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‘Shame on you,’ disabled vet Duckworth grills IRS contractor

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Rep. Tammy Duckworth, D-Ill, lost her legs and the use of her right arm as a helicopter pilot in Iraq in 2004. She was awarded a Purple Heart for her combat injuries.

Braulio Castillo broke his foot in a prep school injury nearly three decades ago at the U.S. Military Preparatory School, which he attended for nine months before playing football in college. He owns a technology business certified as a service-disabled, veteran-owned company eligible for government set aside contracts.

The two met at a House Committee on Oversight and Government Reform hearing Wednesday in an exchange neither will forget anytime soon.

For background, what brought them together was a months-long House probe into whether Castillo’s company won IRS contracts thanks, in part, to help from a top contracting official and friend inside the IRS named Greg Roseman, who pleaded the Fifth Amendment when called to testify.

While much of the hearing delved into questions about Roseman and Castillo’s friendship, lawmakers from both parties wondered aloud how a prep school injury suffered so long ago could result in Castillo’s company getting special set aside contract status from the government at a time when so many injured veterans are looking for work.

But among hours of testimony, Duckworth’s questioning of Castillo stood out.

She talked of her own struggles and those of a friend who, exposed to Agent Orange, died of leukemia. She talked of recovering from her injuries along with a young man whose leg had been blown off. And she talked about a backlog of veterans waiting more than 200 days to receive disability ratings from the Department of Veterans Affairs.

At one point, Duckworth read aloud from a letter that Castillo had sent to the VA as his company sought set-aside contract status, quoting him as saying, “These are crosses that I bear due to my service to our great country and I would do it again to protect this great country.”

Duckworth paused.

“I’m so glad that you would be willing to play football in prep school again to protect this great country,” she said. “Shame on you, Mr. Castillo. Shame on you. You may not have broken any laws … but you certainly broke the trust of this great nation. You broke the trust of veterans.”

You can watch the exchange here.

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IRS official pleads the Fifth

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An IRS technology official at the center of a House investigation into whether he pushed the agency to award contracts potentially worth up to $500 million to a company owned by a personal friend pleaded the Fifth Amendment and refused to testify at a House hearing Wednesday.

A House Committee on Oversight and Government Reform report Tuesday said Greg Roseman, an IRS deputy director, may have influenced the IRS to award lucrative IT contracts to Strong Castle, Inc.

The same report also said the company had given the Small Business Administration misleading information to win approval so it could obtain set aside contracts, and that its Veterans Affairs-awarded status as a so-called service disabled veteran company was based on a nearly three decade old foot injury by its owner.

The House investigation also uncovered numerous text messages between Roseman and Strong Castle’s owner, Braulio Castillo. The company was previously called Signet Computers. The committee report said the company had little experience, but Castillo pushed back on that assertion, saying the firm had 15 years experience when he purchased it.

Still, Rep. Darrell Issa, R-Ca., the chairman of the committee, said the company had little experience because employees under the previous owner from years ago were no longer around.

Appearing before the committee, Roseman declined to testify other than giving his title, and he declined to say whether he was still employed by the IRS.

The House report called the relationship between Roseman and Castillo “cozy.”

“Text messages … show that Castillo and Roseman had a long-term friendship that extended well beyond a professional relationship,” the report said, adding that many of the messages were vulgar.

Investigators also found a February 2012 email from Roseman to Castillo in which Roseman provided the name of a supervisory contract specialist at the General Services Administration, where Roseman previously worked, who could help Castillo get a contract on GSA’s Schedule 70, a catalog of governmentwide contracts for information technology products and services. In the email, Roseman told Castillo, “I’ve talked to her and she will look into expediting.”

Beth Tucker, a deputy  IRS commissioner, said the agency is the process of severing its relationship with Strong Castle.

While Issa said the IRS hadn’t indicated in recent days whether it would continue doing business with the company, Tucker characterized new text messages uncovered in the House probe as a surprise to IRS officials.

She said Roseman was asked by supervisors if he had a personal relationship with Castillo and “he denied it.”

Meanwhile, Castillo said his company won blanket purchase agreements from the IRS, which placed orders that amounted to about $50 million, with most of that money going to the company’s large business partner, IBM.

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Probe finds personal ties, old injury aided IRS contractor

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A high school  injury nearly three decades ago enabled the owner of a contracting company to claim service disabled veteran status last year, opening the door to contracts worth up to a half billion dollars, a House investigation has found.

