Tag Archives: waste fraud and abuse

Department Of Justice Forces $30M From Northrop For Fraudulent Costs

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Northrop Grumman Fraud

Northrop Grumman’s chalet at the 2018 Farnborough International Airshow. (Aaron Mehta/Staff)

“DEFENSE NEWS”

“Northrop Grumman will have to pay the U.S. government $30 million as a settlement for falsely billing hours to the Air Force between 2010 and 2013, the Department of Justice announced Friday.

Per the Justice Department, between July 1, 2010, and Dec. 31, 2013, Northrop employees stationed in the Middle East billed hours they did not work to the government.”


“But in an internal memo to employees obtained by Defense News, Northrop Chairman and CEO Wes Bush expressed his belief that the company followed its own internal procedures and appropriately handled the issue.

Northrop will make a payment of $25.8 million to the federal government. Additionally, the company will forfeit an additional $4.2 million to the Criminal Division of the U.S. Attorney’s Office for the Southern District of California, bringing the total of Friday’s settlement to $30 million. (Northrop had previously been hit for $1.65 million for the same issue.)

The issue stems from two Northrop contracts, the Battlefield Airborne Communications Node, an airborne communications relay, and the Dynamic Re-tasking Capability.

“Federal contracts are not a license to steal from the U.S. Treasury,” U.S Attorney Adam Braverman said in a statement. “DOJ is firmly committed to vigilantly weeding out abuse and will swiftly pursue all available remedies when egregious fraud occurs.”

Added John Brown, special agent in charge of the FBI’s San Diego Field Office: “Uncovering this immense fraud against the government and returning the funds to the American taxpayer is vitally important to ensuring our military receives the honest services they are due.”

In a statement, Northrop Grumman spokesman Tim Paynter said the company identified the issue and reported it to the government in 2013.

After the DOJ announcement, Bush sent an internal memo to staff, saying: “There should be no doubt, the misconduct of these former employees does not reflect who we are as a company, nor the values we embrace.”

“We took disciplinary action against those who we found acted improperly and violated company policy, and we took corrective action to strengthen our time-charging processes even further. We cooperated with the government as it investigated the issues over the following years,” Bush wrote in his memo.

“I am proud of the responsible way the company acted ― investigating, reporting and fixing issues as they arose. As always when we experience a disappointing situation such as this, we are using this opportunity to learn and further improve,” Bush continued. “This provides a strong reminder of the importance of adhering to our values in everything we do. It also serves as a reminder to us all that we each have a responsibility to speak up if we have any concerns.”

https://www.defensenews.com/industry/2018/11/02/department-of-justice-forces-30m-from-northrop-for-fraudulent-costs/

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Defense Contractor Agrees To Pay $1 Million To Settle Allegations Under The False Claims Act

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Alpha Reseaerch and Technology

Image:  Air Force Times

“U.S DEPARTMENT OF JUSTICE”

“In submitting its proposals, ART knowingly included millions of dollars in personal expenses of its owners Donne and DeAnn Smith, which ART knew were unallowable in government contracting.

Those expenses included payments for the design and construction of the Smiths’ luxury personal residence in Amador County, luxury cars, a personal caretaker, and a weekend at the Hotel del Coronado in San Diego.” 


“United States Attorney McGregor Scott announced today that Alpha Research & Technology, Inc. (“ART”), an El Dorado Hills company that provides command and control systems to the U.S. Air Force, has agreed to pay the United States $1 million to resolve allegations that it violated the False Claims Act by knowingly submitting inflated contract pricing to the government.

Between 2006 and 2011, ART submitted subcontract proposals to prime contractors including The Raytheon Company and The Boeing Company that were to be included in firm-fixed-price proposals made by those prime contractors to the Department of Defense.

The False Claims Act allows the government to recover damages and penalties for the presentation of false claims for payment to the United States. By improperly basing its government subcontract proposals on unallowable costs, ART caused the United States to pay improperly inflated prices.

“It is a priority of this office to safeguard public coffers against fraud and abuse that affect the integrity of federal contracting programs,” said U.S. Attorney Scott. “We will continue to work closely with our federal law enforcement partners to address the unnecessary expenditure of taxpayer funds, and results like this one help accomplish that objective.”

Chris Hendrickson, Special Agent in Charge of the Department of Defense, Defense Criminal Investigative Service (DCIS), Western Field Office, said, “Padding government contracts with personal expenses is an act of greed that diverts taxpayer dollars away from the critical support of our soldiers, sailors, airmen, and Marines.  DCIS is committed to working with partner agencies to root out fraud in Department of Defense contracting.”

“Cost mischarging schemes such as this cheat the Air Force and ultimately the American taxpayer,” said Air Force Office of Special Investigations Special Agent in Charge Cornelius King. “I appreciate the dedicated efforts of the Defense Criminal Investigative Service, The Defense Contract Audit Agency, and the U.S. Attorney’s office who helped hold this Air Force contractor accountable.”

