Overseas Civilian Contractors

News and issues relating to Civilian Contractors working Overseas

Harold F Babb, Eyak Technology, pleads guilty in contracting fraud case

Prosecutors say their investigation has unmasked one of the largest and most brazen government procurement frauds in history

Associated Press  March 13, 2012

WASHINGTON — A former executive on Tuesday admitted his role in a $28 million bribery scheme involving the awarding of government contracts and is cooperating with prosecutors in their continuing investigation.

Harold F. Babb, 60, pleaded guilty in federal court in Washington to one charge each of bribery and unlawful kickbacks. Babb was arrested in October along with three other men, including two employees of the U.S. Army Corps of Engineers. Prosecutors say their investigation has unmasked one of the largest and most brazen government procurement frauds in history.

“It took me a while to come to terms (with), but I am guilty,” Babb told a federal judge before entering his plea.

Babb, who has been in custody since his arrest, admitted participating in a complex, far-ranging scheme.

Prosecutors say the fraud involved contracts steered to favored subcontractors for kickbacks, contracts awarded through bribery and the submission of phony and inflated invoices for payment. Authorities say the illicit proceeds of the scheme were split among multiple defendants and used to purchase clothing, real estate, cars, fine jewelry and other luxuries.

A bribery conviction carries a possible sentence of up to 15 years in prison and the unlawful kickbacks charge can carry up to 10 years, though Babb is likely to face a much shorter sentence because of his guilty plea and cooperation.

“Mr. Babb decided to accept responsibility and cooperate with the government and move on his with his life,” his lawyer, Jeffrey Jacobovitz, said after the plea hearing.

At the time of his arrest, Babb was director of contracts for Eyak Technology, the subsidiary of an Alaska Native Corporation with operations in Virginia and the prime contractor for a lucrative contract with the Army Corps of Engineers. EyakTek, in turn, had multiple subcontractors, including Nova Datacom and Big Surf Construction Management.

Babb admitted to accepting more than $1 million in kickbacks from Nova Datacom’s chief technology officer, Alex N. Cho, in exchange for giving the subcontractor preferential treatment, and to paying more than $7 million in bribes in return for approval on Army Corps of Engineers contracts and subcontracts, according to authorities.

Babb was arrested along with two Army Corps of Engineers employees, Kerry F. Khan and Michael A. Alexander, and Khan’s son, Lee Khan. Alexander pleaded guilty last month to bribery and conspiracy. Prosecutors initially described the scheme as totaling $20 million, but they say the scope of the fraud has increased to $28 million as new bribes and kickback payments have been discovered.

Since the initial arrests, prosecutors also have revealed charges against a handful of other men associated with subcontractors, including Cho, who pleaded guilty last September to money laundering, conspiracy and other charges.

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March 14, 2012 Posted by | Government Contractor, USACE | , , , , , , , , , , , , , , | Leave a comment

Sole-Sourcing the Pentagon

February 17, 2011 by JD at The Economist

IN LAST week’s paper we reported that America’s fiscal crisis seemed to have put even the once-sacrosanct defence budget on the chopping block. But one of the surprising features of Barack Obama’s proposed budget is how little it reduces military spending (and Republicans seem just as reluctant to cut the Pentagon’s allowance). Instead, what Mr Obama has urged is greater efficiency in defence spending, including more competition for contracts. In the last fiscal year the Pentagon spent over half of its $366 billion contracting budget on projects that were awarded in an uncompetitive manner.

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February 17, 2011 Posted by | Afghanistan, Civilian Contractors, Department of Defense, Government Contractor, Iraq, Pentagon | , , , , | Leave a comment

DoD scales back plan to restrict payments to some contractors

By Sean Reilly at Federal Times

Under a barrage of contractor criticism, the Defense Department has softened a plan to hold back contract payments as a way to prod companies to fix problems in their accounting and other business systems.

In a proposed rule released in January, DoD had sought authority to withhold 10 percent of payments if a particular business system was found to be deficient. Under a new proposal published this month in the Federal Register, that amount is cut to 5 percent and for small businesses would be limited to 2 percent. If a deficiency is considered high risk, the maximum that could withheld would be capped at 20 percent, down from 100 percent in the original proposal. And in response to complaints that the original draft was overly subjective, officials spell out compliance criteria more clearly.       Please see the  original in it’s entirety here

December 15, 2010 Posted by | Civilian Contractors, Contractor Oversight, Department of Defense, Pentagon, Private Military Contractors, Wartime Contracting | , , , , , , | Leave a comment

Improper time-and-materials contracts prove costly

by Robert Brodsky at GovExec

Army contracting officials improperly awarded time-and-materials contracts and task orders to support the wars in Iraq and Afghanistan, potentially costing taxpayers nearly $3.7 million, according to the Defense Department inspector general.

The report, released on Aug. 27, found that contracting and program officials regularly ignored federal and defense acquisition regulations mandating competition and adequate justification when using time-and-materials contracts.

“As a result, the Army did not have the opportunity to obtain cost savings through competition and may have incurred additional costs by not negotiating reasonable prices and by unnecessarily using the riskiest contract type,” the audit said.

Time-and-materials awards have fallen out of favor because the contractor’s profit is built into the labor rates, reducing the company’s incentive to control costs and work efficiently. The Obama administration has directed agencies to cut their use of time-and-materials contracts, and the Defense Department has indicated it will phase out this type of contract altogether.

The IG reviewed seven contracts and 11 task orders with a total value of $605 million. Investigators reported that Army acquisition officials failed to open three of the contracts and seven task orders to competition.

In September 2006, for example, the Army Contracting Agency at White Sands Missile Range in New Mexico awarded a $9.9 million sole-source task order to Computer Sciences Corp. for “operation, training and maintenance of foreign aviation systems at Kabul Afghanistan International Airport.” The Army had noted CSC was the only firm capable of performing the work due to its specialized nature, but officials offered no evidence to back up their claim, auditors said.

“The justification also included an unexplained assertion that it would take 24 months and cost $25 million for another contractor to acquire the skills needed to gain proficiency for this effort,” the report said. “This assertion was shown to be false a year later, when CSC was forced to compete for the follow-on contract and lost to Northrop Grumman.”

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September 1, 2010 Posted by | Afghanistan, Civilian Contractors, Contractor Oversight, Iraq, Pentagon | , , , , , | Leave a comment