Braulio Castillo, owner Signet Computers, which has been renamed Strong Castle, injured his ankle in the fall of 1984 during his year at the U.S. Military Academy Preparatory School, but would later go on to play quarterback and linebacker the next year at the University of San Diego, according to a 157-page report Tuesday by the House Committee on Oversight and Government Reform, which will hold a hearing on the contract on Wednesday.

The report said high school football players recruited to play at West Point sometimes enroll in the prep school for a fifth year of high school to “redshirt” and prepare to play college football. Castillo’s injury happened during an orienteering exercise, and his nine months at the prep school represent the entirety of his military career, according to the report.

Still, 27 years later, soon after Castillo purchased a government contracting company, he filed a claim with the Department of Veterans Affairs seeking compensation for a service disability, investigators found.

Once approved, the disability enabled Castillo’s company access to government set asides through the VA’s Service Disabled Veteran Owned Small Business program.

Castillo told a VA examiner weighing the company’s application for entry into the set aside program about the “crosses I bear due to my service to our great country,” according to the report.

He later told congressional investigators that his injury was debilitating over the years and that he’d had three foot fusions. Had Castillo completed his year at the preparatory school without injury, he wouldn’t have been considered a veteran, but a VA official told House investigators that cadets who are injured at school become a veteran due to the service-connected disability, the report said.

The House report also found Castillo’s newly purchased company had no experience with the IRS last year, but still won lucrative information technology contracts worth up to $500 million, in part, because of its status as a HUBZone contractor and Castillo’s relationship with a top IRS contracting official.

Under Small Business Administration rules, a HUBZone, or Historically Underutilized Business Zone, designation gives contractors an edge in competing for federal work if they’re based in certain economically distressed areas.

The SBA revoked Strong Castle’s HUBZone status in May, but has declined to disclose why, saying the decertification letter contains confidential business information.

The House report, however, said the company provided “inaccurate, unreliable and misleading information” to SBA. In a statement to Federal Times prior to the report, company has said it disagreed with the SBA ruling.

The House probe also found that as Strong Castle sought IT work within the IRS, Castillo turned to a personal friend inside tax agency for advice named Greg Roseman, the deputy director of IT procurement.

The House report called the relationship between Roseman and Castillo “cozy”,

Among thousands of pages of documents, House investigators uncovered dozens of text messages between Roseman and Castillo.

“Text messages … show that Castillo and Roseman had a long term friendship that extended well beyond a professional relationship,” the report said, adding that many of the messages were vulgar.

Investigators also found an email from Roseman to Castillo in February 2012, in which Roseman forwarded along a contact at the General Services Administration, where he had previously worked.

At the time, Castillo was trying to place his company on the GSA Schedule 70.

“I’ve talked to her and she will look into expediting,” Roseman told Castillo, referring to a supervisory contract specialist who “knew that the application was a priority for Greg Roseman,” the report said.

Prior to the report, the Federal Times previously sought to interview Roseman and submitted questions to the IRS, which did not respond. Inquiries to Castillo about his military experience also were not returned.

The company was placed on Schedule 70 after 50 days, while the average wait is 114 days, the report said.

“Greg Roseman’s relationship with Braulio Castillo was invaluable in helping Strong Castle win numerous contracts potentially worth hundreds of millions of dollars,” the report concluded. “Given its limited track record and lack of prime contracting experience in the federal government, Strong Castle likely would not have won the contracts.”

Last year, the Treasury Department named Signet as its small business prime contractor of the year.

Association of Government Accountants honors agency reporting

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Twenty agencies big and small were recently noted for top-notch financial and performance reporting by the Association of Government Accountants.

The “Certificate of Excellence in Accountability Reporting” (CEAR)  singles out “high-quality Performance and Accountability Reports (PARs) and Annual Financial Reports (AFRs) that effectively illustrate and assess financial and program performance, accomplishments and challenges, cost and accountability,” the accountants association said in a news release. The association also spotlights the teams of dedicated federal professionals who (often unsung) put the reports together.

“Given the fiscal status of the United States government and the public’s perceptions about government fiscal accountability and transparency, the achievement of this year’s CEAR recipients is even more significant,” AGA Executive Director Relmond Van Daniker said in the release. The agencies being honored “truly represent a select group within the government financial management community.”