The settlement is the product of a joint investigation by DCIS, the Defense Contract Audit Agency, and the Air Force Office of Special Investigations. Assistant U.S. Attorney Colleen M. Kennedy handled the case for the United States. The claims settled by this agreement are allegations only and there has been no determination of liability.”

https://www.justice.gov/usao-edca/pr/defense-contractor-agrees-pay-1-million-settle-allegations-under-false-claims-act

HUBZone’s Beware The Too Good To Be True Offer

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Hubzone 3 SBA

too good 1 McIntoshMD Rules

Free Lip Piercing Image:  “McIntosh MD”       Rules and Hub Zone Images “SBA”

“WASHINGTON TECHNOLOGY”  By Andrew Miller

“While the [HUBZone] program was designed to provide legitimate small businesses with a path to get their foot in the door with the federal government, it has become a prime target for fraud.

To retain their HUBZone eligibility and avoid potential civil or criminal liability, small business owners need to understand the potential pitfalls.”


I’m sure you’re familiar with the adage, “If it sounds too good to be true, it probably is.”

For owners of HUBZone businesses—small businesses that operate and employ people in Historically Underutilized Business Zones (HUBZones)—it’s a motto to keep in mind as they travel to one of the largest HUBZone matchmaking events in the country this October, the National HUBZone Conference in Chantilly, Virginia.

This annual conference provides a tremendous opportunity for HUBZone business owners and corporations to network and identify potential partners who can help them win business with the federal government. Unfortunately, such gatherings can also attract nefarious corporate executives who are on the hunt for a HUBZone business to illegally use as a pass-through to gain access to lucrative federal contracts that would otherwise be out of reach.

But there are proactive steps a HUBZone business can take to protect itself and the integrity of the HUBZone program.

Understandably, many small businesses are unable to comprehensively serve the needs of a federal contract on their own, so they partner with larger corporations. There are legitimate ways to engage in such a partnership and the SBA provides extensive guidance in how to do so. However, HUBZone businesses are sometimes approached with a proposal to sign off as a partner on a contract or bid without having to perform any of the actual work. That should raise a red flag. Experienced HUBZone businesses generally refuse to engage in these types of deals. But when large businesses are intent on establishing a pass-through with a HUBZone organization, they will often use conferences to shop the offer to many potential partners until someone says “yes.”

In other cases, large businesses and corporations are more covert about their intent to use a HUBZone organization as a pass through. In these instances, in the months immediately after partnering on a piece of business, a HUBZone organization may find their corporate partner slowly beginning to squeeze them out of performing the work for which they have been contracted, while still continuing to pay them. In these situations, when the work arrangement starts to look and feel less like a partnership and more like the HUBZone business is just being used for its HUBZone certification, it may be time to take a closer look at the engagement to see if the larger business is committing fraud.

Contractor fraud in HUBZone set-aside programs is a little bit like an iceberg. It can be difficult to detect and prove, which is why even though the problem is pervasive, only a small percentage of fraud cases ever make it to a courtroom. This is why HUBZone contractors play a key role in helping to police their industry. In particular, there are a number of ways for HUBZone business owners to protect themselves and the HUBZone program from these pervasive forms of fraud.

First, if you are a HUBZone business owner who is approached at a convention like the National HUBZone Conference to become a “pass through” for a larger corporation, keep your eyes and ears open. There is a strong likelihood that the corporate contact who offered you a “too good to be true” deal will pursue your peers until someone agrees to their terms. When you have knowledge of this type of fraud, it is important to reach out to an attorney who specializes in government contracting fraud cases and can help you share this information with the federal government. Often, by serving as a whistleblower, you may be entitled to monetary rewards if the government can prove the fraud occurred.

Second, if you are a HUBZone business that enters into a partnership with a larger organization, make sure you have a tightly defined contract and scope of work. This scope of work should clearly state the percentage of work that you are required to perform, as well as what the work will entail. By having these legal documents established at the beginning of a relationship, it will be very difficult for a corporate partner to illegally squeeze you out of a partnership.

Third, and most importantly, it is critical that HUBZone businesses have a strong backbone to stand-up to corporate executives rather than giving in and accepting payment in exchange for the use of their certification. If you’re in a partnership, insist that you perform the work—even if your corporate partner pressures you not to. And if you’re presented with a “too good to be true” offer, protect yourself and your business by walking away. When in doubt, talk to a lawyer.”

https://washingtontechnology.com/articles/2018/10/08/insights-miller-hubzone-warnings.aspx?s=wtdaily_091018

ABOUT THE AUTHOR:

Andrew Miller is a shareholder and attorney at the firm Baron & Budd. 

U.S. RecentlySanctions Government Contractors for Human Trafficking Abuses

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“POGO”

“Tamimi Global Company and several of its subsidiaries and employees accounted for 15 of the suspensions and the compliance agreement, and Texas Gulf Global General Trading & Contracting Company accounted for one suspension.

Both companies were working on U.S. Army contracts.”


pogo-human-trafficking

Photo:  “Project on Government Oversight”

“POGO has identified two companies that were recently sanctioned by the government for violating U.S. restrictions on human trafficking. An official in the Pentagon’s watchdog told POGO that Tamimi Global Company and Texas Gulf Global General Trading & Contracting Company were the two of the companies referred to, although not by name, in a recent State Department report.

