Government Contractor to Pay $1 Million for Defrauding Contract Process
Johnny Buscema, owner, CEO, and sole employee of SAFE Structure Designs and USA Manufacturing, has settled with the federal government to resolve allegations that he defrauded the contracting process through bid rigging.
SAFE Structure Designs supplies safety equipment to military and commercial customers, while USA Manufacturing is a construction company that submits bid contracts with the government as a third-party logistics company, according to the settlement. Both companies provide services such as transportation, shipping and returns, product acquisition and warehousing.
Owner, CEO and Sole Employee
Buscema owns and operates both SAFE Structure Designs and U.S.A. Manufacturing and there are no other full-time employees save for Buscema himself, according to the settlement.
Noble Sales Co., Inc., a Massachusetts-based supplies and logistics company, contracts with the Defense Logistics Agency (DLA) to provide domestic and overseas maintenance, repair, and operations (MRO) support, according to the agreement. Noble also supplies DoD agencies with electrical supplies, HVAC and refrigeration equipment, chemicals and other hardware.
Noble, as the “prime vendor,” was to obtain the best prices for the MRO contracts by initiating and engaging in a competitive bidding process, according to the DOJ press release. Between 2016 and 2023, Noble worked with DLA to provide bids for MRO services to the military in the U.S. under the contracts below.
Paid Companies to Submit False Bids
For Noble to work with companies like Buscema and his businesses, Buscema needed to first submit quotes or bids to compete with the prices of other vendors, according to the agreement. Nobel and Buscema coordinated the bids, with Buscema submitting “courtesy bids” meant to have other companies lower their prices.
Noble provided Buscema with specific bidding prices to submit to the cost of labor, materials and freight costs, according to the agreement. Buscema submitted over 100 courtesy bids not to win but to drive the prices of other vendors down.
Buscema used both of his businesses to make courtesy bids to Noble and paid $200 to $250 per quote to a government contractor, Bloom Industrial, out of Pittsburg, Pennsylvania, and AB Rings Group, another government contractor out of Pompano Beach, Fla., to submit a least 60 bids for Nobles contracts, according to the agreement. Buscema was compensated with procurement awards for 95 of the 100 submissions he made.
Noble submitted the bid packages, including the courtesy bids from Buscema’s companies, Bloom Industrial and AB Rings, and DLA made the final contract award decisions. DLA paid the contracts through Noble to Buscema and the other vendors under the awarded contract, according to the agreement. Buscema and his businesses received about $14.7 million in the scheme but will only be liable to repay $1,000,000 to resolve the settlement.
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