DOT | The Contracting Education Academy

June 16, 2016 By AMK

Consulting firm found guilty in DBE fraud case

Transit Safety Management, Inc., was sentenced Thursday to making a false statement to the government in connection with its certification for “favored contracting status.”

US DOT The firm’s president, Susan Madigan, pleaded guilty earlier this year to one criminal count of lying to a state agency about the firm’s status as a disadvantaged business enterprise (DBE).

The company was sentenced by U.S. District Court Judge Nathaniel M. Gorton to five years of probation and a fine of $84,000.

In order to qualify for favored status, a company’s management must be controlled by a socially or economically disadvantaged individual such as a woman or minority. The purpose of the program is to give an economic advantage to minorities and women who run their own companies. However, the manager cannot also engage in employment that would prevent him or her from devoting sufficient attention to the affairs of the company.

In this case, investigators discovered that TSM’s purported owner, Madigan, was a full-time employee of a federal agency and the business was really operated by her husband making it ineligible for certification.

Keep reading this article at: http://www.newburyportnews.com/news/local_news/georgetown-firm-found-guilty-in-fraud-case/article_79eeaae0-be38-5753-8b69-3f79e3d31284.html

See earlier report on this case at: http://contractingacademy.gatech.edu/?p=9107

February 3, 2016 By AMK

DOJ finds federal employee’s business ownership fraudulent, fines DBE firm $84,000

A Massachusetts-based transportation consulting company has been charged by the U.S. Department of Justice with making a false statement in connection with its certification for favored contracting status.

Transit Safety Management, Inc. (TSM) was charged with one count of making a false statement to a state agency in order to maintain its status as a Disadvantaged Business Enterprise (DBE).

In order to qualify as a DBE, a company’s management must be controlled by a socially or economically disadvantaged individual such as a woman or minority. The purpose of the program is to give an economic advantage to minorities and women who run their own companies. However, the manager of the DBE cannot also engage in employment that would prevent her from devoting sufficient attention to the affairs of the DBE. In this case investigators discovered that TSM’s purported owner was a full-time employee of a federal agency and the business was really operated by her husband making it ineligible for certification as a DBE.

TSM provided consulting services to the railroad industry, focusing on safety and operations management. Shortly after it was founded in 1999, TSM’s owner certified the company as a DBE. As such, TSM was able to take advantage of federal regulations aimed at promoting the participation of minority and disadvantaged businesses in federally-funded public construction contracts. Under the DBE regulations, a contractor on federally-assisted transportation projects must either subcontract a percentage of its work to a DBE or show that it made a good faith effort to subcontract work to a DBE but was unable to do so. This requirement makes the DBE status a valuable and potentially lucrative designation.

In order to maintain its DBE certification, TSM had to make yearly affirmations that it was still eligible and that nothing had changed that would affect its eligibility for the favored DBE status. Despite this, TSM lied about whether it met the criteria for DBE status. According to court documents, TSM’s owner was hired as a full-time employee with a federal agency in 2005. As a full-time federal employee, TSM’s purported manager could not control TSM under the regulations. Nevertheless, TSM failed to disclose this change and continued to make its yearly affirmations to maintain is DBE status.

As part of its plea agreement, TSM has agreed to pay a fine of $84,000 and dissolve its operations.

United States Attorney Carmen M. Ortiz; Todd Damiani, Special Agent in Charge of the U.S. Department of Transportation, Office of Inspector General, Office of Investigations; and Harold H. Shaw, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division, made the announcement of the plea agreement. The case is being prosecuted by Assistant U.S. Attorney Eugenia M. Carris of Ortiz’s Public Corruption Unit.

The details contained in the Information are allegations. The defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

Source: http://www.justice.gov/usao-ma/pr/massachusetts-company-charged-connection-disadvantaged-business-enterprise-fraud

April 21, 2015 By AMK

Some DOT contracting officers not certified for high-dollar contracts

Nearly a quarter of Transportation Department contracting officers didn’t comply with certification specifications when working on certain high dollar acquisitions, says an April 9, 2015 DOT inspector general report.

In fiscal 2014, DOT obligated $2 billion on contracts.

To help ensure those contracts meet federal and departmental requirements, the Office of Federal Procurement Policy (OFPP) requires that contracting officers be certified at the appropriate level to correspond with the dollar value of contracts, the report says.

OFPP also directed each agency’s chief acquisition officer to establish agency-specific certification and warrant requirements.

But of the 63 contracting officers GAO reviewed, 15, or about 24 percent, did not fully comply with those requirements.

Keep reading this article at: http://www.fiercegovernment.com/story/some-dot-contracting-officers-not-certified-high-dollar-contracts/2015-04-15

Read the DOT IG’s report here: https://www.oig.dot.gov/sites/default/files/DOT%20Contracting%20Officer%20Certification%20and%20Warrant%20Requirements%20Final%20Report%5E4-9-15.pdf

October 17, 2014 By AMK

GAO: Agencies not taking advantage of market research on lower dollar contracts

Federal agencies are taking advantage of market research for big dollar procurements, but are missing those opportunities for smaller contracts, an Oct. 9, 2014 Government Accountability Office (GAO) report says.

All 28 contracts GAO reviewed included some evidence of the market research conducted. The contracts GAO reviewed were pulled from the Defense Department, Homeland Security Department, Federal Aviation Administration and the Transportation Department.

The market research conducted on the 12 higher dollar contracts GAO reviewed tended to be more robust and include more techniques that involved outreach to vendors, such as issuing requests for information to industry. That helped promote competition, the report says.

Keep reading this article at: http://www.fiercegovernment.com/story/gao-agencies-not-taking-advantage-market-research-lower-dollar-contracts/2014-10-13

September 17, 2014 By AMK

GAO says federal agencies need better oversight of contractor-operated systems

Congressional investigators found that several federal agencies are not consistently overseeing security and privacy measures for information systems operated by contractors.

In reviewing six selected agencies, the Government Accountability Office said the agencies generally established security and privacy requirements and had plans to assess the effectiveness of contractor-operated systems. But five of the agencies were inconsistent in such reviews.

For example, the GAO report released Sept. 9, 2014 said Transportation Department officials responsible for system testing didn’t evaluate whether seven contractor employees had the required background investigation.

“When they did so in response to our audit, they found that three of them did not,” GAO investigators said. “Officials stated that they subsequently removed system access rights for the three contractor employees until their background investigations had been completed.”

Besides DOT, GAO also reviewed the Energy, Homeland Security, and State departments as well as the Environmental Protection Agency and Office of Personnel Management.

Keep reading this article at: http://www.fiercegovernmentit.com/story/gao-says-federal-agencies-need-better-oversight-contractor-operated-systems/2014-09-10

Transit Safety Management, Inc., was sentenced Thursday to making a false statement to the government in connection with its certification for “favored contracting status.”

A Massachusetts-based transportation consulting company has been charged by the U.S. Department of Justice with making a false statement in connection with its certification for favored contracting status.

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