The State Department’s Trafficking in Persons Report 2018 released in June reported:

[The Department of Justice] and other federal law enforcement agencies continued to investigate allegations of debt bondage and excessive recruitment fees required of third-country nationals working on certain U.S. government contracts abroad, but no federal criminal prosecutions of employers or labor contractors resulted from these investigations in FY 2017. [The Department of Defense] took action against noncompliant employers or labor contractors from U.S. programs resulting in 22 suspensions, six debarments, one job termination, and one compliance agreement. (emphasis added)

The report does not name these employers and labor contractors or the U.S. contracts and programs on which were they were working. After several weeks of digging and numerous calls and emails to the State Department and the Department of Defense, an official at the Pentagon’s Office of the Inspector General provided some details.

Little is known about Texas Gulf Global. It is a Kuwaiti company that had approximately $500,000 in federal contracts from 2013 to 2015. The System for Award Management database of federal contractor registrations and exclusions indicates that the company was suspended from federal contracting by the Army for about four months—from September 29, 2017 until February 1 this year—but provides no other details.

By contrast, Tamimi Global has a fairly extensive paper trail. This Saudi support services company is a key supplier of food services to U.S. forces in the Middle East. In 2011, Tamimi paid $13 million to settle criminal and civil allegations of paying kickbacks to win contracts supporting Army operations in Iraq and Kuwait in the 2000s. Tamimi vice president Mohammad Shabbir Khan was sent to prison for his role in the scheme, which involved employees of defense contracting giant KBR. KBR and Tamimi were two of the infamous “Flagrant Five”—five companies former Wartime Contracting Commissioner Charles Tiefer called out in 2011 for their poor contract performance and checkered legal histories.

The System for Award Management database shows Tamimi was suspended by the Army from April 5, 2017 until July 28, 2017. The Federal Awardee Performance and Integrity Information System (FAPIIS) shows that, on the day the suspension was lifted, Tamimi entered into a three-year administrative compliance agreement with the Army resolving alleged violations of the Trafficking Victims Protection Act on a $134 million food services contract in Kuwait.

According to the facts set out in the administrative agreement, Tamimi employees recruited in Bangladesh were promised salaries of 100KD (Kuwaiti Dinars) per month, but many were paid only 40KD. (Kuwaiti law requires employers to pay a minimum monthly salary of 60KD.) Employees worked 12-hour shifts for seven days a week, and one employee allegedly received “unacceptable treatment.” Tamimi disputed some of the facts, but agreed there was a “legally sufficient basis” for debarment. The agreement contains no monetary penalties, but it requires Tamimi to hire an independent compliance monitor and to take steps to strengthen its corporate ethics and compliance programs.

When notified of Tamimi’s latest wrongdoing, Charles Tiefer told POGO “Tamimi was one of the worst contractors from the wars in Iraq and Afghanistan.” In particular, he remembers the company’s stonewalling with regard to the KBR kickback affair.

“The Tamimi Group refused to let the Defense Contract Audit Agency look at the company’s books to see where the kickback money came from,” Tiefer said.

Finally, we have a few things to say about the government’s contractor accountability web resources. Both FAPIIS and the System for Award Management are extremely useful resources that help the public delve into the backgrounds of federal contractors and grantees. However, both have flaws that can also confuse or mislead the public. For example, FAPIIS contains three listings for Tamimi (two of which differ by a single punctuation mark) but only one contains a record of the administrative agreement. FAPIIS is supposed include data on human trafficking instances, but the “Information on Trafficking in Persons” section of Tamimi’s and Texas Gulf’s listings contains no records. The System for Award Management keeps active and inactive exclusion records separate, so the suspensions of Tamimi and Texas Gulf do not appear in the initial search of the database. Both databases also suffer from a government-wide identification system that assigns some business entities more than one identifying number, making it even more difficult to track down records for a particular company.

All of this underscores the need for the government to finally adopt a better unique identifier system and create a one-stop public portal for all spending and contractor accountability data, as well as agency watchdog reports and audits. Improving these tools is essential for ensuring the public is aware of companies that commit serious human rights violations.

POGO has long been engaged in the fight against human trafficking involving federal contractors, a worldwide problem our government exacerbates as the single largest purchaser of products and services on the global market. For many years, we have pushed for reforms to ensure contractor involvement in this form of modern slavery is stopped.

We are heartened to hear that there are criminal investigations into the other recent instances of alleged human trafficking by government contractors. These abuses are unacceptable, let alone from companies doing business with the U.S. government. Powerful safeguards, meaningful transparency, and strong punishments are necessary to ensure human trafficking is eradicated.”

https://www.pogo.org/investigation/2018/08/pogo-identifies-defense-contractors-recently-sanctioned-for-human-trafficking-abuses

Army Carefully Considering Next Worldwide Logistics Contractors

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Logcap Contractor

(Photo: U.S. Army / Summer Barkley)

“The United States Army is still deciding to which companies it will award a major contract that supports U.S. troops stationed around the world.

Past versions of the contract were plagued by contractor misconduct that resulted in waste, fraud, abuse, and consequent harm to service members.”


“The Army has delayed the award date multiple times, but one can hope it is to ensure the contract is granted to companies that will faithfully execute it.

