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contractor Defense

Defense contractor with billions in sales got millions in pandemic loans intended for small businesses – The Washington Post

A military equipment supplier that has been accused of fraudulently misrepresenting its size in order to benefit from privileges associated with being a small business has received a Paycheck Protection Program small business loan worth at least $2 million, public records show.

Atlantic Diving Supply, a Virginia Beach, Va.-based reseller of specialized military gear, is the latest organization whose receipt of taxpayer-backed loans through the Paycheck Protection Program has raised questions about a program launched in early April to help sustain employment at small companies through the economic crisis.

In late April, the Treasury Department retroactively clarified its rules after well-known restaurant chains, car dealerships and hotel companies reported receiving PPP loans. Several of them returned the loan funds following public uproar; others kept the money. The SBA has said it will audit all PPP loans above $2 million to determine whether the recipients were eligible.

Representatives from the Small Business Administration and Atlantic Diving Supply did not comment on the company’s receipt of SBA loans.

The company’s legal issues are detailed extensively in a report released Monday by the nonprofit Project on Government Oversight, known as POGO. A review of business data by POGO and the nonprofit Anti-Corruption Data Collective concluded that ADS was one of at least 27 PPP recipients estimated annual sales of more than $1 billion in 2019. Another 2,068 loan recipients cleared $100 million in sales last year, according to the analysis.

Nick Schwellenbach, a senior investigator at POGO, questioned whether it’s appropriate for ADS to receive small business coronavirus loans. Schwellenbach’s investigation also found that two other firms allegedly tied to ADS ― including one that was named in a settlement with the Department of Justice ― separately received smaller PPP loans.

“It’s important that taxpayer funding reserved for genuine small businesses isn’t siphoned off by companies that are not eligible,” Schwellenbach said. “As a top government contractor with revenues well over a billion dollars a year, it strains credibility that Atlantic Diving Supply is a real small business, especially given several recent settlements and law enforcement outcomes related to their alleged small business contracting fraud.”

Although it received a favorable ruling from the SBA as recently as November 2019, ADS’s small business credentials have long been called into question.

ADS started as a small, family-owned shop focused on the military diving community in Virginia Beach, which includes the Navy SEALs. It was transformed under the leadership of long-time chief executive Luke Hillier, winning its first major government contract in 2000. It grew quickly to meet an insatiable demand for military gear of all sorts in the years following 9/11.

That fast growth became permanent business as the U.S. military presence in Iraq, Afghanistan and elsewhere dragged on for nearly two decades.

At one point, ADS filed papers to go public, something that is usually the purview of large corporations. In 2015 it purchased Theodore Wille International, a military food and equipment supplier with offices in seven countries.

Its business has remained healthy despite recent troop reductions. ADS received more than $3 billion in unclassified government contract dollars in 2019, procurement records show. That’s more than some well-known, objectively large government contractors, including Bechtel, KBR and CACI. ADS has already cleared $1 billion in federal contract receipts in 2020 despite the economic crisis.

As it has grown ADS’s continued status as a small business status has been critical to its participation in the Defense Department’s Tailored Logistics Support, or TLS program, a lucrative military supply line that is largely restricted to SBA-approved small and disadvantaged businesses.

In recent years, ADS’s official headcount has teetered close to the SBA’s 500-employee limit for small-company designation, and the company has fought off repeated challenges to its size status. If ADS were declared “no longer small,” it would not only be ineligible for SBA coronavirus assistance, but would also be forbidden from competing on small business set-aside contracts that drive its business.

In 2017, ADS settled federal allegations that it used a network of allegedly-affiliated companies to rig bids and fraudulently misrepresent its size. The Justice Department called the $16 million settlement “one of the largest recoveries involving alleged fraud in connection with small business contracting eligibility.”

Hillier, who has moved on from the CEO role but remained the company’s chairman as of July 20, according to a company filing, separately paid $20 million to settle federal allegations that he “violated the False Claims Act by fraudulently obtaining federal set-aside contracts reserved for small businesses that his company was ineligible to receive.” The settlements resulted from a Qui Tam lawsuit brought by whistleblowers.

Two of the alleged affiliate businesses — Karda Systems and SEK Solutions — were named in a related case in which Ron Villanueva, a former state lawmaker from Virginia Beach, pleaded guilty to federal charges that he conspired to defraud the United States. Villanueva admitted that he and a friend pretended both companies were run by people who qualified for particular grants and drafted a misleading letter to the SBA that mischaracterized the degree to which one firm relied on other suppliers.

