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.
The Small Business Administration launched a new online course today designed to help small firms win federal contracts.
The course gives businesses information about the federal market, such as where to find opportunities, contract rules and how to sell to federal agencies.
The course, “Recovery Act Opportunities: How to Win Federal Contracts,” is part of the new Obama administration initiative to increase the use of small business among federal agencies. Last month, the White House announced SBA and the Commerce Department will take part in 200 outreach, education and training events over the next thee months to help small businesses win Recovery Act funded contracts.
You can access the course by clicking here.
FedLine guesses the advice provided there resembles nothing found in the book and Pulitzer Prize winning play How to Succeed in Business Without Really Trying.
I recently reported that the Small Business Administration and the Commerce Department were planning to participate in more than 200 events boost small businesses contracting under the American Recovery and Reinvestment Act.
But it looks like those agencies aren’t the only ones working to ensure small businesses benefit from stimulus spending. The Transportation Department announced today that it has dedicated $20 million in Recovery Act funds to create a “Disadvantaged Business Enterprise Bonding Assistance Program.”
The program, which is run by the department’s Office of Small Disadvantaged Business Utilization, allows small and disadvantaged businesses to apply for reimbursements for the bonding premiums and fees they pay when competing for transportation infrastructure projects, according to a department news release.
The program will help small and disadvantaged businesses better compete for Recovery Act-funded transportation projects by helping them get access to the money they need to participate in government contracting.
“These Recovery dollars will help level the playing field so these companies have the tools and resources they need to compete,” Transportation Secretary Ray LaHood said in the news release.
The announcements come just as SBA reported that agencies missed their 23 percent small business spending goal for the third year running. Last year, agencies spent approximately $94 billion, or 21.5 percent, of their contracting dollars through small businesses. The Obama administration said it hoped to reach those goals through improved education and outreach to small businesses and federal agencies.
For those readers who want to know when and where SBA and Commerce are holding or participating in events, I’m told SBA is compiling the list and will post it on the SBA Web site soon.
There is widespread fraud in the Small Business Administration’s Historically Underutilized Business Zone (HUBZone) Program, the Government Accountability Office has found.
In a review of 36 contracts awarded in four cities, GAO found that 19 firms claiming to be HUBZone eligible didn’t meet the qualifications for the program that is meant to benefit small businesses in severely economically depressed areas. The firms didn’t have their principal offices in HUBZones or didn’t meet the requirement mandating a certain percentage of employees live in the HUBZone.
The result: the firms fraudulently obtained more than $30 million in HUBZone contracts in fiscal 2006 and 2007.
These firms were located in Texas, Alabama and California, showing abuse of the program is beyond the Washington, D.C area, GAO said. GAO reviewed contracts awarded in Washington last July and found similar cases of abuse.
The latest GAO report was released at a House Small Business Committee hearing today. GAO also found the SBA did not remove 10 contractors identified in the July report from the HUBZone program. The continued participation of those firms in HUBZone meant an additional $25 million in HUBZone contracts went to the unqualified companies, GAO said. .
Committee chairwoman Rep. Nydia M. VelÃ¡zquez, D-N.Y. called GAO’s findings “disturbing.” She criticized SBA’s management saying:
In July, the SBA told us they had these problems under control. But, now, GAO finds dishonest companies deceiving SBA with techniques that an ambitious college intern could detect using Google Earth. No wonder so many contractors view the HUBZone program as a ‘contract cash cow’ and see SBA’s enforcement efforts as laughable.
She also expressed concern about the agency’s ability to oversee small business contracts awarded with stimulus money and worried continued oversight failures would result in a “historic amount of waste and abuse.”
In a written response to the report, SBA told GAO it is re-engineering the entire HUBZone certification process to minimize fraud and abuse of the program.
Bet your bottom dollar that the Small Business Administration‘s second annual report card on the government’s use of small businesses in procurement will come out tomorrow. We say this because we’ve been told there is a press conference on that very topic, so it’s a pretty safe bet.
The report cards grade agencies on how well they’ve met their individual goals for contracting with small businesses. These goals are often above and beyond the governmentwide goal of 23 percent, which is set by statute. Last year, SBA reported 12 agencies got red scores indicating they failed to reach their goals for fiscal 2006. We’ll see if anyone has done better in fiscal 2007.
The scorecards will come out along side the fiscal 2007 “Small Business Goaling Report,” which show whether the government reached its 23 percent small business contracting goal. No surprises expected there as we already know they missed it by a slim margin. Calvin Jenkins, SBA’s deputy associate administrator for government contracting, told us so in July.
Check federaltimes.com tomorrow afternoon for a complete story on all the results.