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GAO report suggests DOE should identify more instances of contractor fraud

The Government Accountability Office (GAO) has issued a report on Department of Energy (DOE) contracting, entitled “Improvements Needed to Ensure DOE Assesses Its Full Range of Contracting Fraud Risks.”

The thrust of the report is that DOE should do more to prevent and detect fraud, particularly in less-examined areas such as bid-rigging, misrepresentation of eligibility, kickbacks and gratuities, and conflicts of interest.

DOE relies on contractors to carry out its missions at laboratories and other facilities, spending approximately 80 percent of its $41 billion in total obligations on contracts.  In March 2017, GAO reviewed DOE’s approach to managing its risk of fraud and found DOE did not use leading practices, resulting in missed opportunities to mitigate the likelihood and impact of fraud.

In its most recent report, GAO examined DOE’s processes for managing contracting fraud risks and concluded that DOE has not assessed the full range of fraud risks it faces.

Despite some improvements toward combating fraud in response to GAO’s March 2017 recommendations, GAO noted that the agency’s methods for gathering information capture only top fraud risks and fail to obtain information on fraud risks for non-management and operating (M&O) contractors.

GAO reviewed nine categories of contracting fraud schemes that occurred at DOE sites, and found that DOE’s risk profiles for FY 2018 and 2019 captured five of these nine fraud schemes (billing schemes, payroll schemes, product quality, theft, contract progress schemes), but failed to capture four others: bid-rigging, misrepresentation of eligibility, kickbacks and gratuities, and conflicts of interest. The report urges DOE to give these other areas greater focus in its fraud risk planning.

Keep reading this article at: https://governmentcontractsnavigator.com/2021/01/19/gao-report-suggests-doe-should-identify-more-instances-of-contractor-fraud/

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DOJ’s Procurement Collusion Strike Force expands

Just over a year after launching the Procurement Collusion Strike Force (PCSF), the U.S. Department of Justice’s Antitrust Division (DOJ) announced new measures to further its pursuit of antitrust and related crimes in government procurement, grant, and program funding.

These changes expand the PCSF’s enforcement capacity and signal DOJ’s enduring — and intensifying — commitment to the PCSF’s mission.

The PCSF has added 11 new national partners: the Department of Homeland Security Office of the Inspector General, the Air Force Office of Special Investigations, and nine new U.S. Attorneys.  As a result, the growing PCSF coalition now includes 29 agencies and offices, including U.S. Attorneys in 22 federal judicial districts; the Federal Bureau of Investigation; and Offices of Inspectors General at six federal agencies.  The PCSF also named the Antitrust Division’s Daniel Glad as the Strike Force’s first permanent director, solidifying the PCSF’s institutional role at DOJ.  Glad previously served as an Assistant Chief at the Antitrust Division’s Chicago Office.

These changes followed a productive year for the PCSF.  Since its formation, the PCSF has facilitated the opening of more than two dozen active grand jury investigations, covering a wide array of procurement collusion and fraud matters from defense and national security to public works projects.  The PCSF has focused on expanding the use of data analytics to detect suspicious bid patterns, sharing best practices on collusion analytics, and providing training on both the buy and sell side of government contracting.  The PCSF has also adapted to COVID-19, including the heightened collusion risks associated with exigent procurement by government agencies.  In March, Attorney General William Barr underscored this focus: “The Department of Justice stands ready to make sure that bad actors do not take advantage of emergency response efforts, healthcare providers, or the American people during this crucial time.”

Keep reading this article at: https://www.insidegovernmentcontracts.com/2020/12/expansion-of-the-procurement-collusion-strike-force/

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HUD IG warns agencies to watch out for bidding fraud

Procurement officials should be watching for signs of bid rigging and collusion, according to a report from the Housing and Urban Development Department inspector general.

The report on anticompetitive bidding is part of the HUD Officer of Inspector General Fraud Bulletin series, which provides guidance on how to spot and deter bad actors seeking to abuse the uncertain circumstances of the pandemic. Though the report does not indicate whether anticompetitive bidding schemes have taken place during the pandemic, it encourages procurement officers to keep their eyes open.

