From Truthout.com
Link: http://www.truthout.org/062809Y?n

Members of U.S. House Financial Services Committee Snapped Up or Dumped Bank Stocks as Bottom Fell Out of Market
Thursday 25 June 2009
by: Stephen Koff and Sabrina Eaton | Visit article original @ The Cleveland Plain Dealer

The day before the House passed the financial rescue package, Rep. Ginny Brown-Waite of Florida grabbed up Citigroup stock.

Washington - As financial markets tumbled and the government worked to stave off panic by pumping billions of dollars into banks last fall, several members of Congress who oversee the banking industry were grabbing up or dumping bank stocks.
Anticipating bargains or profits or just trying to unload before the bottom fell out, these members of the House Financial Services Committee or brokers on their behalf were buying and selling stocks including Bank of America and Citigroup - some of the very corporations their committee would later rap for greed, a Plain Dealer examination of congressional stock market transactions shows.
Financial disclosure records show that some of these Financial Services Committee members, including Ohio Rep. Charlie Wilson, made bank stock trades on the same day the banks were getting a government bailout from a program Congress approved. The transactions may not have been illegal or against congressional rules, but securities attorneys and congressional watchdog groups say they raise flags about the appearance of conflicts of interest.
"I don't think that any of these people should be owning these types of financial instruments," said Brian Biggins, a Cleveland securities lawyer and former stock brokerage manager. "I'm not saying they shouldn't be in the stock market. But if they're on the banking committee and trading in these kinds of stocks, I don't think that's right."
For example, Rep. Ginny Brown-Waite, a Florida Republican, bought Citigroup stock valued between $1,001 and $15,000 on Oct. 2, the day before the House passed the financial rescue bill and President George W. Bush signed it into law, records show. She opposed the bill.
Eleven days later, she bought $1,001 to $15,000 worth of Bank of America stock. It was on the same day that then-Treasury Secretary Henry Paulson told leading banks that he expected them to accept billions in bailout money to prevent a financial meltdown.
Brown-Waite, who has since left the committee to join the tax-writing Ways and Means Committee, and her spokeswoman would not comment for this article. The precise value of her investments is not publicly known because financial disclosure reports provide only broad ranges, although some members include detailed brokerage reports.
Wilson, a Democrat from the eastern Ohio town of Bridgeport, sold between $15,001 and $50,000 worth of Huntington Bancshares stock on Nov. 14, the same day Huntington got $1.4 billion in bailout money from the federal Troubled Asset Relief Program, or TARP, records show. Wilson's transactions over the course of last autumn also included Bank of America and BB&T, both beneficiaries of the bank rescue program that Treasury implemented after congressional passage.
Wilson's spokeswoman said the congressman did not personally pick these trades because he leaves day-to-day investment decisions to a money manager who uses a proprietary model in selecting securities to buy or sell.
"To be clear, Mr. Wilson doesn't know about the trades ahead of time or even as they're being made," said spokeswoman Hillary Wicai Viers.
A spokesman for Rep. Carolyn McCarthy, a New York Democrat also on the Financial Services Committee, said she similarly leaves transactions solely to the discretion of account managers. McCarthy's trades included a $2,275 purchase of bailout recipient J.P. Morgan Chase while Congress was still hammering out its rescue bill.
Another member of the Financial Services Committee, Democratic Rep. Jackie Speier of California, said on a recent financial disclosure report that she bought up to $15,000 in Citigroup stock on Nov. 7. That was 10 days after the bank got a $25 billion bailout.
Her office now says the report was filed in error, the transaction should have been listed as her husband's - and she wishes he had not made it.
"When I brought it up with her, she said it was Barry's purchase and she didn't know about it but she would have disagreed with it at the time had she known about it," Speier spokesman Mike Larsen said.
Her husband wasn't the only committee spouse trading on bank stocks.
The stockbroker husband of West Virginia's Shelley Moore Capito, a Republican, sold more than $100,000 in Citigroup stock in several transactions late last year. His brokerage firm was owned by Citigroup and his compensation included Citigroup stock. A Capito spokesman said the House Ethics Committee gave her verbal approval to join the committee despite her husband's job.
Another committee member, Illinois Republican Judith Biggert, whose husband sold Wells Fargo stock while Congress was helping to shape the rescue bill, said she does not discuss stock transactions with her spouse.
"I wouldn't have the vaguest idea" why he sold at that time "because we don't discuss our stocks," said Biggert. "We have a financial group in Chicago, and they take care of all of that."
Some of these stock sales enabled committee members or their families to cut losses before the market continued its slide. Other trades proved to be particularly ill-timed. Citigroup stock, for example, closed at $22.50 per share the day Brown-Waite bought it. Now it's hovering around $3.
Many details about the massive financial bailout last fall were widely known outside Capitol Hill. Yet members of the Financial Services Committee were privy to closed-door discussions, staff briefings and political horse-trading decisions between political parties, Congress and the White House. Banks lobbied Congress and the administration heavily.
Banks that received bailout money spent $77 million on lobbying and $37 million on federal campaign contributions last year, according to the Center for Responsive Politics. The center found that the banks spending the heaviest got the biggest rescue packages.
There has been no direct evidence that this allowed members to engage in insider trading. But when lawmakers overseeing banks also buy and sell bank stocks, it can create "the appearance of a problem," said Anthony J. Hartman, a Cleveland securities attorney.
"I do a lot of different types of litigation, and I just don't think anybody ought to be putting themselves in a situation where as an elected official, I can be suspect of what they are doing," Hartman said.
The issue of appearances is complicated, said Melanie Sloan, executive director of Citizens for Responsibility in Ethics in Washington, because "we can't say that because you're a member of Congress you can't buy or sell any stocks at all."
But she added, "I do think it's more troubling on an oversight committee, particularly Financial Services."

