The U.S. Attorney’s Office in Philadelphia announced the below information on October 8th..
PHILADELPHIA
– United States Attorney Jacqueline C. Romero announced that Nicole K.
Schuster, 32, of Naples, Florida was sentenced to one year and one day in
prison and ordered to pay a $4,000 fine by United States District Court Judge
Paul S. Diamond for unlawfully disclosing to one company the confidential
contractor bid, proposal, and source information of another company.
Schuster was a mechanical engineer and “project lead” employed
by the United States Department of the Navy (“the Navy”) at the Naval Foundry
and Propeller Center in Philadelphia, Pennsylvania (the “NFPC”). The NFPC’s
primary mission was to design, manufacture, and repair submarine propellers. In
her role with the Navy, Schuster served as a project lead for several
multi-million-dollar projects at the NFPC supporting both Columbia Class and
Virginia Class naval submarines.
On January 22, 2024, Schuster pleaded guilty to the unlawful
disclosure charge in a criminal information that was filed on September 25,
2023. According to that charge, in 2019, Schuster began working as the project
lead on a solicitation for a procurement contract for a submarine
propeller-making machine known as a VTC. During the contracting and bidding
process, Schuster favored one company, identified in the information as
“Company 1,” over other competing companies. Schuster urged her superiors to make
the contract for this VTC a “sole source” contract for Company 1. That is, she
requested that the contracting process should be established in a manner that
would ensure that Company 1 would be awarded the procurement contract. The NFPC
and DLA agreed to favor Company 1 in this process but did not agree to prevent
other companies from pursuing the contract. Rather, they established a process
that allowed other contractors to submit information and compete for the
contract.
Schuster demonstrated her favoritism for Company 1 in September
2019 when she sent a WhatsApp message to a representative of Company 1
expressing her “loyalty” to Company 1 and attaching to the message Company 2’s
confidential and proprietary contractor bid, proposal, and source selection
information for its VTC. In a text message to her associate, Schuster expressed
that she would be extremely upset if Company 2 obtained the contract for the
VTC because she said “it’s not for them,” and that she would “ruin” Company 2
if they interfered with her efforts to help Company 1 obtain the contract. The
documents that Schuster provided to this representative of Company 1 were
marked “SOURCE SELECTION INFORMATION,” “OFFICIAL USE ONLY,” and “[Company 2]
Proprietary information.” The documents included cost and pricing data and
proprietary information about manufacturing processes and techniques. This
disclosure gave Company 1 a competitive advantage over Company 2 and other
companies seeking to obtain the VTC contract.
In April 2020, the procurement contract for the VTC was awarded
to Company 1 for a total price of $15,254,608.
Schuster's sentence is evidence that we will hold accountable
those who enrich themselves at the expense of our armed forces; this kind of
corruption impacts us all: the military, taxpayers, and legitimate
businesses," said U.S. Attorney Romero. We continue to ask for assistance
in identifying and reporting those engaged in this type of activity, as it
bolsters the ability to maintain integrity in the procurement process."
“Investigating individuals who corrupt the integrity of
Department of Defense (DoD) procurement is a top priority for the DoD Office of
Inspector General’s Defense Criminal Investigative Service (DCIS). We must help
to ensure that the DoD contracting process remains fair and competitive,"
said Special Agent in Charge Patrick J. Hegarty, DCIS Northeast Field Office.
“Today’s announcement demonstrates our commitment to work with the Department
of Justice and our law enforcement partners to hold accountable those who
misuse their official positions.”
“It is essential that government procurements are unbiased and
devoid of unlawful influence and corruptive practices,” said Special Agent in
Charge Greg Gross of the NCIS Economic Crimes Field Office. “NCIS and our
investigative partners are committed to thoroughly investigating any person or
entity that would disrupt the fair and open competition necessary to ensure our
warfighters are fully equipped for superiority on the battlefield.”
The case was investigated by the Department of Defense, Office of Inspector General, Defense Criminal Investigative Service and the U.S. Naval Criminal Investigative Service, Economic Crimes Field Office, and is being prosecuted by Assistant United States Attorney Louis D. Lappen.
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