“In a disaster environment, such as the one created by the COVID-19 pandemic, competitive pricing can be impacted by the lack of competition, the scarcity of products, the urgent need to acquire products and services quickly, and the lack of substitute product availability,” the report reads. “Although this does not mean that anticompetitive fraud schemes have occurred, the fluid environment increases the risk that they will.”

Collusion prevents the market from allowing the product with the best quality at the best price from rising to the fore during the bidding process, according to the report. Anticompetitive schemes include practices like submitting “token bids” to make it look as though the winning company beat out the competition, when really it was chosen by colluding parties behind the scenes. Other schemes involve agreements to abstain from bidding or withdraw from the bidding process in order to ensure one company wins.

Keep reading this article at: https://www.nextgov.com/cio-briefing/2020/07/hud-ig-warns-agencies-watch-out-bidding-fraud/167263/

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Contracting official sentenced to 18 months in federal prison for role in bribery scheme to rig VA contracts

U.S. Department of Veterans Affairs official Dwane Nevins has been sentenced to serve 18 months in federal prison, followed by three years of supervised release, for corruption offenses.  He took cash bribes and then extorted undercover small business owners so that he could have his “Christmas.”

We first reported on the allegations against Nevins in September 2018.  Then, in January of this year, we reported on the sentencing of a businessman who conspired with Nevins.  Sentencing of one more individual in this case is scheduled later this month.

According to Court records, Dwane Nevins — a small business specialist at the VA’s Network Contracting Office in Colorado — agreed to take bribes offered by co-defendants Robert Revis, Anthony Bueno, and an undercover FBI agent to help them manipulate the process for bidding on federal contracts with the VA.

  • Revis and Bueno, working with Nevins, agreed to submit fraudulent bids from service-disabled-veteran-owned small businesses under contract with their consulting company so that federal contracts would be set aside for only those companies.  As Bueno put it, the conspirators would then “own all the dogs on the track.”
  • Nevins, Bueno and Revis worked to conceal the nature of the bribe payments by either kicking back to Nevins a portion of the payments made to their consulting company, or by asking their consulting company’s clients to pay Nevins for sham training classes related to federal contracting.  At one of those sham trainings in Las Vegas, Nevada, Nevins accepted a $4,500 cash bribe from the undercover FBI agent.

After complaining about not being paid by Revis and Bueno for his participation in the scheme, Nevins used his official position at the VA to extort approximately $10,000 from an undercover FBI agent, telling the agent that “the train don’t go without me.  You know what I mean?  I’m the engine.  I’m the caboose.  I’m the engine room.”  Nevins also told the undercover FBI agent “this is a business and businessmen need to get paid . . . . so I can have my Christmas, you know what I’m saying?”

Anthony Bueno was previously sentenced in this case to 30 months imprisonment.  He was also sentenced to 63 months imprisonment for his role in a separately indicted wire fraud scheme in which he used false representations about investment opportunities to take over a million dollars from several victims.

Robert Revis pleaded guilty in April 2019 to an Information charging him with a single count of supplementing the salary of a federal official.  His sentencing hearing is scheduled for March 2, 2020.

Source: https://www.justice.gov/usao-co/pr/former-veterans-affairs-official-sentenced-18-months-federal-prison-role-bribery-scheme

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DOJ announces ‘strike force’ to combat procurement crimes

The Justice Department announced last week the creation of a new interagency partnership to combat antitrust and procurement crimes.

The Procurement Collusion Strike Force will “deter, detect, investigate, and prosecute antitrust crimes and related criminal schemes,” said Assistant Attorney General Makan Delrahim at a press conference. The strike force will use a “district-based task force organization model” to facilitate cooperation between the Justice Department’s Antitrust Division, 13 Attorneys’ Offices, FBI and inspector general offices for Defense and Justice Departments, General Services Administration and U.S. Postal Service.

“When government contractors collude with each other to rig bids for government contracts at the federal, state, or local level, it leads to artificially higher prices for those goods or services.  When the government has to pay those artificially higher prices, all American taxpayers are paying for it,” said Deputy Attorney General Jeffrey Rosen at the press conference. “Strike Force will better inform federal, state, and local government procurement communities about these criminal activities and how to detect and report them.”

Keep reading this article at: https://www.govexec.com/management/2019/11/justice-department-announces-strike-force-combat-procurement-crimes/161103/

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