USGSA OIG's semi-annuual report to Congress 2011-12

The Office of Inspector General of the U.S. General Services Administration has published is semi-annual report to Congress for the period October 2011 to March 2012. It is online here. I will separately post about its pre-award efforts. Here are other matters discussed in the report. A more complete read of the report is necessary for context and full content.

Mandated to obligate $5.5 billion for many building projects within a 20-month period, GSA’s shortened planning and contracting phases will likely result in continual challenges as Recovery Act-funded projects move into the construction phase.

GSA systems, including its financial system of record (Pegasys), continue to have deficiencies in interoperability and interfaces. As a consequence, GSA management continues to rely heavily on manual workarounds and significant adjusting entries to prepare the financial statements and related note disclosures.

GSA is responsible for protecting the life and safety of employees and public visitors in federal buildings. The increased risks from terrorism have greatly expanded the range of vulnerabilities. A broadly integrated security program is required.

Results Attained:

Referrals for criminal prosecution, civil litigation, & administrative action 486
Indictments and informations on criminal referrals 42
Cases accepted for criminal prosecution 35
Cases accepted for civil action 5
Successful criminal prosecutions 31
Civil settlements 3
Contractors/individuals suspended and debarred 42
Employee actions taken on administrative referrals involving GSA employees 9
Civil settlements and court-ordered and investigative recoveries $218,496,507

Government Infrastructure Protection Initiative (GIPI).

The GSA’s Office of Investigations created GIPI to combat the proliferation of counterfeit information technology products in the federal supply chain by partnering with the Intellectual Property Rights Center operated by Immigration and Customs Enforcement. This semiannual period saw the sentencing of Stephanie McCloskey to 38 months of imprisonment, three years of supervised release, and the payment of $166,141.23 in restitution for selling counterfeit integrated circuits from China and Hong Kong to the U.S. Navy while she worked for VisionTech Components. A joint investigation led to a ten-count indictment for conspiracy, trafficking in counterfeit goods, and mail fraud. Agents also seized items purchased with the proceeds of the scheme, including bank account funds and luxury vehicles (page 10).

Civil Recoveries.
The GSA OIG has consolidated investigative efforts related to civil recoveries. Chief among the OIG’s civil recoveries this semiannual period was a $199.5 million payment by Oracle Corporation to settle qui tam allegations that it failed to disclose discounts offered to commercial customers when it sold software products to federal government agencies (page 10). Additionally, a federal judge entered a default judgment in the amount of over $6 million against C. Henderson Consulting, Inc., to settle allegations that the company falsely billed the government for ambulances it did not provide during the relief efforts following Hurricanes Katrina and Rita (page 11). Cable Express Technologies (CXtec) agreed to pay the United States $2 million to settle allegations that CXtec sold products to federal agencies that were manufactured in China, Taiwan, Indonesia, Malaysia or Thailand in violation of the Trade Agreements Act (page 11).

Criminal Investigations.
Darrell Hardie was found guilty of assaulting a GSA OIG federal agent after he used his vehicle to threaten the agent engaged in surveillance near Hardie’s residence (page 11). In October 2011, Eric Minor, a former GSA employee was sentenced to 30 months of incarceration and two years of supervised release, and ordered to pay $118,000 in restitution for his role in a bribery scheme involving GSA contracts that resulted in the conviction of 11 individuals. GSA OIG agents seized over $71,000 in cash from Minor’s home (page 11). Two others were indicted in a separate bribery/ kickback scheme to entice government purchase card holders to order office supplies from the defendants’ companies for greatly inflated prices (page 11). In December 2011, the former president of Red River Computer Company was sentenced to three years in federal prison and ordered to forfeit $431,949 dollars for defrauding the government (page 12). In February 2012, employees of Mid-America Payphone, Inc., pled guilty for their roles in programming pay phones to dial toll free numbers. By exploiting the Federal Communications Commission regulation that allows payphone service providers to collect $0.49 for every toll free call placed, the individuals defrauded the government, state agencies, and private businesses that owned the toll free numbers of at least $1.2 million (page 12). As a result of another such “dial-around compensation” scheme, Nicolaos Kantartzis, President of Federal Telephone Company, was ordered to pay a $20,000 fine and $2.6 million in restitution (page 12).

Suspension and Debarment.
During this reporting period, the OIG made 319 referrals for consideration of suspension or debarment to GSA, and GSA issued 142 suspension and debarment actions based on current and previous OIG referrals (page 13).