DLA | The Contracting Education Academy

September 18, 2018 By AMK

GAO to DoD: Fix ‘fourth estate’ inefficiencies

The Government Accountability Office is telling the Defense Department to clamp down on inefficiencies in its 19 agencies and 8 field activities — collectively known as the “Fourth Estate.”

While DoD spends billions annually on these defense agencies and DoD field activities to maintain business functions, it “does not comprehensively or routinely assess the continuing need” for them, according to a report published last week by the watchdog agency.

The Defense Department has agreed to act on GAO’s five recommendations to fix the problems. However, the DoD official who signed off — Chief Management Officer John Gibson — is reportedly being terminated by Defense Secretary Jim Mattis for non-performance.

A former U.S. Air Force finance official with a long defense industry resume, Gibson is the first-ever CMO. The job was established last year in the largest reorganization of the DoD since the Goldwater-Nichols Act of 1986.

Keep reading this article at: https://www.defensenews.com/pentagon/2018/09/11/gao-to-dod-fix-fourth-estate-inefficiencies/

August 15, 2018 By AMK

Millions flow to Pentagon’s banned contractors via a back door

Some of the world’s largest companies have benefited from a little-known law that lets the Defense Department override decisions barring contractors accused or convicted of bribery, fraud, theft, and other crimes from doing business with the government.

International Business Machines Corp., Boeing Co., BP Plc, and several other contractors have received special dispensation to fulfill multimillion-dollar government contracts through “compelling reason determinations.” That process allows the Defense Department in rare cases to determine that the need to fulfill certain contracts justifies doing business with companies that have been suspended from government work.

The 22 determinations were released by the General Services Administration at the request of Bloomberg Government, allowing for the first collective examination of the cases and the system that allowed them.

The determinations, also referred to as waivers or overrides, included contracts to provide food services for Defense Department personnel at an Army base in Afghanistan, “vital” web-hosting services for an agency that serves the Pentagon and the U.S. intelligence community, and aviation fuel sold to the Defense Logistics Agency.

Keep reading this article at: https://about.bgov.com/blog/millions-flow-pentagons-banned-contractors-via-back-door/

See further analysis at: https://www.forbes.com/sites/charlestiefer/2018/08/05/study-of-waivers-of-federal-contractor-debarments-leads-to-review-of-major-criminal-charges/#654bac3c6ac3

August 3, 2018 By AMK

3M to pay $9.1 million, resolving allegations it sold DLA defective hearing protection devices

The Department of Justice has announced that the 3M Company (3M), headquartered in St. Paul, Minnesota, has agreed to pay $9.1 million to resolve allegations that it knowingly sold the dual-ended Combat Arms Earplugs, Version 2 (CAEv2) to the United States military without disclosing defects that hampered the effectiveness of the hearing protection device.

“The Department of Justice is committed to protecting the men and women serving in the United States military from defective products and fraudulent conduct,” said Acting Assistant Attorney General Chad A. Readler of the Department’s Civil Division. “Government contractors who seek to profit at the expense of our military will face appropriate consequences.”

“Through rigorous enforcement of the False Claims Act, we protect taxpayer dollars from waste, fraud, and abuse,” said U. S. Attorney Sherri Lydon for the District of South Carolina. “And in this case in particular, we are proud to defend the integrity of our military programs and ensure that our men and women in uniform are adequately protected as they serve our country.”

“Today’s settlement will ensure that those who do business with the government know that their actions will not go unnoticed,” said Frank Robey, director of the U.S. Army Criminal Investigation Command’s Major Procurement Fraud Unit. “Properly made safety equipment, for use by our Soldiers, is vital to our military’s readiness. Our agents will respond robustly to protect the safety of our military.”

“This settlement demonstrates the commitment of the Defense Criminal Investigative Service and our law enforcement partners to hold companies accountable for supplying substandard products, in particular products that could directly impact our service members’ health and welfare. DCIS protects the integrity of Defense Department programs by rooting out fraud, waste, and abuse that negatively affect the wellbeing of our troops,” said Special Agent in Charge Robert E. Craig, Jr., DCIS Mid-Atlantic Field Office.

