1993, the Jacksonville Division of the FBI received an anonymous
tip that a certain company (COMPANY A) had committed fraud
against the government by bid-rigging a contract awarded by
the National Aeronautics & Space Administration (NASA)
at the Kennedy Space Center. According to the tip, COMPANY
A had purposely submitted false and inflated bills and committed
outright theft on the contract.
To establish the basis for this case, we need to look back
to 1992. At that time, Congress passed legislation mandating
that a substantial percentage of federal government contracts
be awarded to small disadvantaged businesses and/or small
new legislation hurt COMPANY
A's chance of winning the NASA contract -- it was neither
a small disadvantaged business nor a small woman-owned business.
That's when the owners of COMPANY
A had an idea of how they could comply with the "small
woman-owned business requirement" of the law. They created
a fake company called COMPANY
B and installed their wives as sole employees and
officers. The plan? Once COMPANY
B won a contract, it would hire COMPANY
A as a subcontractor to perform the actual work.
It was soon announced that quotes were being solicited for
repairs to Launch Pad 39A, the launch pad for NASA's Space
Shuttle Fleet. Being near the Atlantic Ocean, corrosion and
constant use required the entire structure to be sand blasted,
repaired, rewired, and cleaned at an estimated cost of $3.2
million. This meant repairing what was essentially a giant
jungle gym the size of a twenty-story building!
B submitted the lowest bid, matching NASA's estimate
perfectly. In fact, the company matched the costs of the different
parts of the project exactly, line by line. A coincidence?
Sources said that COMPANY
B obtained the estimate from someone on the inside.
the company began its work it realized it couldn't make a
profit, so it began to inflate work costs. COMPANY
B claimed more resources were needed to complete the
job on time, eventually submitting a total of approximately
$10 million in claims, about 90% more than the amount of its
Map of the Region, Mission