From Government Exec
Link to original: http://www.govexec.com/dailyfed/0709/070109rb1.htm

Rule requires more reporting of contractors' past performance
By Robert Brodsky rbrodsky@govexec.com July 1, 2009

Contracting officers now will be required to document the past performance of companies that win awards off the General Services Administration's Multiple Award Schedule and for task or delivery orders placed against governmentwide acquisition contracts, according to a final rule published on Wednesday in the Federal Register.
The rule, which was stalled in the rule-making process for more than a year, specifies the mandatory use of the Past Performance Information Retrieval System, a shared governmentwide repository of data on contractors' work.
"We think this will give us a lot more information on contractor past performance than we have [had] in the past," said Al Matera, director of GSA's Office of Acquisition Policy.
Agency procurement officials already are required to use PPIRS -- which houses data from multiple government systems -- to document a company's performance on standard government contracts. But watchdogs and lawmakers have found PPIRS is used sporadically and is of limited value to other agencies.
The new rule mandates performance evaluations for all awards off the GSA Federal Supply Schedule above the simplified acquisition threshold of $100,000.
An April report by the Government Accountability Office that examined the PPIRS system found only a "minimal" number of performance reports for orders placed against the GSA schedules.
"Past performance information can decrease the government's risk in contracting by rating, at a minimum, quality of work, timeliness, cost and business relations of contractors for projects above a specified threshold," the final rule stated. "[Past performance information] incentivizes contractors to perform well in order to be rewarded with future contracts."
The contracting industry, which has been critical of the scattershot use of PPIRS, reacted to the final rule with cautious optimism.
"So long as there continues to be a place where contractors can rebut what they believe to be a spurious evaluation, I think most contractors saw this one coming and will take it in stride," said Larry Allen, president of the Coalition for Government Procurement, a contractor trade association.
The Federal Acquisition Regulation requires agencies to consider past performance as a factor in certain negotiated competitive procurements, along with price, management and capability. But agencies have broad discretion in determining the relative value of past performance data when awarding a new contract.
GSA has collected past performance information on schedule contractors for several years through their Industry Operation Analyst reviews, Allen said. But that data generally was available only to agency contracting officers that were considering a contract modification or renewal request, he said.
Performance evaluations also will be required for task or delivery orders awarded through GWACs or multiagency contracts. The rule recommends, but does not require, past performance reports for task or delivery orders under single agency contracts.
In addition, contracting officers will have to prepare past performance evaluations for construction contracts of more than $550,000 and architect-engineer services contracts of more than $30,000. All such contracts terminated for default must be documented in the database regardless of dollar value.
The evaluations must include documentation on the compliance of prime contractors in following their small business subcontracting plans. The rule leaves it up to the agencies to determine what other information should be included in the report.
"The content of the evaluations should be tailored to the size, content and complexity of the contractual requirements," the rule stated.
The performance information will remain available to agency officials for three years -- six years for construction and architect-engineer contracts -- at which point the data will be archived.
The FAR requires agencies to prepare an evaluation of contractor performance for each contract that exceeds the simplified acquisition threshold once the work is completed. But GAO recently found that agencies rarely abide by that rule.
GAO reviewed PPIRS data for fiscal years 2006 and 2007 and found only a small percentage of contracts had a documented assessment. For example, the watchdog estimated that in fiscal 2007, there should have been about 23,000 performance assessments in the database; GAO found only 7,000, or 31 percent. Roughly 75 percent of all past performance reports in PPIRS are from the Defense Department, the report said.
Some speculated that despite the new requirements, agencies still may not have the time and staffing to complete the performance evaluations. CGP's Allen suggested the private sector could more efficiently perform the data-entry work.
"Adding another agency reporting requirement on top of requirements that are already not being met forces the question of whether this new rule will actually make a lot of difference," he said. "I wonder if the administration would consider outsourcing PPIRS inputs to contractors? If agencies aren't doing it evenly, could contracting out, ironically, be the solution?"

