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Vern Edwards

Contracting Scandals

50 posts in this topic

The so-called "Fat Leonard" scandal of Navy contracting for ship husbanding is one of the worst contracting scandals in American history.

http://www.washingtonpost.com/sf/investigative/2016/05/27/the-man-who-seduced-the-7th-fleet/

The scandal is still playing out, as you can see from today's announcement by the Department of Justice:

See https://www.justice.gov/usao-sdca/pr/navy-commander-charged-part-corrupt-brotherhood-accepted-luxury-travel-and-prostitutes

See also https://www.justice.gov/opa/pr/former-supervisory-contracting-officer-arrested-navy-bribery-scandal

And http://www.nytimes.com/2013/11/30/us/scandal-widens-over-contracts-for-navy-work.html

If you check Wifcon's home page regularly under the "News" heading you will have noticed a number of reports about fraud and bribery in contracting associated with the wars in Iraq and Afghanistan. Quite a few people have gone to jail. 

Some of you will remember the Darleen Druyun scandal. That happened fairly recently, but there has been a lot of misinformation about it. Here is a reliable, comprehensive report:

http://www.dtic.mil/dtic/tr/fulltext/u2/a437374.pdf

Before Darleen Druyun the biggest contracting scandal in the last 50 years was dubbed "Operation Ill Wind." It was major and led to convictions of an assistant secretary of the Navy, 40 executives, and 13 corporations and passage of the Procurement Integrity Act.

Here is a link to a master's thesis by Airon Ann Mothershed entitled, Perception Is Reality. Or is it? A Case Study of Four Department of Defense (DoD) Procurement Scandals. Does Media Coverage Lead to Procurement Reform? The author concludes that "when the public‟s reactions to scandal are negative and strong, last long enough, and result in public pressure, such media coverage may indirectly lead to lasting reform of faulty processes."

 

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Meanwhile. the heirs of von Steuben at the DoD OIG focus their attention on blaming contracting officers for not dispositioning DCAA audit reports quickly enough.

http://www.dodig.mil/pubs/report_summary.cfm?id=7287

 

 

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There is another entry to the Fat Leonard story.

Also, try the one below for disgust.

Quote

Defense Contractor Pleads Guilty to Stealing Medical Equipment Intended to be Shipped to Deployed Marines

Both are on the Home Page.

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This is a case where Fat shaming is appropriate!

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This is a serious case. We are very dependent on our military, not only to keep our country safe, but also to serve in important civilian appointee positions, as demonstrated by the Trump administration. We are in serious trouble if we cannot rely on their integrity. It makes me wonder what they're teaching at the national military academies. The admiral who has been indicted is a graduate of the U.S. Naval Academy.

Of course, innocent until proven guilty.

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A very serious case that, perhaps, could have been avoided, or identified earlier, if the Navy had implemented the appropriate system for monitoring husbanding contracts.

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Is it just me, or is this scandal getting relatively little fanfare given its overall size and how many high-ranking civilians/military officers were ensnared by it?  I've talked to typically informed folks outside of the government who are apparently completely unaware of this scandal, yet they were able to tell me all about the GSA conference scandal from a few years back.

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I think the news media are obsessed by something else at the moment.

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22 hours ago, napolik said:

A very serious case that, perhaps, could have been avoided, or identified earlier, if the Navy had implemented the appropriate system for monitoring husbanding contracts.

I think the Navy's business system should be determined to be inadequate and a 5% payment withhold should be implemented until an acceptable corrective action plan is submitted.

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Here is the case that I brought up to my leadership and was ignored so I resigned my the civil service position for a position in industry:

https://www.justice.gov/archive/usao/ma/news/2010/July/THROWERverdictPR.html

After I left the Army HQ CID folks found the CD with all the needed information for their case in a blank envelope stapled to the contract file.  The person who took over my desk when I resigned told me that the KO pulled all the paper documents out of the file and shredded them.  The amount that was defrauded by the perps was somewhere north of the amount in the story.  I was told by the investigator who called me more than a year after I resigned the amount stolen was closer to $50M than it was to $4 mil but they had enough to put him away so they stopped investigating.  The contract I was working on was $1.5M and the perp had more than 3 fraudulent contracts in place with similar award amounts at that time alone.

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Thanks for your efforts, DW. 

I found an earlier thread where you introduced this scandal:

http://www.wifcon.com/discussion/index.php?/topic/3059-why-should-contracting-personnel-see-what-they-are-buying/#comment-27153

You said that the KO was allowed to retire. Too bad...

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Joel,

Karma played out in the end for the KO, he died less than 6 months after retiring when he had a heart attack while gardening in his back yard.  He wasn't a bad guy to work for but he was a coward when it came to standing up to the bully that was committing the crime.  I think it weighed heavily on his heart and spirit what he had failed to handle properly, which is a heavy burden for sure.

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Yes, that is sad. I probably owe him some compassion for his misfortunes. I had the impression that he was an active player in the scheme. Even so, death is a severe consequence...

