Tech contractors pay $12 million to settle claims they failed to screen staff

Two technology contractors have agreed to pay the U.S. government over $12 million in total to settle a civil court case alleging they allowed employees to work on a Defense Department contract without security clearance.

Services firms NetCracker Technology and CSC will pay $11.4 million and $1.35 million, respectively, according to a Department of Justice release .

False Claims ActIt reveals that the two were accused of contravening the False Claims Act by using staff who had not gone through required vetting procedures to work on a Defense Information Systems Agency (DISA) contract.

CSC was the prime contractor on the project to provide software to manage the Defense Department telecoms network between 2008 and 2013.

However, during that time, NetCracker is alleged to have knowingly used employees without security clearance, resulting in CSC “recklessly” submitting false claims for payment to DISA, the notice claimed.

A Washington Post report went further, claiming that some of the code written for the project was developed by Russian programmers and subsequently placed onto U.S. government computer networks with no testing for backdoors or other possibly malicious elements.

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GSA official jailed for accepting bribes and stealing property

Timothy Francis Cashman, a Building Manager for the General Services Administration (“GSA”), has been sentenced to 16 months in custody for accepting bribes and stealing property owned by the United States.

GSA logoAt a sentencing hearing on Oct. 23, 2015, Judge Gonzalo P. Curiel noted that Cashman was a religious man who performed many good deeds and selfless acts throughout his life. Nevertheless, he told the packed courtroom of friends, family, and supporters who requested leniency for Cashman that it was vital the general public understood that “quid pro quo is not the status quo; quid pro quo is not acceptable.”

During the sentencing, the government demonstrated how Cashman used his position with GSA (overseeing operations and maintenance at the Otay Mesa, San Ysidro, and Tecate Ports of Entry) for his personal enrichment; rather than to fulfill GSA’s core mission of delivering “the best value in real estate, acquisition, and technology services to government and the American people.”

Over a number of years, Cashman provided favorable treatment relating to the awarding of GSA contracts.  For example, he demanded $10,000 in cash and thousands of dollars’ worth of construction and renovation services on Cashman’s personal residence from government contractor Hugo Alonso Inc. (“HAI”).  These services included having HAI paint Cashman’s Lakeside home and replace his roof and windows free of charge.

The former GSA building manager also demanded that HAI pay another government contractor (Company “A”) $120,000 in exchange for HAI being awarded a GSA construction contract at the Otay Mesa POE. Subsequently, Cashman accepted six checks from Company “A” totaling $42,000, which he deposited into his personal account.  All of the income he received from HAI was concealed from the IRS when submitting his federal income tax returns.

In addition to accepting bribes from HAI, Cashman improperly obtained thousands of dollars in valuable United States Government building materials for his own benefit by causing GSA contractors and others to remove and transport such materials away from GSA facilities where he could sell or use them without the knowledge of GSA.  Among other things, Cashman instructed government contractors: 1) in March 2011, to load approximately 25 stainless steel panels located at the San Ysidro POE into his personal Ford truck; 2) in January 2012, to load 35 heavy brass letters (spelling out “United States Border Inspection Station” and weighing approximately 2,000 pounds) into his personal truck; 3) in December 2012, to collect approximately 3,000 feet of underground copper cable belonging to the United States and to deliver it to, among other places, his personal residence; and 4) in November 2013, to set aside for his personal sale a large quantity of underground copper cable and approximately 5 aluminum panels located at the Otay Mesa POE.

United States Attorney Laura E. Duffy remarked that the Cashman case demonstrates that combatting public corruption in all its forms will remain one of her office’s highest priorities. She also thanked the Special Agents with the FBI, IRS-CI and GSA-OIG whose tireless work both uncovered this corruption and resulted in removing the corrupt official from the government fisc.

In addition to his custodial sentence, Cashman was also sentenced to three years of supervised release and ordered to pay $50,057.32 in restitution. HAI, and its principal, Hugo Alonso, previously pleaded guilty and were sentenced.  In total, 11 individuals have been apprehended and pleaded guilty in related corruption investigations.

Temporary ‘bridge contracts’ risk overpayments

Temporary extensions of contracts without competitive bids, a common practice at many large agencies, may waste money and misallocate staff time if the government doesn’t come up with a precise definition for the process, a watchdog found.

GAO-GovernmentAccountabilityOffice-SealSo-called “bridge contracts” are not defined in the Federal Acquisition Regulation, the Government Accountability Office noted in a report released October 15, 2015. It characterized such awards as the extension of an existing sole-source contract to an incumbent contractor to ensure there is no gap in services.

In a review of 73 such contracts at the departments of Defense, Health and Human Services, and Justice, auditors found “limited or no insight into their use of bridge contracts, as bridge contracts were not defined or addressed in department-level guidance.” The exceptions GAO found are two DOD components, the Navy and the Defense Logistics Agency, which “have instituted definitions, policies, and procedures to manage and track their use.”

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Boeing pays $18 million to settle allegations of improperly charging labor costs

The Boeing Company has paid the United States $18 million to settle allegations that the company submitted false claims for labor charges on maintenance contracts with the U.S. Air Force for the C-17 Globemaster aircraft, the Justice Department has announced. 

Justice Dept. sealThe government alleged that Boeing improperly charged labor costs under contracts with the Air Force for the maintenance and repair of C-17 Globemaster aircraft at Boeing’s Long Beach Depot Center in Long Beach, California.  The C-17 Globemaster aircraft, which is both manufactured and maintained by Boeing, is one of the military’s major systems for transporting troops and cargo throughout the world.  The government alleged that the company knowingly charged the United States for time its mechanics spent on extended breaks and lunch hours, and not on maintenance and repair work properly chargeable to the contracts.

“Defense contractors are required to obey the rules when billing for work performed on government contracts,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “Today’s settlement demonstrates that the Justice Department will ensure that government contractors meet their obligations and charge the government appropriately.”

Air Force SealThe allegations resolved by the settlement announced on October 14, 2015 were originally brought by former Boeing employee James Thomas Webb under the qui tam, or whistleblower, provisions of the False Claims Act.  The Act permits private individuals to sue on behalf of the government those who falsely claim federal funds, and to share in the recovery.  Mr. Webb’s share of the settlement has not yet been determined.

The case was handled by the Civil Division’s Commercial Litigation Branch, the Defense Criminal Investigative Service, the Air Force Office of Special Investigations, the Defense Contract Audit Agency and the Defense Contract Management Agency.

The False Claims Act lawsuit is captioned United States ex rel. Webb v. The Boeing Company, CV13-000694 (C.D. Cal.).  The claims resolved by this civil settlement are allegations only as there has been no determination of liability.

Boeing, an aerospace and defense industry giant, is headquartered in Chicago.


Bid-rigging ringleader sentenced to 88 months

A Great Falls, Virginia, businessman was sentenced a little more than seven years in prison for bribing officials at the Army Corps of Engineers for contracts.

usaceYoung N. Cho, also known as Alex Cho, received an 88-month sentence and must repay $7.6 million to the Corps for his role in the bid-rigging scheme, according to the Department of Justice. He also must pay a forfeiture judgment of another $6.9 million. The sentencing took place on Oct. 8, a day before the Justice Department announced it.

From 2007 to 2011, Cho, as chief technology officer for Nova Datacom, paid $17 million in bribes to former Army Corps program manager Kerry F. Khan and another $1 million to former program manager Michael A. Alexander to get government contracts, according to the Justice Department. He also conspired with officials to steer a contract worth nearly $1 billion to his company, according to Justice.

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