Two companies that supply MRO products to a distributor catering to U.S. Department of Defense (DOD) agencies have agreed to pay $1 million to settle allegations that they submitted fraudulent bids on prime vendor contracts.

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A Jan. 3 Department of Justice (DOJ) news release stated that Johnny Buscema Jr. of New Port Richey, FL and his companies — S.A.F.E. Structure Designs (Las Vegas) and U.S.A. Manufacturing (New Port Richey) — will pay the settlement. It resolves allegations that Buscema Jr. and those two firms violated the False Claims Act by causing a “prime vendor” for the Defense Logistics Agency (DLA) to submit fraudulent bids to the DLA that resulted in DOD customers being overcharged for goods and services purchased under those contracts.

The prime vendor in the matter is Boston, MA-based Noble Supply & Logistics, which brands itself as a fully integrated supply chain management provider that includes MRO supplies distribution and procurement, logistics services, technology tools, infrastructure and training to support DOD mission requirements worldwide.

S.A.F.E. Structure Designs sells safety equipment to government customers, while U.S.A. Manufacturing is a general construction supplies manufacturer and distributor. Both provide third party logistics support that includes product acquisition, receiving, warehousing, transportation, shipping and returns, to military customers through DLA MRO contracts for the U.S. northeast and southeast. 

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The MRO contracts covered by the settlement are held by Noble, which the DOJ release said procures supplies and equipment for DOD agencies, such as chemicals, electrical supplies, hardware, HVACR, prefab structures and a variety of small tools.

The goal of the MRO program, the DOJ said, is to achieve favorable product pricing through leveraged buying, infrastructure savings and inventory cost reductions. This involves Noble soliciting bids from two independently competing vendors for transactions below $25,000 and from three competing vendors for transactions for anything higher.

The U.S. alleged that, from 2016 to 2023, S.A.F.E. and U.S.A. Manufacturing conspired with other entities to rig bids for awards on the MRO contracts for the nation’s northeast and southeast regions. More specifically, the settlement reads, Buscema allegedly submitted noncompetitive bids, paid other vendors to submit noncompetitive bids and submitted multiple bids from his two companies on the same solicitations to assist Noble to meet its bid obtainment requirements and to make one of the bids appear more competitive. As a result of the scheme, the U.S. said it was overcharged for items purchased under the MRO contracts.

“As evidenced in this settlement agreement, these contractors gamed the system to line their own pockets,” U.S. Attorney Joshua S. Levy for the District of Massachusetts said in the DOJ release. “They manipulated and undermined the fair and open bidding process designed to save our military — and taxpayers — money. Contractors should be scrupulous in dealing with the government, not coordinating with each other to pad their bottom line. When defense contractors collude, rather than compete, they violate the law and the public’s trust.”

According to its website, Noble has distribution centers in Olive Branch, MS; Las Vegas; Seattle; and Los Angeles; along with nine operations centers (four international); and three training and technical service centers.