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Judge Says “Culture” at FAA Disturbing, Criticizes Cozy Relationship with Contractors

December 14, 2007

ROBERT FERRELL, 48, of Renton, Washington, was sentenced today to 200 hours of community service and three years of probation in connection with a conspiracy to steer a government construction contract in violation of federal procurement laws. The case involves the Federal Aviation Administration’s (“FAA”) award of a $4.3 million contract to install lighting at Sea-Tac Airport. FERRELL pleaded guilty September 14, 2007, to Procurement Fraud. At sentencing today U.S. District Judge Marsha J. Pechman said, “It appears the whole agency (FAA) have run afoul of what their duty is as a government agency.”

FERRELL’s co-conspirator, Vicki Lynn Olson, 51, of Kent, Washington was sentenced earlier this week to 200 hours of community service and three years of probation. Olson pleaded guilty on February 20, 2007, to Conspiracy and Procurement Fraud in connection with the case. Neither Olson or FERRELL are still employed by the FAA.

FERRELL was employed by the FAA as a contracting officer in Renton, Washington. As a contracting officer, Ferrell was responsible for awarding procurement contracts on behalf of the FAA. Olson worked as the Manager of the Acquisition Management Branch of the FAA in Renton, Washington. In April 2002, the FAA began the process of soliciting bids to install a High Intensity Approach Lighting System (“ALSF”) at Sea-Tac Airport. After one bidder, Donald B. Murphy Contractors, Inc. (“DBM”) was judged to be the successful low bidder, Olson and FERRELL removed the contracting officer from the project, and installed FERRELL as the new contracting officer who would then ensure that the contract would be awarded to a different contractor, PCL Construction Services, Inc. (PCL). FERRELL then invited PCL to revise its bid and told PCL that it was not the low bidder. OLSON also told PCL the price differential between the DBM and PCL bids. Armed with this information, PCL submitted a “revised” bid which was $4,300 lower than DBM’s. The contract was awarded to PCL, at a price of $4,293,200.

FERRELL refused to provide DBM with an opportunity to submit a lower bid and misled FAA lawyers into believing that PCL’s bid was lowered, because a subcontractor was late submitting information to the company, when in truth PCL’s lower bid was based upon the information illegally provided by FERRELL and OLSON. Although there was no evidence that either FERRELL or OLSON received any bribe or other benefit for the information they provided to PCL, there was evidence PCL had engaged in “partnering sessions” with a number of FAA employees which included rounds of golf and meals.

PCL ultimately paid a $1 million fine to the Government and paid $750,000 in restitution to DBM. PCL also suspended three employees for one year without pay and implemented a compliance program.

At sentencing Assistant United States Attorney Carl Blackstone described the long term negative impact the actions had on government contracting. “The competitive process was corrupted and other contractors got the impression that the deck was stacked in favor of PCL, thereby leading contractors to believe that they would not get a fair shake if they submitted a bid to the FAA.”

Judge Pechman agreed and had pointed criticism for the FAA saying that it appears that the “whole agency has run afoul of what their duty is as a governmental agency, which is, of course, to follow the rules, be transparent, be honorable, and be uninfluenced by biases that are not helpful to the bidding process.” As Judge Pechman stated, “I find it troubling that the whole milieu appears to have sunk to a very low common denominator.”

The judge was particularly troubled by the fact that a number of FAA employees had submitted letters on FERRELL’s behalf which appeared to justify his illegal behavior. As Judge Pechman stated , “I am appalled by many of the letters I received from FAA employees trying to justify this behavior. When the people you are supposed to be evaluating start taking you out for golf, buying you banquets and currying your favor, that’s exactly when you need to run from them and step back and say I have to make this contract based upon other criteria.... FAA employees shouldn’t be taking a cup of coffee from anybody who is bidding on these contracts. . . I am sad to see that there are still people in the office that think there was nothing wrong. What’s wrong is when you don’t let the system function as the people are entitled to expect.”

Assistant United States Attorney Blackstone says he plans to send a transcript of Judge Pechman’s remarks at both sentencing hearings to the Regional Administrator of the FAA so that the agency will be on notice that it must change its culture.

This case was prosecuted as part of the Procurement Fraud Task Force at the United States Attorney’s Office. The task force is comprised of officers and agents from over 20 agencies. The task force will investigate allegations of fraud and abuse in government contracting in order to safeguard taxpayer dollars.

This local task force is the result of the National Procurement Fraud Initiative announced by the U.S. Department of Justice in October, 2006, and is designed to promote the early detection, identification, prevention and prosecution of procurement fraud associated with the increase in contracting activity for national security and other government programs. As part of this initiative, the Deputy Attorney General has created the National Procurement Fraud Task Force, which is chaired by Assistant Attorney General Alice S. Fisher. The Procurement Fraud Task Force includes the United States Attorney’s Offices, the FBI, the U.S. Inspectors General Community, and a number of other law enforcement agencies. This case, as well as others brought by members of the Task Force, demonstrate the Department of Justice’s commitment to helping ensure the integrity of the government procurement process.

This case was investigated by the Office of Inspector General, Department of Transportation, the Federal Bureau of Investigation and the Internal Revenue Service. The case was prosecuted by Assistant United States Attorneys Carl Blackstone and Peter Winn.

For additional information please contact Emily Langlie, Public Affairs Officer for the United States Attorney’s Office, at (206) 553-4110.

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