Monday, December 21, 2015

Government Employee Conspires with Son to Obtain $2 Million in Contracts

During the Iraq war, the Government deployed Provisional Reconstruction Teams (PRTs) to support economic development, promote reconciliation, and help the Government of Iraq to hasten the transition to self-sufficiency. PRT units included personnel from the military, the State Department, the Corps of Engineers, Agency for International Development, and the Department of Agriculture, among others. PRT units worked closely with Iraqi provincial leaders and Iraqi communities, to oversee and dispense U.S. Government funds appropriated for reconstruction projects in Iraq.

Another program, this one called the Commander's Emergency Response Program (CERP) authorized and provided funding to United States military commanders in Iraq to carry out small-scale projects designed to meet urgent humanitarian relief or urgent reconstruction requirements within their area of responsibility and provide an immediate and direct benefit to the people of Iraq. PRTs were involved in identifying potential CERP projects, developing the scope and statement of work. When possible, CERP projects were supposed to be awarded competitively through a competitive bid process. In some cases, competition was not possible (in theory) so the PRTs wrote up sole-source justifications for DOD to rely upon.

One CERP project was called the Hawijah Micro Dairy Processor project. Micro-dairy processors are self-contained mini-factories that are used to process milk into cheese and yogurt. This project was intended to enable local production of milk products, thereby reducing reliance on costly imports, expanding the market for local farmers, and creating jobs for local Iraqis who would operate the processors.

One of the PRTs was located in Kirkuk, Iraq. One of the team members was an agriculture adviser assigned to the State Department. In 2009, he helped his son set up a company to pursue micro-dairy processor contracts in Iraq. He sent his son insider-information including templates on how to prepare proposals, rendered advise on how to hide the true company ownership, and ultimately, wrote up a sole-source justification for his son's company.

Before the whole scheme unraveled, the Government had awarded more than $2 million in contracts to the son's company - a son that had no previous experience in micro-dairy products. The son received at least $230 thousand in profits from the scheme. He plead guilty last November and is scheduled for sentencing next February. The father has now been indicted for his role in the scheme and, because of his "trusted" position in the Government, faces potentially greater punishment (up to 20 years versus 5 years for the son).

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