Is SBA MIA on contractor fraud?
Something has been bothering me about this contractor fraud story we’ve been following.
Where is the Small Business Administration and its power to debar and suspend companies?
I can’t help but think about MicroTech and its months-long suspension with no indictments and no criminal prosecution. No one is going to jail.
Yet, SBA brought a hammer down on MicroTech.
UPDATE: I left out an important fact. Several of the companies involved this case are service-disabled, veteran-owned small business, which is why I'm making a big deal about SBA not being involved.
And what is happening with the employers of Anthony Bilby and Thomas Flynn? As far as I can tell, nothing.
Let’s take the best case scenario: The senior management of the companies involved with Bilby and Flynn were unaware of their scheme to fake the competitive process and share profits.
I’d expect to at least find some problems with processes and internal controls at these companies that would allow something like this to happen. Wouldn’t it be reasonable to require the companies to undergo an audit and bring in a third party to monitor their activities?
That’s what SBA required of MicroTech, but only after suspending the company from pursuing new work.
Granted, the action against MicroTech was a civil matter, and the burden of proof is lower than in a criminal case.
You could also argue that the Bilby-Flynn case likely involves a continuing criminal investigation, so SBA is holding off to allow the process to run its course. (For the record, the Justice Department hasn’t confirmed whether the investigation is ongoing, but a reading of the statement of facts mentions other co-conspirators and companies that have not been indicted yet.)
But if SBA is holding off on action against the companies to let the process run its course, it is contradicting what it did with MicroTech, and what it did a few years ago with GTSI.
In both cases, SBA acted first and investigated second.
Why get the cart before the horse?
A better process might be to require a suspect company to install a watchdog while SBA conducts its investigation, and after the investigation is concluded, then you debar or suspend the company, or take some other kind of action.
It seems to me to be a much fairer process because innocent companies that perhaps made a mistake or had a problem with their internal controls don’t get such as a black mark on their record.
But the bad actors still get punished and should get punished.
Maybe I’m revealing my own lack of sophistication, but it just seems there needs to be a more thorough process in place before a suspension or debarment than the one that SBA has demonstrated in the MicroTech case.
It’s puzzling to me that SBA hasn't taken more forceful action against Bilby’s and Flynn’s employers, especially now that they have pleaded guilty and been sentenced to prison.
That’s enough of a green light for action, if you ask me.
Posted by Nick Wakeman on Feb 25, 2014 at 9:25 AM