Procurement Fraud

A settlement has been reached to resolve False Claims Act allegations against Lusk Mechanical Contractors and Commonwealth Technologies, and their owners, Harry Lusk and Wendell Goodman. They are accused of submitting false statements to the Small Business Administration and false claims to the Army.

Under the terms of the settlement, Commonwealth, Lusk Mechanical, Goodman, and Lusk have agreed to pay $3,741,739.96, and to forfeit $2,506,260.24 seized by federal agents from their bank accounts under a civil forfeiture action.

The government's investigation involves allegations that Lusk Mechanical, Commonwealth Technology and their owners made, or caused to be made, false statements to the SBA to obtain certification as a HUBZone company, and then used this certification to wrongfully obtain Army contracts to build a courthouse in Fort Knox, Ky., and to complete maintenance and other repairs to Army facilities in Fort Knox. Specifically, the United States alleged that in February 2005, Commonwealth submitted an application to the SBA representing that it was a small business with its principal place of business in a designated HUBZone. In fact, Commonwealth allegedly operated out of Lusk Mechanical’s headquarters, which was not located in a HUBZone area. Commonwealth’s business office was identified on the application as 212 East Caroline Street, Irvington, Ky. The United States alleged that this location was nothing more than a vacant office space with no employees, and that Commonwealth’s application did not disclose that Wendell Goodman and Harry Lusk were, in fact, affiliated with Lusk Mechanical. At the time, Harry Lusk and his wife were the sole owners of Lusk Mechanical and Wendell Goodman was the chief executive officer of Lusk Mechanical. According to the United States’ allegations, neither Lusk nor Goodman disclosed in the application to the SBA that Commonwealth did not operate as an independent company, but instead shared facilities, equipment, personnel, insurance and bonding with Lusk Mechanical, nor did they inform the SBA about the financial relationship between Commonwealth and Lusk Mechanical. The United States alleged that, using the falsely obtained HUBZone certification, the companies obtained contracts from the Army that had been restricted to qualified HUBZone companies, in violation of the False Claims Act and the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA).

A settlement has been reached to resolve False Claims Act allegations against WW Grainger Inca who is accused of submitting false claims under contracts with the General Services Administration (GSA) and the U.S. Postal Services (USPS).

The settlement resolves issues discovered during a GSA post-award audit of Grainger’s MAS contract. The GSA Office of Inspector General learned that Grainger failed to meet its contractual obligations to provide the GSA with current, accurate and complete information about its commercial sales practices, including discounts afforded to other customers. As a result, government customers purchasing items under the Grainger MAS contract paid higher prices than they should have.

In addition, this settlement resolves allegations that Grainger failed to meet its contractual obligations to provide “most-favored customer” pricing under two USPS contracts for sanitation and maintenance supplies. The USPS contracts required Grainger to treat USPS as Grainger’s “most-favored customer” by ensuring that USPS received the best overall discount that Grainger offered to any of its commercial customers. Agents and auditors from the USPS Office of Inspector General (OIG) investigated Grainger’s pricing practices and discovered that Grainger did not consistently adhere to this requirement, causing USPS to pay more than it should have for purchases made under the two contracts.

A settlement has been reached in a whistleblower class action lawsuit brought against American Systems Corporation, Anixter International Inc, and Corning Cable Systems LLC. They are accused of bidding on a contract with the CIA.

The whistleblower will receive a $585,000 share of the government’s recovery.

The government's case involves allegations related to a CIA contract awarded to American Systems in early 2009 to provide supplies and services. American Systems teamed with Anixter to bid on the contract with Corning as a supplier. The United States alleged that American Systems, Anixter and Corning provided gratuities, including meals, entertainment, gifts and tickets to sporting and other events, to CIA employees and outside consultants in order to influence contract specifications that would favor the three companies in the award of the contract. The settlement also resolves allegations that the three companies improperly received source selection information from a CIA employee to whom they had provided gratuities, and that they had concealed the gratuities prior to award.

A settlement has been reached in a whistleblower class action lawsuit brought against CyTerra Corporation who is accused of failing to provide the U. S. Department of the Army with accurate, complete and current cost or pricing data for its sales of mine detectors.

Two whistleblowers that filed the initial lawsuit will share $361,000 from the civil recovery.

In 2003, the Department of the Army awarded CyTerra a contract for the production and delivery of AN/PSS-14 hand-held mine detection units.  The contract was modified several times to provide for the production and delivery of additional mine detection units.  The government contended that, in connection with the negotiations concerning three of these contract modifications, CyTerra knowingly failed to provide the Army with the most recent cost or pricing data on the number of labor hours needed to produce a mine detector.  Under the Truth in Negotiations Act, CyTerra was required to provide cost or pricing data that was “accurate, complete and current.”  The government alleged that if the Army had received such information, it would have negotiated a lower price.

A settlement has been reached in a whistleblower class action lawsuit brought against Science Applications International Corporation  (SAIC) who is accused of submitting claims under a contract with the General Services Administration (GSA) that it knew had been awarded in violation of federal procurement regulations.

The whistleblower's portion of the government recovery is  $977,500.

In 2006, GSA awarded a blanket purchase agreement (BPA) to SAIC for the provision of professional engineering and consulting services.  Those services related to the study and evaluation of new products and emerging technologies.  The United States contended that SAIC personnel provided false information to GSA contracting officials to induce them to award the BPA to SAIC.  In particular, the United States alleged that SAIC caused another individual to falsely represent himself as an employee of the Senior Executive Staff of the Department of Defense and the Director of another federal agency.  SAIC performed a substantial number of the task orders it received under the BPA for the U.S. Central Command at MacDill Air Force Base in Tampa, Florida.