Vague government contracts not new
Published March 5-6, 2011
By Joe Baker/Daily News staff
The types of contracts that spawned recent charges of bribery and resulted in the closure of a Middletown defense firm have been an issue for years.
Both the federal and state governments have used indefinite delivery/indefinite quantity (IDIQ) contracts for more than 20 years. They are supposed to address the needs for technical services that cannot be defined either by the number needed (quantity) or when they will be needed (delivery). The administrative delays caused by repeated bid processes in those cases probably would cost the government more in the long run, and could result in delays in procuring needed supplies.
Last month, Ralph Mariano, a civilian program manager and senior systems engineer with the Navy, and Anjan Dutta-Gupta, president of Advanced Solutions for Tomorrow of Middletown, were arrested and charged with bribery in an alleged $13.5 million kickback scheme. Federal prosecutors have charged the two with setting up a scam in which Mariano approved change orders to IDIQ contracts awarded to ASFT for work never provided.
The scam allegedly involved several other businesses and funneled back approximately $10 million to Mariano, his relatives and associates, Dutta-Gupta and entities controlled by him. No one else has been charged, but the investigation is continuing, according to the U.S. attorney's office in Providence.
When the government awards an IDIQ contract, it describes the scope of the work or the products necessary and, in some cases, establishes a minimum or maximum cost or number of products. The winning contractor basically is on call for when the government needs those services or products.
Navy officials would not comment on the ASFT case, but agreed to explain the contracting process in generic terms if The Daily News submitted written questions.
"These (IDIQ) contracts are used when the government cannot predetermine, above a specified minimum, the precise quantities of supplies or services that the government will require during the contract period and it is inadvisable for the government to commit itself to the purchase of more than a minimum quantity," Navy officials said in their written response.
Once an IDIQ contract is awarded, a government contracting officer oversees the work performed or the delivery of the products requested. It is not uncommon for the scope of work to expand during the contract since, by nature, the services or products are "indefinite."
But at least as far back as 2006 there was criticism about the vagueness of the contract awards, as evidenced by an article printed in "The Army Lawyer" by business-related website Goliath Business News.
"Problems with overly broad statements of work are not easily resolved," the article pointed out. "Statements of work are highly fact specific and will be drafted necessarily without much specific instruction since the facts of each contact will dictate the wording. Broad statements of work often benefit the government in ordering, so contracting officers do not have much incentive to draft narrow statements of work. Compounding the problem, if the statement of work is broad enough, the (U.S. Government Accountability Office) will not review the case. The only realistic basis for a GAO protest review occurs when the order is beyond the scope of the contract. As long as the statement of work is broad enough, any order conceivably will be within scope and unreviewable."
In the ASFT case, the government alleges that going back to 1999, Mariano, in concert with Dutta-Gupta, approved change orders to existing contracts. The charges allege that at least two Portsmouth companies were set up as part of the scam. C&S Technology Inc. and S.I. Technologies, both owned by Portsmouth resident Russell E. Spencer, allegedly submitted invoices for work approved by Mariano but never performed. Government affidavits indicate that a cooperating witness, identified only as the "founder and owner" of both C&S Technologies and S.I. Technologies, would distribute the money to Mariano, his friends and family and Dutta-Gupta.
According to the written responses from Navy officials, "contracting officers have the sole authority to award task orders or to make changes or additions to existing contracts," but the changes are "initiated by technical points of contact in charge of the requirement."
According to the Mariano-Dutta-Gupta affidavit, Mariano is not a contracting officer, but "controls funding for NAVSEA's technical programs and requests contracting officers to issue task orders through modifications on existing contracts."
NAVSEA is the largest of the Navy's five system commands and accounts for nearly one-fifth of the Navy's entire budget. It has responsibility for establishing and enforcing technical authority in combat system design and operation. It uses its technical expertise to ensure systems are engineered effectively.
Mariano provided the contracting officer "with instructions on the work to be performed by ASFT and the costs associated with that work," according to the federal affidavit. Mariano's recommendations apparently never were overruled.
The affidavit outlines an instance on April 8, 2009, when Mariano "added $1,500,000 to an ASFT contract, instructing the contract officer 'please place 1,500,000 R&D (research and development) on the code 25 contract for ASFT.'" The contracting officer responded, "The 1.5M will be awarded today."
While Navy officials responded to several follow-up questions posed by The Daily News, they did not respond to questions seeking more information about the job description or professional requirements of a contracting officer.

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