Here’s a rundown of the winners:

Architect of the Capitol
Federal Aviation Administration
Federal Housing Finance Agency
Federal Trade Commission
NASA
Office of Financial Stability (Treasury Department)
Peace Corps
Commodity Futures Trading Commission
Education Department
Housing and Urban Development Department
Interior Department
Labor Department
State Department
Treasury Department
Government Accountability Office
Nuclear Regulatory Commission
Patent and Trademark Office
Securities and Exchange Commission
Small Business Administration
Social Security Administration

Also honored at the May 22 National Press Club ceremony were 10 agencies that showed “specific points of excellence” within their fiscal year 2012 PARs. Known as ‘Best in Class’ awards, the recipients included:

Health and Human Services Department: Best Summary of Management and Performance Challenges by the Inspector General
Labor Department: Most Complete Schedule of Spending
Peace Corps: Most Comprehensive and Candid Presentation of Forward-Looking Information
FTC: Best Agency Head Message
HUD: Best Presentation of a Financial Management Systems Framework
Interior: Best High-Level Discussion of Performance
Capitol Architect: Best Analysis of an Agency’s Financial Statements
FAA: Most Representative of Editorial Excellence
Department of Homeland Security: Best Improper Payment and Recovery Act Reporting
Central Intelligence Agency: Best Introduction

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Three more sentenced for involvement in federal contract fraud

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Three men were handed down prison sentences this week for participating in a scheme to defraud the government of more than $20 million through Army Corps of Engineers contracts, the Justice Department announced Thursday.

Harold Babb, the former director of contracts at Eyak Technology LLC, was sentenced to seven years and three months in prison on federal charges of bribery and unlawful kickbacks, according to a news release.

Babb admitted that he paid Army Corps of Engineers program manager Kerry Khan in return for Khan’s approval on contracts and subcontracts to EyakTek and Big Surf Construction Management, an EyakTek subcontractor, the release said.

James Miller, the owner of Big Surf Construction Management LLC, was sentenced to five years and 10 months in prison, the release said.

Khan also allegedly approved fictitious and fraudulently inflated invoices worth $850,000 submitted by Alpha Technology Group, company president Robert McKinney told the Justice Department. Alpha Technology kept about $246,000, and the rest allegedly was passed on to Khan directly and through a company controlled by one of Khan’s family members, the release said.

McKinney was sentenced to two years and nine months in prison.

Upon completion of their prison terms, Babb, McKinney and Miller will be under supervision for three years.

Twelve people, including Khan, have pled guilty to charges related to the fraudulent use of Army Corps of Engineers contracts, and the investigation is continuing, the release said. Army Corps of Engineers program director Michael Alexander, who also allegedly took bribes from contractors in exchange for access to government contracts, was sentenced in September 2012 to a six-year prison term. The other defendants are awaiting sentencing, the Justice Department said.

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Small business procurement report needs adjustment, group says

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In anticipation of the government’s annual small business procurement scorecard this summer, a group of small business advocates and watchdog  groups has asked top federal procurement officials to stop practices that inaccurately reflect how close agencies have come to meeting their goals.

The scorecard measures the percent of federal prime and subcontract dollars awarded to small businesses, including women owned small businesses, small disadvantaged businesses, service disabled veteran-­‐owned small businesses and small businesses operating in Historically Underutilized Business Zones. The federal government’s goal is to award 23 percent of its contract dollars to small businesses each year.

During fiscal 2010, the federal  government spent more than $540 billion on goods and services, which means small businesses should have been awardedat least $124 billion worth of federal prime contracts, the group — which includes the Project on Government Oversight, Minority Business Round Table, Public Citizen and more than a dozen chambers of commerce  — said in a June 7 letter to SBA Administrator Karen Mills, Office of Management and Budget Acting Director Jeffrey Zients and Office of Federal Procurement Policy Administrator Joseph Jordan.

Instead, SBA reported that the government narrowly missed its 23 percent goal with $98 billion in small business awards.

The American Small Business League, which led the effort, found instances where contracts awarded to large corporations, such as  General Electric, Lockheed Martin and AT&T, and their subsidiaries have been incorrectly classified as small.  

The group said it also considers past scorecards  to be inaccurate because SBA does not include all federal contracting dollars when calculating the percentage. Instead, the agency uses an amount called “small business eligible,” which omits certain contracts, such as contracts for work performed overseas.

“During his campaign, President Obama promised to end the diversion of federal small business contracts to corporate giants,” said Lloyd Chapman, president of the American Small Business League. “It is time for President Obama to force the SBA to stop fabricating these numbers. They need to tell the truth, which is that small businesses get a small fraction of what the SBA says they do.”

