The U.S. Justice Department released the below information:
Johnny
Buscema Jr. of New Port Richey, Florida, and his companies, S.A.F.E. Structure
Designs, based in Las Vegas, and U.S.A. Manufacturing, based in New Port
Richey, have agreed to pay $1,000,000 to resolve allegations that they violated
the False Claims Act by causing a prime vendor for the Defense Logistics Agency
(DLA) to submit fraudulent contract bids to DLA that resulted in Department of
Defense (DoD) customers being overcharged for goods and related services
purchased under those contracts. The settlement is based on the settling
parties’ ability to pay.
Buscema owns S.A.F.E. Structure Designs, which sells safety
equipment to government customers, and USA Manufacturing, a general
construction company. Both companies provide third party logistics support,
such as product acquisition, receiving, warehousing, transportation, shipping
and returns, to military customers through DLA contracts for Maintenance,
Repair and Operations (MRO) for the Northeast and Southeast regions of the
United States. The MRO contracts covered by the settlement are held by a “prime
vendor,” which procures for DoD agencies supplies and equipment, such as
chemicals, electrical supplies, hardware, HVAC/refrigeration, prefabricated
structures and a variety of small tools. The goal of the MRO program is to
achieve favorable product pricing through leveraged buying, infrastructure
savings, and inventory cost reductions. To obtain the best price for items
procured for the government, the MRO contracts require the prime vendor to
engage in a competitive bidding process, soliciting bids from two independently
competing vendors for transactions below $25,000 and from three independently
competing vendors for transactions at or above $25,000.
The United States alleged that, from 2016 to 2023,
the settling parties conspired with other entities to rig bids for awards
on the MRO contracts for the Northeast and Southeast regions of the United
States. More specifically, Buscema allegedly submitted non-competitive bids,
paid other vendors to submit non-competitive bids and submitted multiple bids
from his own two companies on the same solicitations to assist the prime vendor
to meet its obligation to obtain bids from two or three vendors and to make one
of the bids appear more competitive. As a result of these alleged schemes, the
United States contends it was overcharged for items purchased under the MRO
contracts.
“Those who seek to do business with the government are expected
to compete fairly and independently to ensure that the government receives an
appropriate price,” said Principal Deputy Assistant Attorney General Brian
M. Boynton, head of the Justice Department’s Civil Division. “The department
will hold accountable government contractors that engage in bid rigging or
otherwise seek to defraud the American taxpayers.”
“As evidenced in this settlement agreement, these contractors
gamed the system to line their own pockets,” said U.S. Attorney Joshua S. Levy
for the District of Massachusetts. “They manipulated and undermined the fair
and open bidding process designed to save our military — and
taxpayers — money. Contractors should be scrupulous in dealing with the
government, not coordinating with each other to pad their bottom line. When
defense contractors collude, rather than compete, they violate the law and the
public’s trust.”
“The DoD expects its contractors to compete in open and fair
markets,” said Special Agent in Charge Patrick J. Hegarty of the DoD’s Office
of Inspector General’s Defense Criminal Investigative Service (DCIS) Northeast
Field Office. “Today’s announcement demonstrates our commitment to work with
our law enforcement partners to investigate allegations of anticompetitive
practices and ensure the integrity of the DoD’s procurement process.”
“Department of the Army Criminal Investigation Division works
diligently to maintain the Army’s readiness and will continue to work closely
with our law enforcement partners to prevent and thoroughly investigate
fraudulent activity,” said Special Agent in Charge Keith K. Kelly of the
Department of the Army Criminal Investigation Division (CID)’s Fraud Field
Office. “CID is committed to providing expertise and capabilities supporting
whole of government efforts to ensure the U.S. Army remains the most technologically
advanced, capable, and ready fighting force in the world.”
The resolution obtained in this matter was the result of a
coordinated effort between the Civil Division’s Commercial Litigation Branch,
Fraud Section, and the U.S. Attorney’s Office for the District of
Massachusetts, with assistance from DCIS, Army CID, Air Force Office of Special
Investigations and the General Services Administration Office of Inspector
General.
Trial Attorney Samson Asiyanbi of the Justice Department’s Civil
Division and Assistant U.S. Attorneys Lindsey Ross and Brian LaMacchia for the
District of Massachusetts handled the matter.
The claims resolved by the settlement are allegations only. There has been no determination of liability.
Note: I worked for the Defense Logistics Agency (DLA) after I was separated from the U.S. Navy.
I worked for DLA's Defense Contract Administration Region Philadelphia (DCASR Philadelphia), which oversaw defense contractors in Delaware, Eastern PA and South Jersey.
DCASR and its field offices Defense Contract Administration Services Managment Areas (DCASMA) later became a separate agency called the Defense Contract Managment Agency (DCMA) and broke off from DLA.
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