds of unlawful activity carries a maximum fine of $500,000.00 or twice the value of the property involved in the transaction, whichever is greater.  The other charges carry a maximum possible fine of $250,000.00 each.

The indictment is only an allegation of criminal conduct. Each person is presumed innocent until and unless proven guilty in a court of law.

This case was investigated by the Federal Bureau of Investigation and Internal Revenue Service.

Copy of the indictment is here: Indictment 06.14.2017

Source: https://www.justice.gov/usao-mdga/pr/indictment-returned-fraud-connection-technology-sale-bibb-county-school-district

Filed Under: Contracting News Tagged With: abuse, conspiracy, DOJ, FBI, fraud, indictment, IRS, Justice Dept., waste

Government may disqualify contractors who use standard confidentiality language with employees and subcontractors

May 2, 2017 By Nancy Cleveland

Under a new FAR rule, standard language in confidentiality agreements could lead to disqualification from contracting or False Claims Act liability.

In January, the FAR Council issued a final rule regulating confidentiality agreements between prime contractors and their employees and subcontractors. The rule implements Section 743 of the Consolidated and Further Continuing Appropriations Act of 2015, Pub. L. 113-235 (Dec. 6, 2014).  As we previously reported, a proposed rule was issued in January of 2016 and a class deviation was issued by the Department of Defense late last year.  The final rule largely adopts the proposed rule’s language and applies to all solicitations and resultant contracts that are funded with fiscal year (FY) 2015 funds.  Contractor Employee Internal Confidentiality Agreements or Statements, 82 Fed. Reg. 4717 (Jan. 13, 2017).

In summary, the new FAR 52.203-19 bars contractors from requiring their employees or subcontractors to sign or comply with “internal confidentiality agreements or statements” that would prohibit them from reporting “waste, fraud, or abuse” on a federal contract.  FAR 52.203-19(b).  Contractors who disregard this rule are prohibited from receiving federal funds.  FAR 3.909-1(a).

Because of the broad reach and significant consequences of non-compliance, the contracting community should take notice of this new rule’s requirements.

Keep reading this article at: https://www.insidegovernmentcontracts.com/2017/04/new-far-rule-government-may-disqualify-contractors-use-standard-confidentiality-language-employees-subcontractors/

Filed Under: Contracting News Tagged With: abuse, class deviation, confidential, confidentiality, DoD, employment law, false claims, False Claims Act, FAR, federal contracting, federal contracts, fraud, liability, subcontracting, waste

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

March 8, 2017 By Nancy Cleveland

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

Confidentiality agreements continue to pose potential compliance trap for contractors

December 2, 2016 By Nancy Cleveland

US DoD logoFederal contractors who require employees to sign confidentiality agreements—including those selling only commercial products or in small quantities—need to examine their agreements closely.

For the last two years, the government has sought to prohibit confidentiality agreements that restrict employees’ ability to report fraud, waste, or abuse to “designated investigative or law enforcement representative[s]” for federal agencies authorized to receive that information.”

Most recently, the Department of Defense issued a new class deviation on November 14, 2016 prohibiting DoD from using funds from recent appropriations to contract with companies using overbroad confidentiality agreements. While these restrictions may not be new, the deviation’s broad application and significant consequences mean that contractors should give close scrutiny to ensure any agreements with employees comply with the prohibition.

Specifics of the Latest Class Deviation

DoD’s recent class deviation prohibits DoD agencies from using any money appropriated by the Continuing Appropriations Act of 2017 (or other FY 2017 dollars authorized by future continuing resolutions) to contract with an entity whose confidentiality agreement prevents employees from reporting fraud, waste, or abuse.

Keep reading this article at: https://www.insidegovernmentcontracts.com/2016/11/confidentiality-agreements-continue-pose-potential-compliance-trap-contractors/

Filed Under: Contracting Tips Tagged With: abuse, cladd deviation, confidentiality, confidentiality agreements, DFARS, DoD, False Claims Act, FAR Council, fraud, VA, waste, whistleblower

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