Defendant Pleads Guilty in Army Contracting Bribery Case

The National Procurement Fraud Task Force (NPFTF) is comprised of representatives from the U.S. Attorney's Offices, the FBI, the Offices of Inspector Generals and various other federal law enforcement agencies. It was formed eleven years ago to help the early detection, identification, prevention, and prosecution of procurement fraud in Government programs.

Yesterday, the Task Force announced a guilty plea to bribery charges related to contracting at the Army's Communication-Electronics Command. The guilty plea was entered by Matthew Barrow, the President and owner of MJ-6, LLC.

In 2006, the U.S. Army Contracting Command at Aberdeen Proving Grounds awarded a 10 year $20 Billion contract to seven contractors to provide technology services to support the integrated engineering, business operations, and logistics needs for the Army. Two Army civilian officials, John and Danielle Kays (husband and wife) held leadership positions related to the contract.

Between 2008 and 2014, the Kays agreed to take official actions favorable to Barrow and MJ-6 in return for Barrow paying them approximately $800,000. The Kays used their official position to add MJ-6 as a subcontractor acceptable to the Army, to steer potential employees for government contractors to work for MJ-6, to approve MJ-6 employees to work on various task orders, and to approve the pay rates, status reports and travel reimbursements for MJ-6 employees. In total, the Kays steered subcontracts worth $21 million to MJ-6.

The Kays set up a front company, Transportation Logistics Services, LLC, to conceal payments from Barrow. Barrow was careful to make transfers of less than $10 thousand to avoid bank reporting requirements.

Barrow faces a maximum sentence of 15 years in prison when he is sentenced later. The Kays have been indicted and are pending trial but with Barrow's plea, their defenses just got a lot harder. Their assets have been frozen.

The DOJ press release (which can be read here) did not disclose how the fraud was uncovered. It would be beneficial to know and understand those details in order for contractors to set up their own controls for detecting and preventing procurement fraud.