Investigation into Procurement Irregularities at the Department of Energy Strategic Petroleum Reserve Results in Guilty Plea and Indictment

In July 2020 and February 2021, a company and an individual were charged with a conspiracy to defraud the United States and violate the Procurement Integrity Act (41 U.S.C. §§ 2102 and 2105), in violation of 18 U.S.C. § 371. According to the charging documents, an employee of the Department of Energy’s prime contractor conspired with a subcontractor, Cajan Welding & Rentals Ltd., to impair the government’s procurement process by providing nonpublic pricing and cost information to Cajan in advance of its bids, in order to give it a competitive advantage in obtaining subcontracts to provide equipment and services to the Strategic Petroleum Reserve.

The Strategic Petroleum Reserve is the nation’s stockpile of oil that can be drawn upon during times of emergency. It is managed and operated by a prime contractor, which obtains equipment and maintenance services for the Reserve through a procurement process that seeks competitive bids from subcontractors. The charged individual served as a subcontract manager’s technical representative, and his involvement in the procurement process included preparing nonpublic pricing and cost estimates for the government. The alleged conspiracy began at least as early as February 2002 and continued at least as late as October 2016, during which time the defendant provided these nonpublic pricing and cost estimates to Cajan in advance of its bids, sometimes by email. Cajan used this information to prepare its bids, and during the course of the conspiracy period, Cajan received over 50 subcontracts worth approximately $15 million. The indictment alleges that the defendant had a personal and business relationship with Cajan’s owner (now deceased), and that he received financial benefits from Cajan. The indictment also charges that he made false statements to federal agents by asserting that he had not provided any nonpublic pricing information to Cajan.

The company, Cajan Welding & Rentals, Ltd., pleaded guilty, and in December 2020 was sentenced to a criminal fine of $400,000. The individual was indicted in February 2021, and trial is currently set to begin on May 24, 2021. The cases are the result of an investigation by the Department of Energy Office of Inspector General, in partnership with the Antitrust Division’s Washington Criminal II Section and the U.S. Attorney’s Office in the Eastern District of Louisiana.