Corps of Engineers Bribery Arrests Involving Alaska Native Corporations

Four people from the Corps of Engineers have been indicted on bribery charges stemming from contracts for no bid with the Alaska Native Corporations who front the bids and others do the work.  Sounds a lot like other programs like 8(a) which has made minority companies rich and in many instances given the Department of Defense and other agencies inferior products which tend to run way over budget.  We saw it up close and personal in San Antonio, Texas, from an 8(a) company whose owner then established 8(a) companies for his children.  When it was all said and done, Kelly AFB had little to show for $13M they had given them over the years.

Finally some federal employees have been caught in this contracting scandal by the Corps of Engineers:

A spokesman for the Army Corps of Engineers said in a statement that the agency "takes these allegations and the integrity of the contracting process very seriously. 

"We hold all of our employees to the highest standards of conduct," the statement continued. "The U.S. Army Corps of Engineers has been cooperating with the FBI and other federal investigating agencies to uncover this alleged scheme to defraud the U.S. government." 

It is the tip of the iceberg because the Federal Government is rife with all kinds of deals made on contracts that could never pass the smell test for honesty.  Department of Defense because of their large volumes of contracts are probably the worst.  

In the 1990's Air Force Material Command released a solicitation for B-2 Test Program Sets.  After millions and millions of dollars were wasted, all the Air Force had to show was a few cards that did work but the vast majority were useless.

One type waste was discovered in 2004 involving  how Oklahoma used federal contracting money to fund Democrat candidates.  The would give them or members of their family state/federal contracts so they would have the money to run for office.  NOTE:  A bill was passed making this practice illegal to give contracts to someone running for office or their family so many months before an election after this was discovered.

In 2004, We had this happen in our Senate district when the State through the Federal Bureau of Reclamation awarded a sole source $500,000 contract to a Democrat candidate running for the OK Senate.  When looking at the contract that involved an Environmental Impact Study at Lake Thunderbird as part of the name, it was discovered the sole source contract had no requirement to provide an Environmental Impact Study at the end of the contract.  In fact, the contract had not Purpose listed.

When OK Purchasing was confronted, they pulled the sole source and went out on bids but the problem was they went to companies at Tinker AFB that would never bid on such a small contract.  More importantly they were NEVER involved in bidding on contracts for Environmental Impact studies.  As you can guess, no one bid except the candidate running for Senate using her husband's company who never had done an Environmental Impact study.   She also used the phone number and address for the contract as her campaign number and address.

She lost the election after we outed her in the media, but nothing was ever done to Purchasing or the Bureau of Reclamation.  The US Attorney investigation was killed by a federal elected official.  This was her second contract -- the first was for a federal/state contract dealing with US History in the high schools when she was not certified to teach high school.  That was only for $180,000.

If that happens in a state like Oklahoma, can you imagine how bad it is throughout the Country?  We believe this is a tip of the iceberg.  There are not enough federal agents to track everything down and go to the grand jury for indictments which we believe is what people like this count on.

Corps of Engineers Bribery Arrests Praised by LawmakersBy Charles S. Clark, Government ExecutiveOctober 6, 2011 | 9:38 a.m. 

The Justice Department's indictment -- announced this week -- of four alleged conspirators charged with bribery and kickbacks under two contracts with the Army Corps of Engineers was praised by members of Congress, but the development could renew scrutiny of subcontractors and preferences for Alaska native corporations. 

Four Northern Virginia men, two of them private contractors and two of them employees of the Army Corps of Engineers, were charged in the District of Columbia with a conspiracy involving more than $20 million in bribes and kickback payments and the planned steering of a $780 million government contract to a favored contractor. 

Arrested on Oct. 4 were Kerry F. Khan, 53, of Alexandria, Va.; his son, Lee A. Khan, 30, of Fairfax, Va.; Michael A. Alexander, 55, of Woodbridge, Va.; and Harold F. Babb, 60, of Sterling, Va. The elder Khan and Alexander are federal contract officers. 

Investigators said the alleged scheme, which dates back to 2007, involved funneling more than $45 million to a favored company and padding invoices with fraudulent expenses totaling some $20 million, which was split by the four defendants. According to the indictment, Babb facilitated the conspiracy using subcontractors awarded through his position as director of contracts at EyakTek, an Alaska native-owned small business headquartered in Dulles, Va. 

EyakTek, whose website says it consistently has been among the top 100 federal contractors, was the prime contractor for two major Army Corps of Engineers information technology awards: the Technology for Infrastructure, Geospatial and Environmental Requirements contract and the Contingency Operations Readiness Engineering and Support contract. 

The company on Tuesday announced that Babb's employment had been terminated. "EyakTek is cooperating fully with the federal government in its investigation," said Rod Worl, chief executive officer of the Eyak Corp. and president of Eyak Technology. "Eyak and its shareholders will not tolerate this type of conduct by anyone employed by or associated with an Eyak company." 

The Sept. 16 indictment, which was presented to a grand jury in May and unsealed on Tuesday, was a multiagency effort, involving the U.S. Attorney for the District of Columbia, the FBI's Washington Field Office, the inspector general for the Small Business Administration, the Defense Criminal Investigative Service, the Internal Revenue Service's criminal investigations unit and the Army's Criminal Investigation Command's major procurement fraud unit. 

That team's takedown also included confiscation of 29 bank accounts, three luxury vehicles and seven high-end watches, according to a Justice news release. Officials also began forfeiture proceedings for 16 properties, 14 in Virginia, one in West Virginia, and one in Florida. 

If convicted, Kerry Khan and Alexander face up to 40 years in prison, Babb up to 35 years, and Lee Khan up to 25 years. 

(snip)

Sen. Claire McCaskill, D-Mo., who has conducted hearings on the contract assistance program for Alaska native corporations, said in a statement, "The criminal charges filed in connection with this brazen contract fraud are testimony to the problems with large no-bid contracts that Alaska native corporations are allowed to enjoy at the expense of American taxpayers. 

"For several years I've been crusading against the large loopholes in our contracting laws that allow waste, abuse and -- as these charges show -- fraud," she said. "The Alaska native corporations should compete for these large contracts and further should not be allowed to 'front' for other corporations that are actually doing the work. Congratulations to the inspectors general who found this fraud. Government auditors are the best investment the taxpayers can make." 

Rep. Sam Graves, R-Mo., chairman of the House Small Business Committee, also was effusive. "Bribery, kickbacks and pass-through contracts will not be tolerated -- crooked contractors and corrupt public officials cannot be allowed to steal $20 million from hardworking taxpayers," he said in a statement. "The integrity of the federal procurement system needs to be protected so that the public has confidence in government contracts and small businesses have every opportunity to compete. I am pleased that the system worked." 

Excerpt:  Read More at the National Journal