The contract, called the Logistics Civil Augmentation Program (LOGCAP) V, is currently capped at $82 billion and will consist of four to six contracts lasting up to ten years­—a five-year base term followed by five one-year options. Contractors will provide services ranging from supplying food, water, and shelter to performing facilities maintenance and construction.

The previous version of the contract, LOGCAP IV, was awarded to DynCorp International LLCFluor Intercontinental, Inc., and Kellogg Brown & Root Services, Inc. (KBR). Two of the companies allegedly committed misconduct while working on it. Employees accused Fluor of retaliating against them after they claimed the company manipulated reports to hide lost government property. Firefighters on military bases accused KBR of denying them pay and benefits, and the company was disqualified from fulfilling part of the contract for refusing to take action after an employee viewed sensitive and proprietary information. KBR is the contractor that originally drew controversy to the LOGCAP contracts in 2001. KBR’s former CEO, Dick Cheney, was Vice President of the United States when LOGCAP III was awarded to the company. The government and employees sued the company numerous times for waste, fraud, and abuse. Most famously, KBR exposed thousands of troops stationed in Iraq to unsafe wastewater that the troops used when showering, washing clothes, brushing their teeth, and occasionally making coffee. Troops may have suffered health problems due to exposure. KBR was awarded LOGCAP IV despite its track record on LOGCAP III.

The other incumbent, DynCorp, has not been charged with misconduct while working on LOGCAP IV, but it too has a history of malpractice on other government contracts. Ecuadorians accused the company of causing extreme physical and mental harm as well as property damage after the contractor sprayed pesticides over Colombia and Ecuador to eradicate cocaine and heroin crops. DynCorp employees also pleaded guilty to overcharging the State Department for rent in Iraq.

LOGCAP IV expired in April 2018, but the Army has repeatedly delayed awarding LOGCAP V. According to LOGCAP V project manager Jerome Jastrab, the decisions will be announced around December 2018. In the meantime, services will continue to be provided by the three incumbents whose contracts were extended for up to two one-year terms. LOGCAP IV ended up costing approximately $22 billion prior to the extension, although the government capped it at $150 billion. The Army has not publicly disclosed the dollar amount of the contract extensions.

In October 2017, the Army hosted Industry Day, an event for companies that were interested in bidding on contracts and learning more about contract expectations. Representatives from LOGCAP IV incumbents Fluor and KBR attended; DynCorp was not present at the event. While the Army only allowed three representatives from most companies to attend the event, Fluor was allowed seven.

There are plenty of other companies also looking to come away with a piece of LOGCAP V. One such company is Pacific Architects and Engineers (PAE), once a subsidiary of Lockheed Martin. PAE has created two separate joint ventures with defense suppliers—one with Parsons Corporation and the other with Vectrus Systems—in hopes of increasing its chances of winning. The joint ventures are headed by Scott Welker, who was a senior official at the Army contracting headquarters three months prior to leading the ventures. All three companies were at Industry Day, with Vectrus being allowed six representatives despite the three-person limit.

The new companies have also had their share of alleged and proven misconduct while working on other government contracts. Most recently, PAE paid the government $5 million for failing to conduct, and falsely billing the government for, personnel background checks. Prior to this, PAE paid $1.15 million for bid-rigging on a services contract in Afghanistan. Vectrus, who is teaming up with PAE, retaliated against employees who were cooperating with an investigation into illegal activities at Bagram Air Base in Afghanistan. The jury awarded the employees $1.7 million in damages. Parsons, the other defense supplier partnering with PAE, failed to complete two thirds of the projectsassigned in a construction contract in Iraq, prompting the Army to ask the company to show cause for why it should not be debarred.

The Army is taking steps to improve performance and to safeguard against contractor fraud and misconduct in the next LOGCAP contract. First, the contract will be awarded on a competitive basis in hopes that competition will improve contractor accountability. This was the approach implemented in LOGCAP IV and resulted in far fewer instances of misconduct than the previous, sole-source contract. Second, the Army will require contractors to create crisis action plans to prepare for unforeseen or sudden warfighter needs. These plans will be put to the test during the three planning exercises per yearnow required at bases in each region. In principle, implementing these measures will help contractors respond more quickly to troop needs.

In addition, the Army is learning from mistakes from past contracts. They agreed to implement in LOGCAP V all corrective actions suggested by the Department of Defense Inspector General in a LOGCAP IV audit to increase accountability and effective contractor oversight.

While nothing is certain about which companies will win the LOGCAP V contract, it’s good to see the government designing the contract with safeguards, such as requiring contractors to submit crisis action plans, to ensure they do what they’re supposed to and are held accountable when they don’t. Hopefully the extra time that was needed to amend LOGCAP V and to deliberate over who will win the contracts will result in improved decisions when it comes to the contractors the Army chooses and, ultimately, in improved logistical support for our troops.”

http://www.pogo.org/blog/2018/08/army-carefully-considering-next-worldwide-logistics-contractors.html

 

The 37 Year Tax-Day Impact Of The Project on Government Oversight (POGO)

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POGO and Your Taxes

“POGO”

“POGO exposed the fact that the Pentagon was buying $7,600 coffee makers and $435 hammers.  [POGO works] with government insiders in order to sound the alarm on wrongdoing by government contractors and workers and to save taxpayer dollars—all on behalf of the public.