Link: http://www.mondaq.com/article.asp?articleid=81882&login=true&newsub=1

United States: Government Contracts Alert - Spring 2009
25 June 2009
Article by James McCullough, Joel R. Feildelman, William H. Taft, Steven A. Alerding, Michael J. Anstett, Joseph J. LoBue and William S. Speros
RECENT DEVELOPMENTS
False Claims Act Amendments: On May 20, 2009, the Fraud Enforcement and Recovery Act of 2009 was signed into law, marking only the second time in the history of the civil False Claims Act (FCA) that all-embracing amendments have been made to this 1863 law. The new amendments will adversely affect contractors (and any other person, company, or entity that pays money to the Government or receives Federal funds) by making it far easier to conduct FCA investigations and win FCA recoveries. For a detailed discussion of these significant changes to the FCA, please see Fried Frank FraudMail Alert No. 09-05-21.

American Recovery And Reinvestment Act Of 2009: Interim rules have been issued implementing procurement-related provisions of the American Recovery and Reinvestment Act of 2009 (Recovery Act), which was signed into law on February 17, 2009. 74 Fed. Reg. 14622-52 (Mar. 31, 2009). One of the interim rules prohibits the use of funds provided by the Recovery Act for any project for the construction, alteration, maintenance, or repair of a public building or public work unless all of the iron, steel, and other manufactured goods used as construction material in the project are produced or manufactured in the United States, subject to certain exceptions. Another interim rule requires contractors that receive awards funded in whole or in part by the Recovery Act to report quarterly on the use of such funds. These reporting requirements apply to nearly all Recovery Act-funded contracts, including commercial item contracts, commercially available off-the-shelf (COTS) item contracts, and contracting actions below the simplified acquisition threshold. Other interim rules provide for whistleblower protections and access by Government auditors to contractor records and personnel under contracts involving Recovery Act funds. The interim rules went into effect on March 31, 2009. See also 74 Fed. Reg. 18449 (Apr. 23, 2009) (establishing Government-wide guidance and standard award terms for agencies to include in grants, cooperative agreements, and loans funded under the Recovery Act). In addition, on April 3, 2009 the Office of Management and Budget (OMB) issued updated Government-wide guidance for implementing the Recovery Act, including guidance regarding the award and administration of contracts and grants. This guidance can be found at http://www.recovery.gov/?q=node/317. Other OMB guidance relating to the Recovery Act, including guidance regarding requirements with respect to grants and cooperative agreements, also may be found at http://www.whitehouse.gov/omb/memoranda_default/. (For a discussion of how these interim rules may provide the basis for significant future False Claims Act liability, see the Practitioner's Comment at the end of the article.)

Organizational Conflicts Of Interest: On May 22, 2009, the Weapon Systems Acquisition Reform Act of 2009 was signed into law. Among other provisions, the Act requires the Secretary of Defense to revise the Defense Federal Acquisition Regulation Supplement (DFARS) to provide uniform guidance and "tighten existing requirements" for organizational conflicts of interest (OCIs) by contractors in major defense acquisition programs. At a minimum, these revised regulations are required to address OCIs that could arise as a result of: (1) lead system integrator contracts on major defense acquisition programs and contracts that follow lead system integrator contracts on such programs, particularly contracts for production; (2) the ownership of business units performing systems engineering and technical assistance functions, professional services, or management support services in relation to major defense acquisition programs by contractors who simultaneously own business units competing to perform as either the prime contractor or the supplier of a major subsystem or component for such programs; (3) the award of major subsystem contracts by a prime contractor for a major defense acquisition program to business units or other affiliates of the same parent corporate entity, and particularly the award of subcontracts for software integration or the development of a proprietary software system architecture; or (4) the performance by, or assistance of, contractors in technical evaluations on major defense acquisition programs. The revised regulations also must require that a contract for the performance of systems engineering and technical assistance functions for a major defense acquisition program contains a provision prohibiting the contractor or any affiliate from participating as a prime contractor or a major subcontractor in the development or construction of a weapon system under the program. The Secretary of Defense is required to make these DFARS revisions within 270 days of May 22, 2009.

