DOJ | The Contracting Education Academy

January 8, 2021 By cs

Judge rules that lying about 8(a) eligibility violates False Claims Act

Another court has joined the growing chorus of judges who are singing the same tune on set-aside fraud: when a government contractor lies about its eligibility for a set-aside contract, it violates the False Claims Act, and can be sued by either the Department of Justice or a whistleblower.

The new case is United States ex rel. Montes v. Main Building Maintenance Inc., and the decision was issued on December 22, 2020, by Judge Jason Pulliam of the Western District of Texas.

This is a qui tam case brought under the False Claims Act by a whistleblower, or “relator” as it’s called under that statute. The relator alleges that two parents, Robert and Elvira Ximenes, created a company, JXM, to bid on government contracts reserved (or, in technical terms, “set aside”) for contractors that qualified for the so-called “8(a) Business Development program” for small businesses that are owned by “socially and economically disadvantaged people or entities.”

To qualify for such set-aside contracts, the business must first be “certified” as eligible by the Small Business Administration (SBA). And to be eligible for such certification, the business must make a series of representation to SBA about who both owns the business, and who controls the business.

Keep reading this article at: https://www.natlawreview.com/article/federal-judge-texas-rules-lying-about-eligibility-8a-business-development-program

December 29, 2020 By cs

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/

December 22, 2020 By cs

Defense contractors charged and sentenced for Turkey-based defense contracting fraud scheme

Multiple defense contractors have been charged and/or sentenced for participating in a multi-million-dollar defense contracting fraud scheme based out of Turkey.

According to U.S. Attorney Byung J. (“BJay”) Pak, the charges, and other information presented in court:

Murat Gonenir, along with at least two other defendants, participated in an extensive Turkey-based scheme to defraud the U.S. military.
The defendants applied for and obtained access to a sensitive Department of Defense (DoD) contracting database housing some of the military’s most sensitive schematics, which is only lawfully accessible by U.S. and Canadian citizens or permanent residents.
Once the defendants obtained access to the database, they downloaded thousands of sensitive schematics for parts such as a handle casting for an 105 millimeter tray assembly for an AC-130H Gunship, and catapult/arresting gear for Nimitz and Forrestal Class aircraft carriers.
Gonenir obtained access to this sensitive database by falsely claiming he was a U.S. or Canadian citizen or permanent resident.
The defendants offered bids on numerous defense contracts for these sensitive schematics that required them to produce these parts in the United States. Instead, they produced these parts in Gonenir’s manufacturing plants in Turkey and then falsely claimed to the DoD that the parts had been lawfully produced in the United States.

The DoD paid millions of dollars to the various defense contractors who took part in this scheme as a result of these false statements.

DoD testing revealed that various parts produced at Gonenir’s plants were of such inferior design that they could have resulted in serious injury or death to U.S. military personnel if the parts had been put into production. Several members of the conspiracy were told that DoD testing had determined that at least one of the parts had failed inspection. However, the defendants kept producing parts in Turkey and falsely claiming the parts were produced in the United States.

The defendants and their sentences are as follows:

Murat Gonenir, 59, of Cankaya, Turkey was sentenced to three years, five months in prison and three years of supervised release, and he was ordered to pay $1,487,950.77 in restitution and a special assessment of $100.
Batur Ustol, 61, of Atlanta, Georgia, was sentenced to two years and six months in prison and three years of supervised release for his role in the conspiracy, and he was ordered to pay $100,000 in restitution and a special assessment of $100 in a related matter.
Suleyman Sevket Bayraktar, 43, of Fountain Valley, California, was sentenced to six months in prison, six months of home confinement, and three years of supervised release. He was also ordered to pay $161,925 in restitution and a special assessment of $100.

This case was investigated by the Department of Commerce’s Bureau of Industry & Security, the Federal Bureau of Investigation, and DoD’s Criminal Investigative Service.