[POGO] investigations have found billions of dollars in actual and potential savings. Here are some of the highlights.”

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“In a 1999 report, POGO pointed out that if contractors could inflate the price of everyday items like coffee makers and hammers, how much were they overcharging for things taxpayers didn’t understand, like high-tech weapon systems? Our investigations have found billions of dollars in actual and potential savings. Here are some of the highlights.

POGO publicized over $893 billion in improper payments.

The American taxpayers lose hundreds of billions of dollars every year because the federal government makes payments to the wrong people or institutions, or in the wrong amount. For example, the government sometimes sends benefits to individuals who are deceased, or FEMA pays fraudulent claims following disasters like hurricanes. Unfortunately, the government doesn’t do enough to address the problem. In 2016, POGO completed a set of reports that publicized $893 billion in improper payments between FY 2008 and 2015. In our reports, we provided recommendations to identify and recover improper payments that potentially could save the government billions of dollars. Currently, POGO is advocating for a bipartisan bill, the Stopping Improper Payments to Dead People Act. This act would allow the Social Security Administration to share its database of deceased people with many other government agencies to reduce inaccurate payments to dead people.

In 2001, POGO’s reporting causes military to stop two wasteful weapons projects, saving $49 billion.

In a blistering set of reports sent to the White House in 2001 on the defense weapon acquisition process, POGO exposed how multiple weapon systems wasted taxpayer money and ultimately made us less safe. One example was the Crusader howitzer cannon, which entered into the acquisitions phase before United Defense finished its preliminary design. Our analysis cited a Government Accountability Office report that found the Crusader weighed too much, underwent shortcuts in testing, and was behind schedule. Another example was the RAH-66 Comanche helicopter, which suffered from many of the same problems. While military planners designed the helicopter to be inexpensive, the cost quickly ballooned from $12.1 million to $58.9 million a copy as the development cost increased and the testing schedule was delayed.

POGO investigation into F-35 leads to $21 billion to $40 billion in taxpayer savings.

Multiple POGO investigations have found serious problems in the F-35 program. In one report last year, we discovered that the Air Force wanted to leave several older F-35s unfinished because paying to update them would make it harder to buy new fighters. The Air Force bought the F-35s while still designing and testing the aircraft—a decision POGOand the Government Accountability Office have independently labeled as a major driver of increased cost. After POGO published its report, the Air Force decided to stop the plan, preventing between $21 billion and $40 billion in waste.

POGO investigations help get the Deepwater contract cancelled, saving $24 billion.

In 2007, POGO investigated a $24 billion Lockheed Martin and Northrop Grumman project to update the U.S. Coast Guard’s equipment that resulted in millions of wasted dollars. To save money, the Coast Guard initially allowed the two private contractors to oversee and manage the project. Relying on private contractors to conduct inherently governmental functions ultimately cost the Coast Guard millions, because the contractors made numerous design and technical mistakes. After POGO’s investigation, media attention, and several high-profile disasters, the Coast Guard took back management of the project, and later asked for a $96 million refund.

POGO reporting helps shut down the wasteful Superconducting Super Collider, saving $11 billion.

POGO led the way in campaigning to cancel the Superconducting Super Collider, a grossly over budget project run by contractors that took advantage of weak oversight and permissive spending guidelines to overcharge the federal government. According to invoices obtained by POGO, the principal subcontractor charged the government $21,369 for office plants in a year and $1,107 dollars for Christmas cards, among other waste. POGO’s investigation turned the Super Collider into the largest government project ever cancelled at that time, saving taxpayers roughly $11 billion dollars.

Our investigation into Boston’s “Big Dig” helps save taxpayers roughly $11 billion.

Even before Boston’s Harbor Tunnel Project, known as the Big Dig, became a national embarrassment, POGO investigated the devastating impact of private contractors spending billions of tax dollars to build a highway project with little federal or state oversight. The Big Dig started with a $2.3 billion budget but, with contractors given a free rein, it ballooned to around $24.3 billion as the project suffered from delays, bad planning, and mismanagement. Initially, federal taxpayers were on the hook for 80% of the funding, but POGO’s investigation helped reduce losses by getting Congress to freeze federal spending at $8.6 billion, saving federal taxpayers roughly $11 billion.

POGO helps cancel the F-22, saving $4.268 billion in one year.

Much like the F-35, the F-22 cost much more than advertised and drained resources from other critical Air Force priorities—like training pilots. Also like the F-35, POGO campaigned heavily to end the program. After almost a decade’s worth of reportspress releases, and conversations with Members of Congress and their staff, POGO finally succeeded in helping get the program shut down—thanks in large part to Senators Carl Levin (D-MI) and John McCain (R-AZ). Cancelling the production of 240 F-22s saved taxpayers $4.268 billion that year alone.

POGO helps the government collect over $1 billion in additional oil royalties to date.

During the late 1990s, POGO investigators uncovered how the Interior Department ignored the fact that several oil companies chronically underpaid the Federal Treasuryon royalties they owed for oil they extracted from public lands. In 1997, POGO filed a False Claims Act lawsuit against 16 major oil companies. By 2001, the companies settled the lawsuit. The U.S. Treasury recovered nearly half a billion dollars in unpaid royalty revenue, and began collecting $67 million more per year in royalties owed to the public.

