Tuesday, February 13, 2018

Firm Gets Contract, Doesn't Produce, Gets Another Contract, Doesn't Produce, Gets ....

A jury has just found the owner of a Government contractor guilty of fraud. He faces a maximum penalty of 20 years in federal prison when he will be sentenced next May.

Akbar Fard is the President and Owner of Advanced Materials Technology, Inc. (AMTI). Beginning in 2004 and continuing for eight years, Fard got pretty skilled at securing SBIR (Small Business Innovative Research) and STTR (Small Business Transfer Technology Research) contracts through NASA and various DoD organizations. In fact, he was awarded 11 such contracts over the years totaling $2.4 million.

To obtain those contracts, Fard dutifully prepared proposals in the formats one would expect. They included hours and hourly rates for program managers and research associates, lab supplies, small tools, test equipment, travel and of course, G&A (General and Administrative) costs.

These being cost-type contracts, Fard would then prepare billings based on costs incurred and submit them to the Government for payment. The Government would then pay the invoices.

Somewhere along the line, the Government became a little suspicious of Fard. Perhaps someone noticed that there was very little to show for the money being spent on Fard's SBIR/STTR contracts. We don't really know. But we do know that an investigation was opened.

The investigations found that Fard had not spent any of the money in the manner in which he proposed. No labor, no materials, no ODCs (other direct costs). Just deposits to his personal bank account. In fact, the company, AMTI, was based out of his personal residence and all of the funds were diverted to pay Fard's own personal expenses.

The thing that surprised us in this case is not that someone defrauded the Government. That happens all too frequently. But that manner in which it festered for eight years before someone noticed does not speak well for Government oversight and the established internal controls that should have significantly limited the period of time over which the fraud continued. Does anyone in the Government procurement cycle care about such things?

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