Employment Eligibility Verification: The applicability date of a new rule, which requires certain contractors and subcontractors to use the US Citizenship and Immigration Services' E-Verify System as the means of verifying that certain employees are eligible to work in the United States, has been delayed to September 8, 2009. 74 Fed. Reg. 26981 (Jun. 5, 2009); 74 Fed. Reg. 17793 (Apr. 17, 2009); 74 Fed. Reg. 5621 (Jan. 30, 2009); 73 Fed. Reg. 67651 (Nov. 14, 2008). The rule contains a new Federal Acquisition Regulation (FAR) clause (52.222-54) that requires contractors and subcontractors to enroll in the E-Verify program within 30 days of contract award and to begin to use E-Verify within 90 days of enrollment. The requirements apply to all prime contracts except those that (1) are under the simplified acquisition threshold (generally $100,000), (2) are only for work that will be performed outside the United States, (3) have a performance period of less than 120 days, or (4) are only for COTS items, certain other "would be" COTS items, or certain COTS-associated commercial services. Prime contractors are required to flow these requirements down to subcontracts that exceed $3,000, include work performed in the United States, and are for commercial or noncommercial services (except for certain COTS-related commercial services) or construction. The rule should be consulted for further details concerning the application of these requirements to particular categories of employees.

Post-Government Employment Restrictions: The Department of Defense (DOD) issued an interim rule amending the DFARS to address recently enacted statutory requirements for certain DOD officials to obtain a post-Government employment ethics opinion before accepting a position from a DOD contractor within two years after leaving DOD service. 74 Fed. Reg. 2408 (Jan. 15, 2009). The interim rule, which implements Section 847 of the National Defense Authorization Act for Fiscal Year 2008, applies to certain DOD officials who have held a key acquisition position or who have participated personally and substantially in a DOD acquisition exceeding $10 million. In addition, DOD contractors are prohibited from knowingly providing compensation to any such former official within two years after the official leaves DOD service without first determining that the former official has sought and received (or has not received 30 days after seeking) a written opinion from the appropriate DOD ethics official regarding the applicability of post-Government employment restrictions to the activities that the former official is expected to undertake on behalf of the contractor. Failure by a contractor to comply with this prohibition may subject it to contract rescission, suspension, or debarment. The interim rule went into effect on January 15, 2009.

Freedom Of Information Act: The US Attorney General issued a memorandum on March 19, 2009 revising Department of Justice (DOJ) policy regarding Freedom of Information Act (FOIA) requests. The memorandum states that agencies "should not withhold information simply because it may do so legally." The Attorney General instead strongly encourages agencies to make "discretionary" disclosures of information: "An agency should not withhold records merely because it can demonstrate, as a technical matter, that the records fall within the scope of a FOIA exemption." The memorandum rescinds an October 2001 Attorney General memorandum which stated that the DOJ would defend decisions to withhold records requested under FOIA unless the decisions "lack a sound legal basis or present an unwarranted risk of adverse impact on the ability of other agencies to protect other important records." The DOJ will now defend the denial of a FOIA request only if (1) the agency reasonably foresees that disclosure would harm an interest protected by one of the statutory exemptions or (2) disclosure is prohibited by law. The Attorney General's Memorandum may be found at http://www.usdoj.gov/ag/foia-memo-march2009.pdf. The Government's looser standard for releasing information under FOIA may force more contractors to turn to the courts to protect confidential information from being released to their competitors and other third parties. In that regard, a US district court recently held that a multiple award contractor's e-mails to the Government regarding the eligibility of another contractor to receive work were exempt from disclosure under FOIA because they contained confidential commercial information. Tybrin Corp. v. US Dept. of Air Force, No. 3:08-cv-002 (S.D. Ohio Feb. 19, 2009). (For a detailed discussion of emerging FOIA policies, see "FEATURE COMMENT: The Obama Administration's Emerging Policies on Freedom of Information, Transparency and Open Government – New Benefits and Costs for Government Contractors?")

RECENT DECISIONS
Solicitation Defects: The US Government Accountability Office (GAO) sustained a pre-award bid protest because the solicitation, which contemplated the award of two Defense Logistics Agency (DLA) contracts for food distribution services in Kuwait, Iraq, and Jordan, did not adequately describe the basis for award. PWC Logistics Services Co., B-400660, Jan. 6, 2009. The solicitation divided the requirement into two zones – one with an estimated value of $7.85 billion and the other with an estimated value of $1.58 billion – and stated that the DLA intended to award each zone to a different contractor. Although the solicitation identified the evaluation factors that the DLA would consider in determining the most advantageous proposal for award of each zone, the solicitation was silent as to the basis for determining which zone an offeror would be awarded if its proposal was found to be the most advantageous for both zones. The GAO concluded that this was inconsistent with the Competition in Contracting Act requirement that agencies identify the bases upon which offerors' proposals will be evaluated. The GAO further noted that this omission was particularly significant here where the estimated value of one zone was nearly five times greater than the value of the other zone.