POGO reporting causes Air Force to suspend bad Hamilton Sundstrand contract, saving $664 million.

Every year, POGO warns the government about no-bid contracts fleecing American taxpayers. In 2006, POGO investigators published a previously not-public Department of Defense Inspector General report finding that defense and aviation contractor Hamilton Sundstrand raised the price of several mechanical parts by nearly 900 percent with no reasonable justification. We wrote to Congress showing how contractors were taking advantage of acquisition regulation loopholes to reduce oversight. Our work led the Air Force to suspend the 9-year, $860 million dollar contract, saving taxpayers $664 million dollars.

POGO advocates for bipartisan compromise to reduce contractor compensation, saving $200 million per year.

Prior to 2013, an outdated law that was used to determine contractor compensation packages allowed some companies to receive excessively high executive salaries and benefits—at the expense of taxpayers. This system allowed contractors to receive more money than comparable employees in the federal government. After years of work by POGO, a bipartisan group of legislators voted to reduce the cap from $952,308 to $487,000, saving taxpayers $200 million per year.

POGO investigation helps Air Force save $168 million on C-130J military airlift contract.

The C-130J was a mechanically flawed cargo plane that cost more than expected and the Pentagon didn’t want. A 2005 POGO report highlighted that the Air Force dubiously labeled the C-130J a “commercial” item in order to decrease oversight, a decision that ultimately led to many of the C-130J’s problems. After the Pentagon said they didn’t need the plane, a group of influential military contractors and U.S. Senators lobbied hard to preserve the unnecessary aircraft. POGO worked with Senator McCain and other Members of Congress to restructure the C-130J contract and save taxpayers $168 million.

POGO helps publicize $100 million in fraud by Northrop Grumman.

In 2014, POGO investigators made public a Defense Department Inspector General report that found Northrop Grumman knowingly overcharged the federal government around $100 million for an anti-terrorism program. The U.S. Army contracting agency tasked with overseeing the contract was not conducting proper oversight—until whistleblowers, POGO, and the Defense Department Inspector General got involved. We highlighted how Northrop Grumman and its subcontractor DynCorp defrauded the government in multiple ways. They billed the government for more labor hours than there are in a day and for employees who lacked required education qualifications. They also classified one employee for seven different positions including “depot aircraft mechanic, a senior general engineer, an integrated logistics manager, a quality assurance manager, a program manager, a senior pilot, and a senior technical writer.”

POGO’s investigations into waste, fraud, and abuse of power by the federal government are a core part of the organization’s mission.”

http://www.pogo.org/blog/2018/04/pogos-outsized-tax-day-impact.html

 

 

 

 

 

 

U.S. A Haven for Global Corruption Profits, Panelists Say

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POGO Anti-Corruption

Danielle Brian, POGO Executive Director, speaks at a panel, “Democracy Defenders in Dialogue: Sharing Lessons from Investigative Journalism and Anti-Corruption Advocacy Partnerships Around the World,” December 14, 2017.

 

 

 

 

 

 

 

 

 

 

“THE PROJECT ON GOVERNMENT OVERSIGHT (POGO)”

“Global Witness, an anti-corruption nonprofit that focuses on how corporate secrecy in developed countries facilitates corruption in developing ones, regularly highlights how criminals make use of anonymous American companies.

In one such example, Mexico’s largest drug cartel “used an anonymous Oklahoma company in a scheme to launder millions of dollars of drug money into the United States.” In another, a Russian mobster “allegedly set up a network of anonymous companies stretching from Eastern Pennsylvania to the United Kingdom to cheat the stock market and steal over $150 million from investors.”


“Last fall, the Miami Herald and a freelance journalist who works for Transparency International’s Russian chapter worked together to reveal how a Russian bureaucrat, ostensibly making the equivalent of $75,000 a year, was secretly buying multi-million dollar condos in South Florida. While Transparency International brought the individual’s corruption to the attention of the Russian government, the Miami Herald was able to focus its stories on the systemic problem of corrupt Russians (and others) using American real estate to hide and launder money.

The case is a prime example of how American journalists and advocates can work with their peers overseas to highlight the systemic problems that allow corruption to flourish and to help bring the individuals to justice in their own country. By working together and sharing information with international civil society groups, journalists can significantly amplify the impact of their stories. American regulatory, law enforcement, and intelligence agencies are better at their jobs because they regularly work with other countries. Journalists and advocates should do the same.

Danielle Brian, the Project On Government Oversight’s executive director, participated in a panel discussion in December examining how American journalists and anti-corruption nonprofits can partner with other groups around the world to more effectively address international corruption.

Panelists shared numerous instances when the impact of a story was amplified around the world as a direct result of organizations working together. The competitive media environment in the United States, however, means that such cooperation is rare here despite the potential benefits. With everybody looking to distinguish themselves, journalists are unlikely to share valuable records and risk having someone else publish the story first. International cooperation has also been hampered by technological barriers, although new platforms and tools are making it far easier to manage those partnerships. Despite the barriers, American journalists are beginning to take advantage of opportunities for cooperation.

