Category Archives: Suspension Debarment and Penalties

Posts in this category deal with suspension, debarment, fines, and other penalties imposed on government contractors, as well as settlement agreements reached between the government and contractors to resolve these issues.

Some NAVFAC MAC Task Order Awards Flawed, Says DOD IG

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Now that the GAO no longer has authority to hear protests of many task order awards valued under $10 million, it is fair to question whether the absence of the self-policing system established by the protest mechanism could contribute to unreasonable or improper task order awards.

According to a report issued by the Department of Defense Inspector General last Friday, at least one agency, the Naval Facilities Engineering Command, has experienced some troubling irregularities in the MAC task order award process, including twice failing to permit all MAC holders to bid on task order competitions.

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GSA e-Buy “Purges” May Be Improper, Says Federal Court

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The GSA e-Buy website may have improperly failed to preserve critical solicitation records, according to the U.S. Court of Federal Claims.

In Laboratory Corp. of America v. United States, No. 12-622C (2012), the court has asked the government to explain why it should not face sanctions for so-called “spoliation” of evidence, arising from the inability to access archived e-Buy materials.  The court also suggested that the procuring agency might have used e-Buy to improperly attempt to modify a solicitation without issuing a formal amendment.

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AbilityOne Program: False Claims Act Allegation Leads to $5 Million Settlement

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More than once, a small government contractor has complained to me that there is “just no way” a particular AbilityOne contract recipient is performing at least 75% of direct labor hours with people who are blind or have other significant disabilities, as is required for a non-profit agency to participate in the AbilityOne Program.

Now those same contractors might be saying “I told you so.”  The U.S. Department of Justice announced yesterday that a Texas company has agreed to pay $5 million to resolve False Claims Act allegations that the company failed to comply with the 75% direct hour requirement over a period of six years, but misreported its compliance to the government.

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GAO: Contractor Cannot Claim “Experience” From Novated Contract

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Michael Jackson famously bought the publishing rights to most of the Beatles’ songs, but purchasing the Beatles’ music didn’t mean that Jackson could claim to have appeared on the Ed Sullivan Show in 1964.

As the GAO recently held, a similar principle applies in government contracting: simply buying another company’s government contract does not necessarily entitle the new contractor to lay claim to the other company’s experience.

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Idaho Man Pleads Guilty to HUBZone Fraud Charge

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An Idaho man has pleaded guilty to a HUBZone fraud charge.  According to a U.S. Department of Justice press release, last week, Patrick Large, the owner of Quality Tile and Roofing Inc., pleaded guilty to one count of wire fraud resulting from a HUBZone scheme.

Large admitted defrauding the government by falsely representing the location of two employees, apparently in order to satisfy the SBA’s “principal office” requirement for HUBZone firms.  Based on Large’s representation, the SBA admitted Quality Tile to the HUBZone program.  Quality Tile subsequently won a HUBZone set-aside contract valued at approximately $220,000.

As part of the guilty plea, Large agreed to pay $150,000 in restitution.  However, he still faces the possibility of additional penalties, including prison time.  He is scheduled to be sentenced on January 8, 2013.

Nearly Half of DoD Debarments Exceed Three Years: Highlights From the DoD Suspension and Debarment Report

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Yesterday, the GAO released a report on the DoD’s use of suspension and debarment procedures.

The GAO concluded that during fiscal years 2009-2011 (the years covered by the report), the DoD had active referral systems in place to initiate suspension and debarment proceedings, although the GAO determined that the DoD did not properly inform the GSA of its “compelling reasons” for doing business with suspended or debarred contractors in a handful of cases.

The report weighs in at 34 pages, so in case you did not have time to read the entire thing, here are some of the highlights.

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Federal Court: False Claims Act Covers Deliberate Underbidding

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Deliberate underbidding on federal government contracts–known in industry parlance as “buying in”–is not a terribly unusual practice.  Contractors may buy in for several reasons, such as an effort to gain a toehold in the federal marketplace or the belief that modifications to the contract will result in a higher actual price.

However, contractors thinking of underbidding, for whatever reason, should proceed with caution in light of a new federal court case.  In United States ex rel. Hooper v. Lockheed Martin Corp., No. 11-55278 (9th. Cir. 2012), the U.S. Court of Appeals for the Ninth Circuit held that underbidding and/or giving false estimates, at least in the context of a cost reimbursement contract, may be violations of the False Claims Act.

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