Unduly Restrictive Requirements: The GAO sustained a bid protest challenging the terms of a US Army solicitation for telecommunications equipment because the Army failed to establish that a requirement for equipment certification at the time of proposal submission was necessary to meet the agency's needs. SMARTnet, Inc., B-400651.2, Jan. 27, 2009, 2009 CPD 34. The Army required the equipment to be certified by the Joint Interoperability Test Command (JITC), a part of the Defense Information Systems Agency that provides testing and certification of information technology systems and equipment. The protester argued that requiring this certification at the time of proposal submission was unduly restrictive of competition because the JITC certification process is time-consuming and is only performed at two sites in the United States. As a result, the requirement would essentially restrict the procurement to firms that already had the certification at the time the solicitation was issued. The GAO concluded that the Army's legitimate need for equipment to be JITC-certified at the time of equipment installation did not justify a requirement for certification at the time of proposal submission. "An agency's otherwise legitimate requirements regarding an offeror's demonstrated ability to meet contract requirements may not be required prior to when such qualifications become relevant."

Procurement Integrity: The GAO refused to review a bid protester's allegation that the awardee of a NASA contract for space communications network services gained an unfair competitive advantage through its retention of a former NASA official as a consultant for the procurement because the protester failed to timely report this alleged procurement integrity violation to NASA. Honeywell Technology Solutions, Inc., B-400771 et al., Jan. 27, 2009, 2009 CPD 49. In accordance with statutory procurement integrity provisions and the GAO's bid protest regulations, the GAO cannot consider a protester's allegation of a procurement integrity violation unless the protester reported the alleged violation to the contracting agency within 14 days after first becoming aware of the information or facts giving rise to the alleged violation. Here, approximately 10 months before award (and a month before the solicitation was issued) a vice president of the protester learned at a NASA holiday party that a former NASA official, who had been involved in overseeing the developmental and operational elements of the procurement's statement of work, was assisting another offeror (the eventual awardee) with its proposal. The protester, however, failed to report this potential procurement integrity violation to NASA within 14 days after the holiday party and, instead, first raised the alleged violation nearly a year later in a post-award GAO protest. The GAO therefore dismissed the allegation as untimely.

Trade Agreements Act: The GAO sustained a bid protest challenging the award of a General Services Administration (GSA) contract for mini-utility vehicles because the GSA failed to follow required evaluation procedures for procurements covered by the Trade Agreements Act (TAA). Tiger Truck, LLC, B-400685, Jan. 14, 2009, 2009 CPD 19. When the TAA applies to a procurement, the Government must acquire only US-made or designated country end products, unless offers of such "TAA-compliant" products either are not received or are insufficient to fulfil requirements. The GSA received quotations from three offerors, but only one offeror – the protester – certified that its vehicles were TAA-compliant. The GSA, however, concluded that it could not award the contract to the protester because its quoted prices were "exorbitantly unreasonable." The GSA therefore awarded the contract to another offeror, even though it did not offer TAA-compliant vehicles. The GAO concluded that this evaluation process was flawed. To begin with, while the protester certified that its vehicles were manufactured in the United States, the GSA determined only that the vehicles – which contained several parts purchased from outside the United States – "may" be TAA-compliant. The GAO stated that the GSA should first have determined whether the protester's vehicles were TAA-compliant in order to ascertain whether any TAA-compliant products were available. If the GSA had determined that the protester's vehicles were TAA-compliant, the GAO stated that the other two offerors' quotations for non-TAA-compliant vehicles should have been eliminated from consideration and the GSA should have evaluated only the protester's quotation. If, however, the GSA had determined that the protester's vehicles were not TAA-compliant, the head of the contracting activity would have been required to issue a non-availability determination before the GSA could have selected a quotation for non-TAA-compliant vehicles for award. Instead, the GSA improperly failed to determine whether the protester's vehicles complied with the TAA and, in addition, made award based on a quotation for non-TAA-compliant vehicles without first obtaining a non-availability determination from the head of the contracting activity. In addition, in response to the GSA's assertion that the protester was not prejudiced by these errors because it was ineligible for award due to its unreasonable prices, the GAO concluded that the GSA failed to conduct meaningful discussions with the protester regarding its quoted prices. Although the GSA clearly viewed the protester's prices as a deficiency, and the sole basis for rejecting the quotation, the agency during discussions never raised its concern that the quoted prices were unreasonable. The GAO stated that, had the GSA conducted meaningful discussions, the protester would have had the opportunity to reduce its prices or explain why they were fair and reasonable, which could have resolved the GSA's pricing concerns and resulted in an award to the protester.