Panelist Marina Walker Guevara, deputy director of DC-based International Consortium of Investigative Journalists, pointed to the Panama Papers and the more recent Paradise Papers projects to highlight the benefits of cooperation. The projects were based on massive leaks of information from firms that facilitate tax evasion and avoidance by the rich and powerful. The original recipient of the leaks, a German newspaper, decided that the sheer volume of records and the global scope required a global investigation. By partnering with a global consortium of trusted journalists, investigators were able to share access to records and help each other put various pieces of the puzzle together. All of the participating organizations had time to make sense of the records, and they then broke the news on the same day, creating a massive media wave that grabbed the world’s attention. As a result, approximately 80 countries have launched a total of nearly 150 audits, investigations, prosecutions, and arrests. One such investigation in India encompasses over four hundred entities. Iceland’s Prime Minister resigned, Pakistan’s former Prime Minister has been indicted, and the founders of the law firm whose records were leaked have been arrested.

Another organization that was featured on the panel is the Organized Crime and Corruption Reporting Program, led by Drew Sullivan and Paul Radu. Organized crime, they say, can only be defeated by an organized opposition. When that crime crosses national borders, the opposition must do so as well. Their organization is dedicated to conducting cross-border investigations, and they help teach other organizations how to maximize their impact through international reporting.

As international corruption increasingly crosses America’s borders, the oversight community needs to play catch-up.

“While the rest of the world provides the transparency that the U.S. demanded, the U.S. is rapidly becoming the new Switzerland,” the Bloomberg Editorial Board wrote in December. Despite requests from the previous administration, Congressional inaction on the issue has prevented the reporting of information like account balances and the names of beneficial owners—the same information that other countries provide to us. “A Russian billionaire, for example, can put real-estate assets in a U.S. trust and rest assured that neither the U.S. tax authorities nor his home-country government will will know anything about it.”

Corporation secrecy laws in Delaware, Nevada, Wyoming, and other states facilitate transnational crime, according to a Transparency International report from January 2016. Complex webs of anonymous shell companies can make law enforcement’s job much more difficult and allow foreign organizations to get away with defrauding Americans and committing crimes.

The bad news is that too many investigations into international corruption lead to American companies. The good news is that while corruption can transcend borders, the work of watchdogs can too. POGO is looking forward to working more closely with international groups in the months and years to come.”

http://www.pogo.org/blog/2018/01/us-a-haven-for-global-corruption-profits-panelists-say.html

 

 

Big Data At Its Best – POGO Federal Contractor Misconduct Data Base

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POGO Misconduct

THE PROJECT ON GOVERNMENT OVERSIGHT – POGO”

“We encourage you to visit our Federal Contractor Misconduct Database, which currently contains 412 resolved and 121 pending instances of workplace-related misconduct by the federal government’s largest contractors.

The government’s top vendors have paid a collective total of $2.7 billion in fines, judgments, and settlements since 1996 for a wide variety of labor violations, including discrimination, health and safety hazards, unpaid wages, and whistleblower retaliation.

The vast majority of the labor misconduct instances in our database did not involve the federal government. About 54 percent were lawsuits filed by private parties, while another 7 percent were enforcement actions by local, state, and foreign governments. One instance we recently added is KBR’s $3.75 million settlement of a lawsuit brought by construction workers who alleged the company stiffed them on wages and meal breaks at a California mining facility.

The Trump administration’s efforts to roll back worker protections and oversight of contractors’ business practices could further shrink the percentage of labor instances involving Uncle Sam in our database. Nonetheless, at least for now, federal enforcers are still on the job. A few weeks ago, the National Nuclear Security Administration hit National Security Technologies, the managing contractor of the Nevada Test Site, with a proposed $112,500 fine for violations of worker safety and health requirements. In May, the Occupational Safety and Health Administration fined Exxon Mobil $164,775 for violations related to a November 2016 Baton Rouge refinery explosion that injured four workers.

A list of all resolved and pending labor misconduct instances in our database can be found at this link.”

http://www.pogo.org/blog/2017/09/celebrate-labor-day-by-diving-into-contractor-misconduct-data.html

 

 

Corporate Crime Crackdown

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Photo Credit: Derek Key / Flickr

“THE PROJECT ON GOVERNMENT OVERSIGHT”

“In the 72 days between Election Day last year and the inauguration, federal agencies obtained more than $20 billion in penalties and settlements from dozens of companies accused of defrauding consumers or risking public health and safety.

That’s the key finding of the nonprofit watchdog Good Jobs First, which expanded its Violation Tracker database of corporate misconduct this week. Among the new cases added to Violation Tracker are the flurry of high-dollar settlements announced in the final days of the Obama administration:

  • Deutsche Bank ($7.2 billion): misleading investors in its sale of residential mortgage-backed securities
  • Credit Suisse ($5.3 billion): making false and irresponsible representations about residential mortgage-backed securities
  • Volkswagen ($4.3 billion): conspiracy to cheat US emissions tests
  • Takata Corporation ($1 billion): fraudulent conduct relating to the sale of defective airbag inflators
  • Moody’s ($864 million): providing flawed credit ratings for residential mortgage-backed securities and collateralized debt obligations
  • Western Union ($586 million): failing to maintain an effective anti-money laundering program and aiding and abetting wire fraud

“Given the Trump administration’s focus on deregulation rather than enforcement, the Obama administration’s wave of case resolutions may represent Uncle Sam’s last hurrah against business misconduct for some time,” Good Jobs First Research Director Philip Mattera said in a press release.