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White House launches BusinessUSA.gov

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The administration on Friday launched a new beta website called BusinessUSA.gov to simplify online interaction between businesses and the government.

BusinessUSA.gov matches “businesses with the services relevant to them, regardless of where the information is located or which agency’s website, call center, or office they go to for help,” federal Chief Information Officer Steven VanRoekel said in a blog post Friday.

The website is currently in a beta version but will evolve to incorporate user feedback.

Business owners can browse the site and customize their search results to receive information about topics of interest, such as federal contracting, grants, or opportunities that meet their specific needs. For example, if a veteran- or minority-owned business is interested in loans or exporting, the website provides information about those topics.

President Obama first announced plans to launch BusinessUSA.gov in January and also said he would ask Congress for authority to merge agencies that handle business and trade functions into a single department. Sens. Joe Lieberman, I-Conn., and Mark Warner, D-Va., plan to sponsor a bill that would give the president “fast track” authority to consolidate government agencies, pending Congress’ approval.

“We shouldn’t be an inhibitor through the complexity that we present people,” VanRoekel said.

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New OMB adviser in line to replace procurement chief

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Word around town is that Joseph Jordan, an associate administrator at the Small Business Administration, has been tapped to replace outgoing Office of Federal Procurement Policy Administrator Dan Gordon.

The Office of Management and Budget won’t confirm that Jordan is the nominee for Gordon’s job, which requires Senate confirmation. But
Jordan has been named as a senior adviser to Jeff Zients, the federal Chief Performance Officer and OMB’s deputy director for management.

Jordan will start advising Zients and his senior staff on policy and procurement matters this month. Jordan did not respond to requests for an interview.

Being brought on as a senior adviser is a common first step before being nominated to a position like this. In the meantime, OFPP Deputy Administrator Lesley Field will serve as acting administrator starting Jan. 1.

Gordon announced last month that he will leave his post later this year to become associate dean for government contracts law at the George Washington University Law School.

Jordan has been SBA’s associate administrator of government contracting and business development since March 2009. His team oversees
several programs and services that help small businesses meet the requirements necessary to win government set-aside contracts.

Prior to joining SBA, Jordan was an engagement manager with McKinsey & Company, a global management consulting firm, where he
specialized in developing purchasing and supply management strategies for clients. He also worked in the firm’s public sector practice, advising state governments on how to cut costs and capture efficiencies.

Jordan also worked as a consultant at Corrigan Communications in Boston; built and managed operations of the Web-based publisher and marketer formerly known as Backwire; and was an associate producer on MSNBC’s “Hardball with Chris Matthews.”

Jordan holds a bachelor’s in political science from College of the Holy Cross in Worcester, Mass. and an MBA from the University of Virginia’s Darden Graduate School of Business Administration in Charlottesville, Va.

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Drawing the line between big and small biz

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If proposed changes to small business size standards are finalized, most of the nation’s engineering fims will be defined as small businesses, allowing them access to set-aside contracts that should go to “truly small firms,” the American Council of Engineering Companies said this week.

The Small Business Administration (SBA) is redefining what constitutes a small business in the professional, scientific and technical services sector for the first time in more than 25 years.

SBA has said the changes aim to reflect the current realities of industry.
For example, the revenue standard defining a small engineering services firm would increase from $4.5 million to $19 million under SBA’s proposal. For computer system design services, the change is more slight — from $25 million to $25.5 million.

The SBA started reviewing its size standards after its inspector general found that several large contractors were getting small-business contracts. SBA officials said at the time the findings demonstrated a need to change the rules for situations where long-term contracts let a small company grow past revenue size limits.

Craig Rose, an employee of Wetland Studies and Solutions Inc., said in a public comment to SBA that his company, with 75 employees and $9.7 million in annual revenue, is in a “no man’s  land” in the marketplace — too big to qualify as a small business but too small to compete effectively against large companies.

The increased size standard would provide more opportunities for moderate size firms like his and also allow federal agencies a larger pool of technical expertise from which to choose.

But  the changes would force engineering firms with a dozen employees or fewer to compete for work against companies with hundreds of employees, ACEC President David Raymond said in a news release.

“In engineering-and in many other industries-such a size difference produces unassailable advantages for the larger firms in vying for federal contracts,” he said.

ACEC, which represents more than 5,300 engineering firms nationwide, has recommended to the SBA a size standard increase to $10 million.

The SBA is in the process of finalizing the size standards after receiving hundreds of comments both in support and opposition of the changes.

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