Competitive Range Determinations: The GAO sustained a bid protest regarding a Department of Health and Human Services (HHS) procurement for custodial services because the HHS excluded the protester's proposal from the competitive range without considering its proposed price. Arc- Tech, Inc., B-400325.3, Feb. 19, 2009, 2009 CPD 53. An agency may properly exclude a technically unacceptable proposal from the competitive range regardless of its price; however, an agency may not, as here, exclude a technically acceptable proposal from the competitive range without taking into account the relative cost of that proposal to the Government. (In another recent decision involving an agency's failure to properly consider price, the GAO sustained a protest regarding the issuance of a US Marine Corps task order for information technology services because the record did not establish that the Marine Corps meaningfully considered the protester's lower price in the agency's cost/technical tradeoff analysis. ACCESS Systems, Inc., B- 400623.3, Mar. 4, 2009, 2009 CPD 56. Although the Marine Corps qualitatively evaluated the offerors' technical quotations and identified differing strengths, the agency was unable, even after a hearing, to explain what evaluated strengths justified paying the price premium associated with the awardee's quotation. Instead, the Marine Corps repeatedly argued that the protester's lower evaluated price did not reflect a price advantage.)

Methods Of Delivery Order Placement: The Armed Services Board of Contract Appeals (ASBCA) held that a contractor was entitled to an equitable adjustment because the US Navy used a contractually unauthorized method for placing delivery orders under an indefinite delivery, indefinite quantity contract to supply digital modular radios. General Dynamics C4 Systems, Inc., ASBCA No. 54988, May 8, 2009. The Navy issued the delivery orders in question by e-mail. The contract, however, did not authorize such a method of delivery order placement. While the contract's Ordering clause provided that orders could be issued by electronic commerce methods "only if authorized in the Schedule," the contract's Schedule did not authorize issuance of orders by e-mail. Likening the placement of orders to the exercise of options, the ASBCA determined that, for an order to be effective, the Government must exercise it in strict compliance with the contract's terms and, when the Government does not do so but requires the contractor to perform, the contractor has the right to recover the costs it incurred in performing the work, plus a reasonable profit. In that regard, it should be noted that the contractor alleged that the e-mailed delivery orders contained "unconscionable prices" in light of then-extent circumstances, and it sought the difference between the prices paid and its actual performance costs, plus profit.

Limitation Of Funds: The US Civilian Board of Contract Appeals (CBCA) held that, notwithstanding an Incremental Funding/Limitation of Liability clause in a GSA contract for information technology systems support services, the agency was required to reimburse the contractor for invoiced services exceeding the total authorized funding under the contract. DSS Services, Inc. v. General Services Administration, CBCA No. 1093, Apr. 16, 2009. Although the contract was primarily for services, the GSA modified the contract to require the contractor also to provide equipment. Significantly, however, this modification did not add a contract line item (CLIN) against which to charge the equipment costs; the GSA instead simply increased funding at various times in response to requests for equipment. The contractor ultimately submitted invoices totaling $2.65 million for services rendered under the contract's four CLINs, which was less than $2.96 million in total funding authorized under the contract, as amended. When equipment costs were added, however, the total costs invoiced under the contract exceeded the total authorized funding. As a result, the GSA refused to pay $691,048 of the invoiced services, the amount in excess of the funding ceiling. The GSA asserted that, pursuant to the contract's Incremental Funding/Limitation of Liability clause, the contractor should have stopped work once the total amount payable by the GSA under contract, including for both services and equipment, reached the total authorized funding. However, the CBCA determined that, had the GSA not used contract funds to pay for equipment that had not been allocated to a specific CLIN, the total funding under the contract would have been sufficient to cover all of the invoices for services rendered under the CLINs. "The fact that the Government failed to properly charge equipment against a CLIN cannot be the basis for refusing to pay [the contractor] for services properly rendered under the contract." The CBCA therefore held that the contractor was entitled to payment of the $691,048 in invoiced services which the GSA refused to pay, plus interest.