Violation Tracker, launched in 2015, now contains 120,000 enforcement actions by 39 federal agencies in cases ranging from accounting fraud, consumer scams, and public health and safety hazards, to false claims, price fixing, and bribery. The database also added whistleblower retaliation cases handled by the Occupational Safety and Health Administration.

Violation Tracker is a good complement to POGO’s Federal Contractor Misconduct Database, which tracks fewer companies but covers a longer time period and isn’t limited to cases initiated by the federal government.

Good Jobs First maintains other useful corporate and government accountability resources. Its Subsidy Tracker database, about which we’ve blogged before, collects information on local, state, and federal economic development subsidies and other financial assistance to businesses. The organization also compiles corporate “rap sheets” on dozens of the world’s largest and most controversial companies.”

http://www.pogo.org/blog/2017/02/tracking-corporate-crime-crackdown-obama-database-violation-tracker.html

Government Fraud Recovery Bounces Back in 2016

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“THE PROJECT ON GOVERNMENT OVERSIGHT”

“It is  a substantial increase over last year’s total.

A large number of recoveries came from contract fraud cases involving some of Uncle Sam’s most prominent suppliers of goods and services.

The Justice Department announced on Wednesday it had recovered for taxpayers more than $4.7 billion through settlements and judgments from False Claims Act cases in fiscal year 2016. According to the announcement, it is the third highest annual recovery in False Claims Act history. It is also a substantial increase over last year’s total.

Of the $4.7 billion recovered, $2.5 billion came from health care fraud cases. An additional $1.7 billion came from settlements and judgments in cases alleging false claims in connection with federally insured residential mortgages.

  • Boeing: $18 million to settle allegations that it overcharged the US Air Force for aircraft maintenance services at Boeing’s Long Beach, California, depot. (In 2014, Boeing paid $23 million for allegedly overcharging maintenance work at its depot in San Antonio, Texas.)
  • Centerra Services International: $7.4 million to resolve a lawsuit accusing the company of overbilling the Army for firefighting services in the Middle East
  • Computer Sciences Corporation: $1.35 million for billing the Defense Information Systems Agency for subcontract workers who lacked the required security clearances
  • Deloitte Consulting LLP: $11.38 million to resolve overbilling claims on a General Services Administration contract
  • DRS Technical Services: $1 million to settle charges that employees billed the Army for hours they did not work
  • L-3 Communications: $25.6 million to settle claims of selling the government defective weapon sights
  • Lockheed Martin: $5 million for allegedly misleading federal and state regulators about noncompliance with environmental regulations at the Paducah Gaseous Diffusion Plant in Kentucky
  • SRA International: $1.1 million for alleged false billing on military contracts
  • United Technologies: $11 million in penalties, interest, and disgorgement of profits for overcharging the Air Force for jet engines in the 1980s
  • URS Corporation: $9 million to settle allegations that a subsidiary defrauded the government into awarding it construction contracts that it was not eligible to receive. In a different case, URS paid $580,000 for allegedly overbilling labor rates on a bridge reconstruction project.

The False Claims Act is the government’s primary tool to redress fraud in the areas of health care, defense and national security, food safety and inspection, federally insured loans and mortgages, highway funds, small business contracts, agricultural subsidies, disaster assistance, and import tariffs. In 1986, Congress strengthened the Act by increasing incentives for whistleblowers to come forward with allegations of fraud. Most false claims actions are filed by whistleblowers in qui tam lawsuits. Since 1986, the government has recovered slightly over $53 billion, awarding more than $6.3 billion of that to the whistleblowers who filed the lawsuits—often at great risk to their careers.

On the same day the Justice Department announced its annual fraud recoveries, it also announced it had collected nearly $15.4 billion in civil and criminal cases in FY 2016, one-third less than last year’s total. This amount includes recoveries in all civil and criminal enforcement cases (including those involving the False Claims Act), fines imposed on individuals and corporations for violations of federal financial, health, safety, civil rights, and environmental laws, and collected debts owed to the federal government.

How will the False Claims Act fare under the Trump administration? At least one expert foresees very little change.

Taxpayers Against Fraud acting president Patrick Burns recently observed that Senator Jeff Sessions (R-AL), President-elect Trump’s choice for Attorney General, “has never winked at companies that harm American workers and consumers” and “understand[s] the value of whistleblowers and whistleblower laws when it comes to fighting corporate theft and crony capitalism.” He noted that Sessions has supported strengthening the False Claims Act and has a good relationship with Senator Chuck Grassley (R-IA), the law’s key champion in the Senate.

Burns’ prediction gives us hope that active enforcement of the False Claims Act—and billions of dollars in annual recoveries—will continue for years to come.”

http://www.pogo.org/blog/2016/12/federal-fraud-recoveries-fy-2016.html