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By Nick Wakeman

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Nick Wakeman

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 7:22 AM

Reader Comments

Wed, Jul 2, 2014

Very uneven treatment is rampant, GTSI was ruined for minor infraction while Thundercat skated where flat out bribery was alledged in a sworn and signed plea.

Thu, May 15, 2014 Roy Barrrera

I absolutely disagree with J. Mischbuccha! The reporter did more than took liberties - he manipulated the news by feeding us lies and half-truths hoping that the agencies mentioned in his front page articles would react and true-to-form the SBA's ready, aim, fire abusive approach prevailed. Nobody questioned the SBA when they took a series of racist articles written by a bigoted reporter at the Washington Post and used them to propose MicroTech for debarment and when Nick asked about “due process" everyone just shrugged their shoulders. When you start off your series of articles by telling us this guy lives in a neighborhood where few Hispanics live, that he drives an amazing car and that he has transformed his life through hard work and for that we should hate him, that scares me. It makes me wonder if O’Harrow wasn’t using Donald Sterling as his fact checker? In the end it turns out that all this boiled down to a ten year old document that actually was correct, but the follow-up Q&As were inaccurately submitted by a man with a sorted past without Jimenez’s knowledge. The real crime here that the SBA, in violation of its own rules and regulations, accepted documents from a consultant not the individual asking for 8(a) status. Mischbuccha thinks we should demand some semblance of disclosure that is full and valid and that I agree with that but, going back ten years to find a “t” that was not crossed and then attacking a man because he lives in a nice house, drives a nice car and is a role model for Hispanics and Veterans is the crime we should be focused on. Can you say McCarthyism?

Tue, Apr 22, 2014 Hack Job Vienna

J. M., I could not disagree with you more. The reporter hated this company and did everything he could to destroy them. He gave us an inaccurate story and tried to convince us the SB concern lied on their 8(a) application, which turned out not to be true. The truth is the application filed by the SB concern was in fact correct. After the application was filed, the SBA accepted a document from a company hired to help SB concern with the application. Rather than verifying what was stated in the document and requiring that the certification come directly from the individual being certified, which SBA regulations require, they accepted the document from a consultant and moved on. SBA regulations are very specific about who can clarify your application information and who can certify on your behalf and the truth is only the individual seeking certification can certify statements made to the SBA, not a consultant from another company. Why did the SBA accept statements from a consultant and then wait 10 years to call out that error and then blame the SB concern rather than admit they screwed up? The answer is they got embarrassed by the Post and it was easier to take it out on the SB concern.

Sat, Apr 19, 2014 J. Mischbuccha

Mr. Amtower comment might be reversed to suggest that certain people who feed at the trough of clueless contractors never met a contractor they did not like. The dumber the better, eh? Agree the Post is remarkably dumb about the major private enterprise in town and the the reporter took some liberties, but the fact remains that the SB concerned did not hew to the true facts in formulating its certification. Do we just forget about that, i.e., love them unconditionally as Mr. Amt. wants us to infer, or do we demand some semblance of disclosure that is full and valid?

Tue, Apr 8, 2014 Proud American

Strong Castle CEO Charged with Murder of Wife. Nick, Once again you called it. The SBA was asleep at the wheel when it came to Strong Castle and Braulio Castillo. It’s a terrible story about a Small Business operating outside the lines and the fact that it resulted in the death of Michelle Castillo is even more tragic. I knew Braulio before he started Strong Castle and heard stories about how he manipulated contracts behind the scenes. When he started Strong Castle I knew it was only a matter of time before the SBA and VA caught up to him and shut him down, but I had no idea that it would end as tragically as it did. Now I wonder if the Washington Post had not had SBA or VA so preoccupied chasing MicroTech and had been paying attention to what was taking place right under their noses hey might have been able to focus their efforts on Strong Castle shut them down and prevent the series of events that led to Michelle's death. The weirdest part of the story is that despite the illegal business dealings he had with the IRS, despite Braulio's Congressional video that went viral, and despite the fact that Strong Castle's CEO has now been charged with first-degree murder in death of his wife, his company - Strong Castle, has never been suspended, proposed for debarment, or debarred. MicroTech's CEO does nothing criminal and commits no crimes, but a consultant forgets to check a block on his SBA 8(a) form 10 years ago and Jimenez gets the front page of the Post 10 times, gets proposed for debarment, loses millions in contracts, and is later vindicated and the Washington Post buries it on page 14. What a double standard for the Post and the SBA! This goes to show that the Washington Post runs the SBA and when they say jump the SBA and dozens of other agencies. Because this was not their Story the Post has said nothing. Time to clean up the mess over at SBA and stop all the Washington Post generated witch hunts! While they were chasing Jimenez real crimes were taking place and nobody on the Hill or at the SBA did anything about it, instead they focused on Jimenez and MicroTech because that is what the Washington Post told them to do.

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