Allowability Of Defense And Settlement Costs: The US Court of Appeals for the Federal Circuit (Federal Circuit) reversed a decision of the ASBCA because the ASBCA erroneously held that a military housing contractor's costs associated with defending and settling a sexual harassment lawsuit were allowable under the contract regardless of the lawsuit's merits. Geren v. Tecom, Inc., No. 2008-1171 (Fed. Cir. May 19, 2009). During the performance of a cost reimbursement contract for military housing maintenance, a former employee sued the contractor under Title VII of the Civil Rights Act of 1964, alleging sexual harassment and firing in retaliation for filing a sexual harassment charge while the employee was working under the contract. The contractor subsequently settled the case without admitting any wrongdoing, and then sought to (1) include its related legal fees as an indirect cost charged to its G&A expense pool and (2) bill the settlement costs as a direct cost of the contract. The Federal Circuit first held that the costs associated with an adverse judgment in the sexual harassment case would not have been allowable because the alleged harassment clearly would have violated the contract, which included a FAR clause prohibiting discrimination on the basis of sex. The Federal Circuit therefore further held that, under its decision in Boeing North American, Inc. v. Roche, 298 F.3d 1274 (Fed. Cir. 2002), the contractor's defense and settlement costs were allowable only if the contractor could show that the plaintiff in the Title VII suit had "very little likelihood of success on the merits." Because the ASBCA refused to apply this standard to the contractor's defense and settlement costs, the Federal Circuit reversed the ASBCA's decision and remanded the case to the Board for further proceedings.
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Sea Launch Co. files for Chapter 11 reorganization
Wednesday, June 24, 2009
(06-24) 12:25 PDT Long Beach, Calif. (AP) --
Sea Launch Co., a satellite launch services provider owned by Boeing and international partners, has filed for bankruptcy protection.
In its Chapter 11 filing, the Long Beach-based company listed assets of between $100 million and $500 million against liabilities of between $500 million and $1 billion.
Sea Launch said in a statement this week that it intends to maintain all normal business operations and, subject to court approval, will initially use its cash balance to meet operational requirements during reorganization.
Boeing owns 40 percent of Sea Launch. Its partners are RSC Energia of Moscow, SDO Yuzhnoye/PO Yuzhmash of Ukraine and Aker ASA Group of Norway.
Formed in 1995, the company launches satellites from a seagoing platform that sails from the Port of Long Beach to the equator, where its rockets can lift heavier payloads than would be possible from other locations on Earth's surface.
The platform is evacuated for launches, which are conducted by controllers aboard an accompanying command ship.
The company also offers land launches from Kazakhstan for medium-weight satellites.
Kjell Karlsen, president and general manager, sought to reassure customers, employees, suppliers and partners.
"Chapter 11 reorganization provides an opportunity for us to continue operations and focus on building our future plans," he said in the company statement.
The company currently has a backlog of 10 launches, spokeswoman Paula Korn said Wednesday. Eight will be conducted at sea and two will be land launches.
Most of the company's launches have been successful since the first in 1999. One of its major failures was a 2007 explosion just seconds after ignition that blew a 300-ton gas deflector off the self-propelled Odyssey launch platform.
The company's most recent launch was conducted this week at the Baikonur space center in Kazakhstan.
http://sfgate.com/cgi-bin/article.cgi?f=/n/a/2009/06/24/financial/f090449D78.DTL

link: http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2009/06/24/financial/f090449D78.DTL&type=health

Sea Launch Bankruptcy Gives Advantage to European Rivals - Wall Street Journal
Posted by admin
June 24, 2009
Sea Launch Bankruptcy Gives Advantage to European Rivals Wall Street Journal By ANDY PASZTOR The federal bankruptcy court filing earlier this week by Sea Launch Co., the last remaining US-based commercial satellite launch provider, could hand its European and Russian rivals new opportunities to gain control over the industry. Sea Launch Co. files for Chapter 11 reorganization The Associated Press Boeing's satellite launch subsidiary files for Chapter 11 Seattle Post Intelligencer Reuters - Los Angeles Times - Seattle Times - Motley Fool all 87 news articles
Link: http://livetrade.com/?p=115076

I have called the White House’s attention to a particularly obnoxious situation in which two whistleblowers have been egregiously betrayed by the United States Federal Government in Texas. These two men, father and son, stood up and tried to report and stop some serious fraud and have suffered outrageous retribution for it, from their former employer, but also have suffered indifference, neglect and hostility from local and federal law enforcement and agencies with oversight responsibilities.