The settlement announced today resolves allegations that 3M violated the False Claims Act by selling or causing to be sold defective earplugs to the Defense Logistics Agency. Specifically, the United States alleged that 3M, and its predecessor, Aearo Technologies, Inc., knew the CAEv2 was too short for proper insertion into users’ ears and that the earplugs could loosen imperceptibly and therefore did not perform well for certain individuals. The United States further alleged that 3M did not disclose this design defect to the military.

The allegations resolved by the settlement were brought in a lawsuit filed under the qui tam, or whistleblower, provisions of the False Claims Act. The act permits private parties to sue on behalf of the government when they believe that defendants submitted false claims for government funds and to share in any recovery. As part of today’s resolution, the whistleblower will receive $1,911,000.

The settlement was the result of a coordinated effort by the Civil Division of the Department of Justice, the United States Attorney’s Office for the District of South Carolina, the Army Criminal Investigation Command, and the Defense Criminal Investigative Service.

The case is captioned United States ex rel. Moldex-Metric v. 3M Company, Case No. 3:16-cv-1533-MBS (D.S.C.). The claims resolved by the settlement are allegations only, and there has been no determination of liability.

Source: https://www.justice.gov/opa/pr/3m-company-agrees-pay-91-million-resolve-allegations-it-supplied-united-states-defective-dual

July 9, 2018 By AMK

Two men face federal charges for their role in stealing government property

U.S. Attorney Josh Minkler has announced that two men are facing federal charges for their role in stealing Humvee vehicles that were meant to be destroyed and sold for scrap.

Richard S. Treloar, 63, St. Louis, Missouri, faces seven counts of conversion of government property and seven counts of false statements; co-defendant Mark W. Collier 52, Bedford, Indiana, faces seven counts of false statements.

“Theft, waste, fraud and abuse of government funds and equipment is never acceptable,” said Minkler. “When it involves stealing from our military, it is a particularly egregious offense and those responsible will be held accountable.”

Treloar owned a St. Louis based company called Treloar Enterprises International, Inc. (TEI) which contracted with the Department of Defense’s Defense Logistics Agency (DLA) to demilitarize military vehicles, mostly High Mobility Multipurpose Wheeled Vehicles commonly known as Humvees. The Humvee is a four-wheel drive military light truck capable of being outfitted with armor, ballistic glass and high-powered weapons and is currently being used in the Iraq and Afghanistan theaters.

As part of Treloar’s contract with DLA, his company was responsible for demilitarizing the Humvees which would include eliminating the functional capabilities and inherent design features of vehicles. In many cases, that included the total destruction of the Humvee. When the Humvees were demilitarized, both Treloar and Collier verified in writing that the process had been completed.

From January 2014, through November 2015, TEI took delivery of all Humvees from Naval Support Activity Crane (Crane) which is located in Southern Indiana. To facilitate the contract, TEI opened a facility in nearby Spencer, Indiana, where the purported demilitarization took place. The indictment alleges Treloar converted at least seven fully armored Humvees for his own use and sold or attempted to sell them for his own benefit. The value of the Humvees was over $589,000. Both defendants also certified that each and every Humvee was demilitarized, when in fact they were not.

This case was investigated by DoD’s Office of Inspector General-Defense Criminal Investigative Service, Naval Criminal Investigative Services, and Defense Logistics Agency’s Office of the Inspector General.

“Today’s indictments demonstrate the commitment of the Defense Criminal Investigative Service and its law enforcement partners to protect the integrity of all Department of Defense programs,” said Special Agent in Charge John F. Khin, Southeast Field Office. “DCIS’ efforts in this investigation mitigated further significant loss and waste of taxpayer dollars from this fraudulent scheme.”