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Good morning - The link you mentioned is not the one he is writing about in this chain.  For the one he is writing about in this chain, I was one of the brand new contract specialists assigned to one of the requirements awarded to the subject contractor in FY04.  The CID investigation and case preparation went on for years and in 2010 I testified at the Federal trial in Boston, as did many of the contract specialists, contracting officers, and the Government attorney who advised our contracting office.  When CID started investigating, the activities spelled out in the Press Release from the Justice Department DWGerard1102 furnished in his post were discovered.  As for that KO retiring - he was a good man who worked for a horrible shrew of a supervisor and did the very best he could to keep us shielded from her.  I, and others, hold him in high regard for his kindness and for his efforts.  I know of no rumor, innuendo, or factual proof that he did anything unethical or illegal.   RIP.

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Leo, please edit your post. You tried to quote something that I posted but the text appears to be written by you.

I think you are trying to say that the link  I found that described a contracting scandal that DWGerard1102 was involved with was not the one that DW was referring to in his March  20 post. Then you described the case that he was referring to in this thread. 

Sorry if I was referencing another situation that DWGerard had experienced.  But DW indicated in the other thread that he quit because of THAT situation. 

So, which situation was he referring to in his response to me here and which situation caused him to quit?  I'm obviously confused. 

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Let me clarify -  DWGerard1102 may have been involved at the beginning of he CID investigation for Thrower.  I have no knowledge of his involvement.  I would think that he would remember the specific reason he left the organization. 

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Leo:

I removed the quote.  Is it as you want?

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Yes - Thank you!!

 

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Just a point of curiosity, I wonder if any of the other offerors in the case referenced in the press release filed a protest after finding out about his conviction.  Such protests were filed by competitors of Boeing after Darleen Druyun's (?) conviction.

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On 3/31/2017 at 3:18 PM, leo1102 said:

Let me clarify -  DWGerard1102 may have been involved at the beginning of he CID investigation for Thrower.  I have no knowledge of his involvement.  I would think that he would remember the specific reason he left the organization. 

The link that I provided above on March 20 contains DWGerard's July 6, 2015 post, which appears to be consistent with the details found in the link in his March 20 post here concerning the Thrower case.  

It's hard for me to believe that a contracting officer and/or others besides the guilty PM didn't know that there were phoney contracts where the contractor was paid but no actual work was performed. DWGerard knew. Who else knew and how could the fraudulent activitiy have been repeated over numerous contracts?  It appears that the contract that DWGerard described in his 2015 post was for construction and would have involved multiple progress payments.  Thus, validating the point in the 2015 thread  that the KO and/or their specialists need to see what they are actually contracting for at some point. 

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The link that DWGerard1102 furnished in this thread is the one I was referring to in my Friday 9:58 AM post.  THROWER

In the case in which myself and others were involved, the contractor was performing on a daily basis, had many employees and was receiving monthly payment IAW the contracts.  Having said that, Mr. Thrower was the COR on all of these contracts and would have been the one certifying the invoices for payment.  They were providing Human Resources and Administrative work under at least three contracts, if I remember correctly, in support of multiple Ft Benning organizations.  I did a site visit on the one contract that I worked and Mr. Thrower and his sister were both there.  It is not unusual for the COR and the Contractor to be present during a site visit.  Just like during source selection, I had no idea that they were related.  He even signed a non-disclosure agreement and a conflict of interest form.  CID got involved when another new contract specialist noticed that the insurance document provided by the contractor to prove that they had sufficient insurance to work on a Government installation appeared strange- the type font looked altered.  That eagle eyed contract specialist called the insurance agency, found that the company did not have insurance with that agency, and then reported her suspicions up the Contracting chain to CID and CID investigated.   Not only were the insurance documents found to be fraudulent, but the compensation received by Mr. Thrower from his sister and their familial relationship was discovered.  In early 2005, a bunch of us went to Boston to appear before the Grand Jury and in July 2010, the trial was held.  Mr. Thrower's sister was sentenced before his trial started and he was sentenced, I think, in October 2010. 

I have no knowledge of whether protests were filed after the verdict as I had left that particular contracting office in 2008.

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I did not find any record of a protest.

It appears that the main culprit, Allen Thrower, a COR, got 27 months in prison.

http://www.eagletribune.com/news/local_news/army-official-locked-up-for-giving-contracts-to-sister/article_c352e1c8-c5df-5df3-a5a7-3f3cdc9c19f0.html

He had faced a max of 20 years. The government had asked for 60 months. Thrower's lawyer had tried to get the jury verdict set aside and when that didn't work had asked for probation.

Thrower's sister, who owned the company involved in the case, for which Thrower did favors, got 24 months probation.

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Yep - that's it Vern.  It appears as if it wasn't just the three contracts that I knew about.  The article said eight contracts.  I also did not know that Mr. Thrower's lawyer had tried to get the jury verdict set aside.  I wonder on what grounds the set aside was based? 

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