Here is the link one uses to contact the White House and the one I used for this letter:

Provides address, phone numbers and e-mail information for the White House.
www.whitehouse.gov/CONTACT/

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July 3, 2009

Dear President Obama:

I am sending you a compelling story of courage on the part of two whistleblowers and the betrayal due to the absolute corruption that some parts of our government has suffered in the past decade. This is not the only story like this. I am sending you this one, as the father and son who sent this in have chosen to take this public, due to the total devastation of their lives by not only the bad actors in their former employer, but also the neglect or outright hostility of those government agencies that should have been supporting them while competently investigating and prosecuting the wrongdoers.

Please use your significant authority and power to direct some real clean up of this situation including the federal agencies involved, and assist these whistleblowers. No one should have to endure such retribution for trying to stand up and do the right thing.

Sincerely,

G. Florence Scott

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Why a poor man can not afford to be a whistle blower for the United
States Government

My name is Alton Eugene Aaron and my son's name is Jacob Eugene Aaron.
We are legal residents of Ector County in Odessa, TX

I had been hired by my ex-employer as a Computer Specialist on or
about June of 2006. Because of my having over 36 years experience
with computers my job quickly expanded to include, Information
Technology (IT), Web Developer and designer, Database Administrator,
Server Administrator, and Network Administrator for the company.

Jacob had been requested to relocate from Mobile, Alabama to Odessa,
Texas because he had shown natural skills and talents for controlling
inventory while working for a company during hurricane Katrina relief
efforts. He began working on Feb 26, 2007.

Between July 18th and July 24th it had been brought to my attention on
4 occasions that the software that managed inventory had been
corrupted. At the same time Jacob began to see major irregularities
and deletions of entries that he had made while managing inventory.

When we started researching the data corruption and the deleted
transactions there seemed to be an obvious trail of tampering. Both
transactions and the history records of those transactions had been
removed from the database.

On Aug 6 2007 Jacob and I presented our findings to our employer to
show that the software had been tampered with.

On Aug 7 2007 we found ourselves being threatened with termination if
we would not participate in the crime we suspected. Our employer
retaliated by placing us under oppressive supervision of the
individual we had reported we suspected and were treated with undue
suspicion.

On Aug 10 2007 Jacob and I due to the fear of further retaliation
reported to the Internal Revenue Service that we suspected our
employer of conspiracy to commit fraud and feared that the retaliation
would endanger our lives and our families. We requested protection
under the Whistleblower Act.

The clerk at the IRS could not even connect us with an agent of the
Criminal Investigation Dept. I was given a form to fill out and that
form was mailed to the Criminal Investigation Dept of the IRS in
California. When I asked about the protection for our families the
clerk suggested we try the FBI.

Jacob and I went to the FBI and explained our situation and the
possible evidence that I had on my laptop. We requested that the FBI
take custody of the laptop and help us get protection from any further
retaliation.

The FBI then contacted the Texas Rangers and we asked the Texas
Rangers for help but they stated that there probably was not anything
they could do.

When I arrive home at 2:30 I am met by my wife and an Ector County
Sheriffs Deputy. My wife explains that my employer had called almost
half a dozen times and even came to the house to find out where I was.
When she told the employer that I was out of town and probably would
not be back the deputy was sent to retrieve my keys, work uniforms,
and the laptop. I explained to the deputy what was contained on the
laptop and asked to have the Ector County Sheriffs Department take
custody they declined.

On Aug 13th we returned to the FBI and finished filing a statement
with that agency; again requesting protection for ourselves and our
families. We were politely informed that had this been a drug case or
something of that nature we might would have qualified, but this was
different.

On Aug 14th Jacob and I are both served with a restraining order and
notice that we were being sued for disseminating trade secrets.

On Aug 22nd I am contacted by the Criminal Investigation Department of
the IRS and asked to bring the possible evidence to an agent, but now
I am under a restraint that forbids me even cooperating with the
federal government. I would be in contempt of court to perform a
civil duty required of me.

On Aug 24 Jacob and I are sued in court by the employer and judgment
goes for the employer.
Jacob and I were drawn into court, treated like criminals. When we
requested a court appointed attorney we were denied. We found
ourselves in a hostel court alone. I might even be in contempt of
court to speak to the press about this, but if I do go to jail maybe
someone else will benefit from this article.

We sought our rights under the whistleblower act that states " It is
illegal for an employer to retaliated in any way against an employee
for reporting suspicion of a crime". We have not found one single
agency to take a stand for our rights as whistleblowers.
As of today Jacob and I have sought help from all of the following
agencies.
1. IRS
2. FBI
3 Texas Rangers
4 Ector County Sheriff's Department
5 Texas Attorney General
6 District Attorney
7 US Attorney General
8 US Marshal's Office

All 8 have answered the same, Hire an attorney, we can't help you!