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Concerns raised about Navy contracting
Published April 27, 2011
By Matt Sheley/Daily News staff
NEWPORT - Area defense contractors are concerned how the Navy's unexpected suspension of Naval Undersea Warfare Center Newport's authority to award work contracts will affect their firms and the region's economy.
Jody Sullivan, executive director of the Newport County Chamber of Commerce, said her office fielded numerous calls after the news broke late Tuesday morning that the Naval Sea Systems Command in Washington, D.C., had stripped the local submarine research lab of its contracting authority for an indefinite period. The sanction has raised serious concerns about local jobs, work orders and funding for payroll and other payments.
NAVSEA spokeswoman Patricia Dolan said she believes none of the existing NUWC Newport contracts will be affected by the decision, which was made late Friday, nor does she expect any loss of jobs. NAVSEA has taken over the role of issuing contracts, so the primary impact will be delays as contracts are analyzed and awarded before they became available to NUWC, Dolan said.
"We have no sense of the period of time this will be in place," she said Tuesday afternoon. "NUWC is required to submit a detailed 'get well plan,' and that must be approved before anything else happens."
According to a statement issued Tuesday by NAVSEA, the federal investigation of a multi-million bribery scheme involving Anjan Dutta-Gupta, 58, of Roswell, Ga., the founder and president of Advanced Solutions for Tomorrow in Middletown, and Ralph Mariano, 52, of Arlington, Va., a civilian program manager and senior systems engineer at NUWC, prompted Vice Adm. Kevin M. McCoy, commander of NAVSEA, to appoint a special review team to investigate how contract and financial processes operated at NUWC Newport.
Based on the team's findings, NAVSEA suspended NUWC's warrant and contracting authority because of "lapses in the technical and requirements communities to sufficiently describe work ordered, effectively account for work ordered and received, and to provide proper surveillance and oversight of that work," the statement reads.
The Navy investigation began after the U.S. Attorney's Office in Providence arrested Dutta-Gupta and Mariano on charges of participating in a scheme that siphoned off millions of dollars from legitimate Navy contracts by changing work orders and making payments to subcontractors for work never done.
From 1996 through January this year, at least $8 million was paid by ASFT to Mariano, his family members and to his longtime girlfriend, Mary O'Rourke, who was a senior vice president and director of strategic planning at ASFT, according to court documents. In addition, at least $1.2 million was funneled back to SIC, a corporation owned by Dutta-Gupta.
He agreed last week to plead guilty to a charge of paying bribes to Mariano to guarantee payment and additional funding to ASFT, his former company, which closed - leaving about 100 people unemployed - in February in the wake of the arrests. Dutta-Gupta is scheduled to enter the plea in U.S. District Court in Providence on Thursday, when he is expected to be sentenced. He faces up to 15 years in federal prison and extensive fines.
The NAVSEA review team identified "vulnerabilities and process failures" that enabled the fraud to occur, according to the prepared statement, provided suggestions for improvements in the contract process.
"There's going to be a learning curve," Dolan said. "We'll know a lot more once things settle out. It might be a harsh pill to swallow, but it's one we're going to have to swallow nonetheless."
Statistics posted on the NUWC Newport website show it had a funded program of $1.1 billion in 2010. Of that total, $277 million was provided in salaries to more than 2,400 civilians and attached military personnel.
It could be as soon as two to three weeks for NUWC to submit its "get well plan," Dolan said. NAVSEA must review it and make changes to work out any differences.
In the meantime, it will be up to NUWC Newport to prioritize upcoming contracts to make sure the most pressing ones get first review, she said.
"We're not terminating any contracts," Dolan said. "The biggest place where there may be an impact on contracts is where they're awarded in a slower timeframe."
The reason for the delay in announcing the suspension of NUWC's contract authority was because the matter remains under investigation, and the Rhode Island Congressional delegation needed to be notified, Dolan said. They issued prepared statements reacting to NAVSEA's sanction, which Dolan said she believes is unprecedented.
"The defense industry is critical to Rhode Island and the entire region," said Sen. Jack Reed, D-R.I. "The Navy is well aware of the effects this decision could have on the livelihoods of thousands of hard working Rhode Islanders. They should proceed swiftly with contracting reforms and improvements so that uninvolved employees and companies who have a record of supporting the Navy's mission to protect our nation are not adversely affected."
"I trust the Navy will reform as swiftly as possible its contracting process, without undue disruption to the Rhode Island companies and employees who support our Navy with their expertise," Sen. Sheldon Whitehouse, D -R.I., said.
"My hope is that these reforms will be done in a way that does not adversely affect companies that were not involved in this case because the naval industry is so incredibly important to the state and the wider New England area," said Rep. David Cicilline, D-R.I.
The Naval Criminal Investigative Service and the U.S. Attorney's Office in Providence are continuing their criminal investigation, but it is unknown if additional criminal charges will be filed in connection with scheme.

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