Johnny B. Fraud: Government Contractor Will Pay $1M to Resolve False Claims Act Allegations for Submitting Fraudulent Bids on Contracts
On January 3, Johnny Buscema Jr. from New Port Richey, Florida, and his companies, S.A.F.E. Structure Designs (in Las Vegas) and U.S.A. Manufacturing (in New Port Richey) agreed to pay $1,000,000 to resolve allegations that they engaged in bid rigging in violation of the False Claims Act. According to the government, Buscema and his companies caused a prime vendor for the Defense Logistics Agency (DLA) to submit false contract bids to the DLA. This resulted in overcharging Department of Defense (DoD) customers for goods and services bought during those contracts. The settlement’s total considers the parties’ ability to pay.
S.A.F.E. Structure Designs sells safety equipment to government customers. U.S.A Manufacturing is a general construction company. The companies offer third party logistics support for receiving, transportation, warehousing, product acquisition, shipping, and returns to military customers. This is conducted through DLA contracts for Maintenance, Repair and Operations (MRO) in America’s Northeast and Southeast regions.
MRO contracts included in the settlement are held by a prime vendor that acquires supplies and equipment for DoD agencies, including chemicals, electrical supplies, hardware, HVAC/refrigeration, prefabricated structures, and small tools. The MRO program’s goal is to achieve satisfactory product pricing via leveraged buying, inventory cost reductions, and infrastructure savings. To gain the best price when acquiring items for the government, MRO contracts require the prime vendor to participate in competitive bidding, asking for bids from two independently competing vendors for transactions under $25,000, and three independently competing vendors for transactions at or above $25,000.
From 2016 to 2023, the government alleges that the settling parties and other entities conspired to rig bids on the MRO contracts in the Northeast and Southeast regions of the United States. Buscema also purportedly submitted non-competitive bids, paid other vendors to submit non-competitive bids, and submitted multiple bids from his two companies on the same solicitations. This would help the prime vendor meet the requirement of gaining bids from two or three vendors and make one bid appear more competitive. The government claims it was overcharged for items purchased under the MRO contracts.
Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division said: “Those who seek to do business with the government are expected to compete fairly and independently to ensure that the government receives an appropriate price. The department will hold accountable government contractors that engage in bid rigging or otherwise seek to defraud the American taxpayers.”
U.S. Attorney Joshua S. Levy for the District of Massachusetts commented, “They manipulated and undermined the fair and open bidding process designed to save our military — and taxpayers — money. Contractors should be scrupulous in dealing with the government, not coordinating with each other to pad their bottom line. When defense contractors collude, rather than compete, they violate the law and the public’s trust.”
If you believe you have information about potential fraud against the government, please do not hesitate to contact us. We will connect you with an experienced member of the Constantine Cannon whistleblower team for a free and confidential consult.
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