December 3, 2020 By cs

Contractor agrees to pay $18.98 million for alleged overcharges and use of unqualified labor

Cognosante LLC has agreed to pay the United States $18,987,789 to resolve allegations that it violated the False Claims Act by using unqualified labor and overcharging the United States for services provided to government agencies under two General Services Administration (GSA) contracts, the Justice Department.

Cognosante, which is headquartered in Falls Church, Virginia, provides health care and IT services and solutions to federal agencies.

GSA’s Multiple Award Schedule (MAS) contracts allow the federal government to leverage its buying power to achieve favorable pricing. Under MAS contracts, contractors negotiate with GSA to set maximum prices for goods and services subsequently ordered by agencies across the federal government. These contracts provide streamlined access to the federal marketplace.

The settlement resolves allegations that Cognosante overcharged the United States for services performed under two GSA MAS contracts, including by providing false information concerning Cognosante’s commercial discounting practices during contract negotiations. It also resolves allegations that Cognosante charged the United States for labor that failed to meet the qualifications in one of the contracts.

Cognosante investigated and disclosed to the United States the contractual violations resolved in the settlement. It received credit for its disclosure and cooperation.

The settlement was the result of a joint investigation by the GSA OIG, the U.S. Attorney’s Office for the District of Columbia, and the Civil Division’s Commercial Litigation Branch. The claims resolved by the settlement agreement are allegations only, and there has been no determination of liability.

Source: https://www.justice.gov/opa/pr/federal-contractor-agrees-pay-1898-million-alleged-false-claims-act-caused-overcharges-and

November 30, 2020 By cs

Contractor admits to giving gifts to USDA officials to influence contract awards and obstructing federal grand jury investigation

The former vice president and CEO of Communications Resource, Inc. (CRI), has pled guilty in federal court in the District of Columbia to one count of conspiracy to violate the Procurement Integrity Act and one count of obstruction of justice.

According to court papers, Eric Schneider of Virginia admitted to giving gifts to multiple officials at the U.S. Department of Agriculture (USDA) to influence the award of contracts worth over $19.2 million to CRI and another company he controlled.

Schneider admitted to giving USDA officials Corvette wheels, concert tickets, PGA tour tickets, meals, alcohol, strip clubs, parking, concierge medical services, prescription drugs, and other cash tips.
Schneider further admitted that, as part of the conspiracy, he drafted or instructed employees to draft procurement documents in such a way as to favor the award of a multi-million dollar contract to CRI.
Schneider then provided the documents to a USDA official to whom he provided gifts, for use in the procurement process as if they had been prepared by the USDA.
Schneider also admitted to directing two of his company’s employees to destroy documents responsive to a federal grand jury subpoena.

Schneider pled guilty in U.S. District Court for the District of Columbia. A sentencing date has not yet been set. The maximum penalty for conspiracy is five years in prison and a fine of not more than $250,000 or twice the pecuniary gain or loss of the offense. The maximum penalty for obstruction of justice is ten years of imprisonment.

The Washington Field Office of the Federal Bureau of Investigation, and the Beltsville Field Office of the United States Department of Agriculture, Office of the Inspector General (OIG) investigated the case, along with assistance from the Department of Health and Human Services OIG, the Department of State OIG, and the Small Business Administration OIG.

Source: https://www.justice.gov/usao-dc/pr/usda-contractor-admits-giving-gifts-usda-officials-influence-award-contracts-and

Another court has joined the growing chorus of judges who are singing the same tune on set-aside fraud: when a government contractor lies about its eligibility for a set-aside contract, it violates the False Claims Act, and can be sued by either the Department of Justice or a whistleblower.

Multiple defense contractors have been charged and/or sentenced for participating in a multi-million-dollar defense contracting fraud scheme based out of Turkey.

The former vice president and CEO of Communications Resource, Inc. (CRI), has pled guilty in federal court in the District of Columbia to one count of conspiracy to violate the Procurement Integrity Act and one count of obstruction of justice.

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