“Not only is fraud of this type a serious financial crime, the equipment involved is concerning,” said Mike Wiest, Special Agent in Charge of the NCIS Southeast Field Office. “There are no legitimate civilian uses for an armored military vehicle. NCIS will continue to work with our law enforcement partners to hold accountable those who siphon resources away from America’s warfighters.”

Assistant U.S. Attorney Bradley P. Shepard who is prosecuting this case for the government, said Treloar faces up to 10 years’ imprisonment on each count of conversion of government property and Collier faces up to five years’ imprisonment on each count of false statements.

An indictment is only a charge and not evidence of guilt. All defendants are presumed innocent until proven otherwise in federal court.

In October 2017, U.S. Attorney Josh J. Minkler announced a Strategic Plan designed to shape and strengthen the District’s response to its most significant public safety challenges. This prosecution demonstrates the Office’s firm commitment to prosecuting complex, large-scale fraud schemes, particularly those that exploit positions of trust.

Source: https://www.justice.gov/usao-sdin/pr/two-men-face-federal-charges-their-role-stealing-government-property

June 14, 2018 By AMK

Court enters judgment against couple for overcharging DLA for spare vehicle parts

A New Jersey couple has been ordered to pay $232,891.37 to the United States for overcharging the military for light assemblies for munitions vehicles for the Defense Logistics Agency (DLA).

The defendants, New Jersey residents Babu Metgud and Shubhada Kalyani, operated Shubhada Industries, a defense contractor. The United States, as the plaintiff, moved for summary judgment against Metgud and Kalyani. In granting the United States’ motion, the district court entered judgment against the individual defendants, awarding damages and imposing the maximum penalty allowable under the False Claims Act.

The case arose from a contract in which Shubhada Industries agreed to manufacture light assemblies for DLA. Instead of actually manufacturing those parts, Shubhada purchased them from a third party and charged the government a total purchase price of $73,842 — which amounted to a 5,400 percent mark-up of the cost price, according to the court’s opinion. When the government questioned the cost, Metgud justified it by explaining that costs sometimes seem very high “to untrained eyes.”

Under the False Claims Act, a person who causes false or fraudulent claims to be submitted to the government for payment is liable for three times the government’s damages, plus civil penalties for each false claim. The court’s judgment consists of three times the amount the DLA paid, plus a civil penalty of $11,000, which the court noted was “at the top of the statutory range.”

In imposing this maximum penalty, the court explained that Metgud and Kalyani did not disclose to the agency their purchase of the light assemblies from someone else. In addition, the court opined the individuals “have not been forthright or cooperative in the Government’s investigation of the claims alleged in the amended complaint,” and seemed to “shrug off” the investigation and the court proceeding.

“Those who do business with the government must treat taxpayers fairly,” said U.S. Attorney McSwain. “This case demonstrates my Office’s commitment to holding accountable defense contractors and others who try to game the system for personal profit at the military’s expense.”

The case is significant because the government, as the plaintiff and moving party at summary judgment, obtained a judgment on the merits and without a trial. It is also significant because the district court’s judgment was based in part on its conclusion that it could draw an adverse inference against the individual defendants who invoked their Fifth Amendment right against self-incrimination.

Assistant U.S. Attorney Michael S. Macko handled the case, which arose from an investigation led by the Defense Criminal Investigative Service.

Source: https://www.justice.gov/usao-edpa/pr/court-enters-judgment-against-new-jersey-couple-overcharging-military-spare-vehicle

Some of the world’s largest companies have benefited from a little-known law that lets the Defense Department override decisions barring contractors accused or convicted of bribery, fraud, theft, and other crimes from doing business with the government.

U.S. Attorney Josh Minkler has announced that two men are facing federal charges for their role in stealing Humvee vehicles that were meant to be destroyed and sold for scrap.

A New Jersey couple has been ordered to pay $232,891.37 to the United States for overcharging the military for light assemblies for munitions vehicles for the Defense Logistics Agency (DLA).

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