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VA official charged with taking bribes to help associates rig federal contracting process

Three men were arrested in Colorado on Wednesday of this week pursuant to warrants issued in connection with an indictment charging them with conspiring to pay and receive bribes in exchange for creating an opportunity to commit a fraud against the U.S.  Department of Veterans Affairs (VA). 

The defendants are also charged with paying and receiving bribes, or aiding and abetting the payment of bribes.

Dwane Nevins, a VA contracting official at the time of the alleged crimes, was separately charged in another count with extortion under color of official right and in two counts with violating the federal conflict of interest statute.

The following is alleged in the indictment:

  • Dwane Nevins — a small business specialist at the VA’s Network Contracting Office in Colorado — agreed to take bribes offered by 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 allegedly explained, they 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.

The indictment also alleges that, 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 allegedly 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?”

The indictment alleges that the conspirators attempted to rig the process related to two particular contracts, both of which related to medical equipment and not to the construction of any VA facilities.  The first contract related to the procurement of LC bead particle embolization products by a VA hospital in Salt Lake City, and the second contract related to the procurement of durable medical equipment for VA facilities located throughout the region.

The case was jointly investigated by the Federal Bureau of Investigation, the U.S. Department of Veterans Affairs Office of Inspector General, and the U.S. Small Business Administration Office of Inspector General.

Readers are reminded that the defendants are presumed innocent unless and until proven guilty in a court of law.

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Does ‘Kingdomware’ apply to non-VA FSS orders?

The Supreme Court’s rationale in a recent decision might compel every agency to set aside any Federal Supply Schedule order (or any other order, for that matter) valued between $3,000 and $150,000.

Supreme CourtEarlier this year, the United States Supreme Court issued its decision in Kingdomware Technologies v. United States.   As we’ve noted, this case was a monumental win for veteran-owned small businesses — it requires the Department of Veterans Affairs to set-aside solicitations for SDVOSBs or VOSBs where two or more such offerors will submit a proposal at a fair and reasonable price, even if that solicitation is issued under the Federal Supply Schedule.

A recent GAO decision suggests, however, that Kingdomware’s impact could be felt beyond the world of VA procurements.

In Aldevra, B-411752.2—Reconsideration (Oct. 5, 2016), the protester relied on Kingdomware to challenge a prior GAO decision that an agency is not required to set-aside an FSS order for small businesses. At issue in the initial protest was an Army National Guard Bureau solicitation under the FSS, seeking an ice machine/water dispenser (valued at $4300). According to Aldevra, the Small Business Act required the solicitation to be set aside for small businesses.

Keep reading this article at: http://smallgovcon.com/gaobidprotests/does-kingdomware-apply-to-non-va-fss-orders/

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Owner of sham veteran-owned company sentenced for $100 million fraud

A Massachusetts man was sentenced last week in U.S. District Court in Boston in connection with recruiting veterans as figurehead owners of a construction company in order to receive specialized government contracts.

sdvosb-logoDavid Gorski, 51, was sentenced to 30 months in prison, one year of supervised release, and ordered to pay a fine of $1 million.  In June 2016, Gorski was found guilty by a jury following a 12-day trial of conspiring to defraud the United States by impairing the lawful governmental function of the Department of Veterans Affairs, the General Services Administration, the Army, and the Navy in the implementation and administration of the Service Disabled Veteran Owned Small Business (SDVOSB) Program.  He was also convicted of four counts of wire fraud.

The purpose of the SDVOSB program is to provide federal contracting assistance to service-disabled veterans who own small businesses by creating set-aside and sole-source acquisitions for such businesses.

In 2006, Gorski established a company, Legion Construction, Inc., after recruiting a disabled Korean War veteran to act as the company’s straw owner for the sole purpose of obtaining federal construction contracts set aside under the SDVOSB Program.  When the veteran’s health deteriorated, Gorski added a second disabled veteran, Peter Ianuzzi, to serve as the figurehead owner of Legion.  Legion acquired more than $113 million in federal contracts between 2006 and November 2010, after Gorski falsely represented to federal contracting officers that the company was owned and operated by service-disabled veterans.

In March 2010, a different SDVOSB registered a bid protest against Legion, alleging that Legion should not have been awarded a contract with the U.S. Department of Veterans Affairs at its medical center in White River Junction, VT.  The company specifically challenged Legion’s SDVOSB status, noting that it appeared that Gorski, not one of the veterans, was the person running Legion.

After retaining the services of a large Boston law firm to assist him, Gorski filed an opposition to the bid protest that contained backdated documents containing false and misleading information.  The Small Business Administration denied the bid protest based on Legion’s submission.

Gorski then began exploring ways to siphon money from Legion that would not appear as compensation exceeding the pay of the nominal veteran owner, Ianuzzi, in violation of federal regulations, including Ianuzzi “gifting” him $900,000 and establishing private bank accounts into which the company would deposit $2.5 million for Gorski’s benefit.  Before the bank accounts could be opened, however, a federal grand jury issued subpoenas to Legion and several witnesses.

Source: https://www.justice.gov/usao-ma/pr/owner-sham-veteran-owned-company-sentenced-100-million-fraud

 

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Kingdomware decision gives new meaning to the words ‘government contract’

The Supreme Court’s June 2016 decision in Kingdomware Techs., Inc. v. United States, No. 14-916 (June 16, 2016), may significantly impact the meaning of the term “government contract” for years to come.

Supreme Court sealThe case centered on a project for the Department of Veteran Affairs. When VA continually fell behind in achieving its three percent goal for contracting with service-disabled veteran-owned small businesses, Congress enacted the Veterans Benefits, Health Care, and Information Technology Act of 2006. See 38 U.S.C. §§ 8127 & 8128. The Act includes a mandatory set-aside provision that requires competition to be restricted to veteran-owned small businesses if the government contracting officer reasonably expects that at least two such businesses will submit offers and that the “award can be made at a fair and reasonable price that offers best value to the United States.” This is an iteration of the well-known “Rule of Two.”

When it published regulations implementing this statutory requirement, VA took the position that the set-aside requirements in § 8127 “do not apply to [Federal Supply Schedule] task or delivery orders.” 74 Fed. Reg. 64619, 64624 (2009). The Kingdomware case posed a direct challenge to this interpretation.

Keep reading this article at: http://www.contractorsperspective.com/small-business/kingdomware-redefines-government-contract/#page=1

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VA doesn’t waste time in implementing Supreme Court decision

The Veterans Affairs Department acted unusually quickly to comply with the U.S. Supreme Court’s “rule of two” decision in the Kingdomware case.

VA-LogoSo much so that it both surprised observers and had them wondering if VA was acting too hastily.

VA issued new acquisition regulations July 25, just more than a month after the decision, which found VA’s interpretation of a law requiring the agency to set-aside all procurements if at least two veteran-owned small businesses are qualified was flawed. The nation’s highest court reversed the lower court’s decision on June 16 by an 8-0 vote, finding VA must use the “rule of two” for supply schedule contracts even if it has met its statutory contracting goals.

Keep reading this article at: http://federalnewsradio.com/reporters-notebook-jason-miller/2016/08/va-doesnt-waste-time-implementing-supreme-court-decision/

See the VA’s new rules here.

See the VA’s “decision tree” for following the Rule of Two here.

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