Defense contractor alleged to have taken competitor's bid information pays $1.15 million
DENVER – The United States Attorney for the District of Colorado announces that Paragon Dynamics, Inc., a defense contractor based in Aurora, Colorado, has agreed to pay $1,150,000.00 to settle allegations that it improperly obtained bid and proposal information from a competitor on contracts for the National Reconnaissance Office.
Today’s settlement resolves contentions by the United States that Paragon Dynamics violated the Procurement Integrity Act by improperly obtaining bid and proposal information from Raytheon Corporation. Specifically, the United States contended the following: From February 2008 to August 2009, Raytheon was competing to win certain contracts for the National Reconnaissance Office, which is the federal agency in charge of designing, building, launching, and maintaining America’s intelligence satellites. A Paragon Dynamics employee with access to a Raytheon facility in Aurora used his access to obtain entire drafts of Raytheon’s proposals for two separate contracts, as well as other information. The Paragon Dynamics employee was then videotaped by a security camera as he faxed part of a proposal to the president of Paragon Dynamics. The president of Paragon Dynamics then sent that information to another corporation that Paragon Dynamics was teaming with in a competition to win the NRO contract. An investigation revealed that the employee had obtained drafts of Raytheon’s proposals for two government contracts, as well as other related documents. Some of these documents were then identified on a computer system maintained by another employee of Paragon Dynamics.
“When companies cheat in the bidding process for government contracts by stealing the work of their competitors, they face strict penalties,” said John Walsh, United States Attorney for the District of Colorado. “Corporate espionage erodes the trust we have in our public procurement system, and the Department of Justice will hold cheaters accountable for their actions.”
As part of today’s agreement, the Office of Inspector General for the National Reconnaissance Office (NRO OIG) also reached a Corporate Integrity Agreement with Paragon Dynamics.
“The culmination of this case and the effort put forth in the investigation illustrate the NRO’s commitment to maintaining and enforcing a business environment that promotes fair competition,” said Eric Beatty, the NRO OIG Assistant Inspector General for Investigations. “Our success is a direct result of our partnerships with law enforcement agencies, and to those in government and industry who are willing to report wrongdoing.”
"The settlement in this investigation is the result of a highly successful joint effort by the Defense Criminal Investigative Service (DCIS) and our law enforcement partners from the Federal Bureau of Investigation and the National Reconnaissance Office-Office of Inspector General, " said Janice M. Flores, Special Agent in Charge of the DCIS Southwest Field Office. “This settlement highlights the Federal Government's continuing resolve to ensure those who violate the Program Integrity Act are held accountable for their actions."
“This successful investigation was initiated as a result of the continuing relationship with our corporate partners, in conjunction with our counterparts in the Office of Inspector General within the National Reconnaissance Office, and the Defense Criminal Investigative Service,” said FBI Denver Special Agent in Charge James Yacone. “Through these partnerships the FBI will continue to assist in detecting, deterring and prosecuting those who illegally collect and share proprietary bid information for U.S. contracts.”
The Procurement Integrity Act was originally enacted in the late 1980s in response to allegations of insider trading on government contractor procurement information. Among its provisions, the Procurement Integrity Act has clear prohibitions against disclosing or obtaining various types of contractor bid and proposal information. The Procurement Integrity Act is currently codified at 41 U.S.C. §§ 2201-2207.
The United States Attorney’s Office acknowledges the cooperation and teamwork demonstrated by the governmental entities involved in today’s recovery. Special thanks are extended to the Office of Inspector General for the National Reconnaissance Office, the Defense Criminal Investigative Service, and the Denver Field Office of the Federal Bureau of Investigation.
The claims settled by this agreement are only allegations. There has been no determination of liability.
Assistant United States Attorney J. Chris Larson handled this matter for the United States Attorney’s Office.