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March 22, 2021 By cs

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/

February 19, 2021 By cs

What to expect for False Claims Act enforcement under new Administration

Although Department of Justice (DOJ) recoveries under the False Claims Act (FCA) reached historic lows in FY2020, President Biden’s administration is poised to usher in a return to aggressive FCA enforcement.

Under President Obama, DOJ’s FCA recoveries hit all-time peaks, totaling over $5 billion in 2012, $6.1 billion in 2014, and $4.9 billion in 2016. From there, they trended consistently downward throughout the Trump Administration, averaging under $3 billion annually. Given the Biden Administration’s focus on tackling the COVID-19 pandemic and stimulating the economy, we anticipate that DOJ’s scrutiny of alleged fraud in government programs will be as probing as ever.

In the 1980s, then-Senator Biden supported the seminal 1986 amendments to the FCA, emphasizing in his Senate remarks that enforcement should enjoy bipartisan support: “Fraud against the Government is not a matter that ought to be used for political advantage. . . . It is not a matter that divides Democrats from Republicans.”

More recently, as Vice President under President Obama, Biden famously oversaw the 2009 Recovery Act in the wake of the 2008 financial crisis and touted the lower-than-average rate of fraud investigations into the stimulus spending. In 2011, he also led the Government Accountability and Transparency Board to advance efforts to detect and remediate fraud, waste, and abuse in federal programs as part of the “Campaign to Cut Waste.” When announcing this campaign, he underscored his commitment “to changing the way government works and . . . stepping up the hunt for misspent dollars.”

Keep reading this article at: https://www.mondaq.com/unitedstates/government-contracts-procurement-ppp/1035290/what-to-expect-for-false-claims-act-enforcement-under-the-biden-administration

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.

August 10, 2020 By cs

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/

March 9, 2020 By cs

HHS’ shutdown of assisted acquisition services remains painful, wasteful

The Department of Health and Human Services is not just failing its agency and contractor customers but also, once again, demonstrating why “the government” gets maligned as wasteful, insular and uncaring.

With its decision to end its assisted acquisition services through its Program Support Center, HHS is putting more than $1 billion in contracts at risk. It’s hanging large and small agencies out to dry — ranging from the Defense Department to the Environmental Protection Agency to the Office of Special Counsel — by canceling contracts and giving them little time to prepare for the changes. And it is withholding payment to potentially hundreds of small and large contractors, putting some at risk of closing down or facing employee layoffs and additional contract costs.

At the same time, HHS is paying tens of thousands of dollars in prompt payment penalties to those same contractors for avoidable mistakes, inching ever closer to what experts would call waste and abuse.

“Since the beginning, HHS PSC was inflicting pain on themselves,” said Ron Robinson, a former program manager for Copper River Technologies, which provided contract support and financial analyst services until December when PSC ended its three-year contract two years early. “It is horrible the way HHS has handled this. They should be held accountable, and it doesn’t seem like anyone wants to. There wasn’t communication. There was a lack of transparency. You see that time and again with them suspending warrants and putting four people on administrative leave without telling them why.”

Keep reading this article at: https://federalnewsnetwork.com/reporters-notebook-jason-miller/2020/03/hhs-shutdown-of-assisted-acquisition-services-remains-painful-wasteful/

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.”

Although Department of Justice (DOJ) recoveries under the False Claims Act (FCA) reached historic lows in FY2020, President Biden’s administration is poised to usher in a return to aggressive FCA enforcement.

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

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 Department of Health and Human Services is not just failing its agency and contractor customers but also, once again, demonstrating why “the government” gets maligned as wasteful, insular and uncaring.

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