ADS briefly lost its small business designation as a result of those allegations when a Defense Department contracting officer, concerned by ADS’s settlement, requested a formal SBA review of the company’s size status and its degree of affiliation with other companies named in the whistleblower lawsuit, according to documents obtained by The Washington Post. That SBA review determined that ADS was “other than small,” which temporarily blocked the company from bidding on set-aside contracts. But ADS successfully appealed that ruling, which was reversed because it relied on old financial records.

Today the company continues to receive federal contracts designated for small firms. Because the settlements arrived at by ADS and Hillier did not include a determination of liability, the company has been allowed to keep benefiting from the SBA’s various small business programs. Its most recent size determination, which found it to be a small business, was finalized in November 2019.

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Defense secretary

Defense Secretary Esper, In Careful Exchange, Denies Being Briefed On ‘Bounties’ – NPR

Defense Secretary Mark Esper (left) and Gen. Mark Milley, chairman of the Joint Chiefs of Staff, testify Thursday before a House Armed Services Committee hearing.

Greg Nash/Pool/Getty Images


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Greg Nash/Pool/Getty Images

Defense Secretary Mark Esper (left) and Gen. Mark Milley, chairman of the Joint Chiefs of Staff, testify Thursday before a House Armed Services Committee hearing.

Greg Nash/Pool/Getty Images

Defense Secretary Mark Esper never received a briefing about alleged Russian practices against U.S. troops in Afghanistan that included the term “bounty,” he told Congress on Thursday.

Esper said so in an answer to a carefully worded question from Rep. Mike Turner, R-Ohio, who appeared to be aware about how to cue Esper, potentially from the lawmaker’s own awareness of the still-secret underlying intelligence about the Russian allegations.

“To the best of my recollection, I have not received a briefing that included the word ‘bounty,’ ” Esper said.

He and Gen. Mark Milley, chairman of the Joint Chiefs of Staff, vowed they are working to ensure American forces in Afghanistan are as well-equipped and well-protected as possible and they suggested the reports about alleged bounties paid by Russian intelligence to Taliban insurgents still aren’t confirmed.

Turner also asked Esper whether, if he had been told about “bounties” specifically, he would have taken action.

Yes, he said.

“If it was a credible report, a credible, corroborated report, that used those words, certainly it would have been brought to my attention by chain of command, by the chairman of the Joint Chiefs and others, for action. We would have taken upon that action an interagency effort to make sure we addressed it,” Esper said.

Experts Say Intel Should Have Reached Trump On Russian Bounty Program

Neither Esper nor Milley appeared to dispute that some underlying activity might be playing out in Afghanistan, but they both presented the situation as one still unresolved or requiring further investigation.

“We’re going to get to the bottom of all that,” Milley said.

Another Republican, Rep. Elise Stefanik of New York, suggested that she and other lawmakers had been briefed about the alleged bounties on Thursday and asked the witnesses to restate their commitment to protecting American forces serving abroad.

“You have a thousand percent commitment,” Milley said.

Esper revealed another clue about the origins of the bounty allegations in a separate answer to a question about whether the Defense Department was responsible for assessing that bounties have been paid to Afghan insurgents.

The defense secretary said this: “It was not produced by a DOD intelligence agency” — which rules out a number of big organizations, including the intelligence components of the military services, the Defense Intelligence Agency and perhaps the National Security Agency. The NSA is structured organizationally as a support agency to the Pentagon.

Esper said he’d first learned about the allegations in February in an “intelligence piece of paper” — perhaps a reference to a reported classified CIA bulletin that has been described by The New York Times.

Trump Calls Bounty Report A 'Hoax' Despite Administration's Briefing Of Congress

Republicans on the House Armed Services Committee sought to defend President Trump on Thursday and puncture the criticism that his administration bungled the discovery of the alleged bounty practices.

In their telling, officials continue to assess unreliable reports and that’s why the matter was never singled out for the president in an in-person presentation.

Trump has called the alleged bounty practices a “hoax,” and the White House hasn’t said it’ll take any action against Russia in retaliation for whatever is taking place on the ground in Afghanistan.

Congress Unites To Demand Answers From Trump On Russian Bounties In Afghanistan

The underlying intelligence has not become public.

A number of press reports, however, including those led by The New York Times, have described a broad range of evidence, including electronic wire transfers and personal comments by Taliban insurgents, confirming that Russia offered monetary incentives to insurgents for targeting Western troops.

Critics have faulted Trump for creating a process inside his administration in which he reportedly isn’t given pertinent intelligence because it might upset him or in which aides effectively bury unpleasant material in written documents that Trump doesn’t read.

Rep. Seth Moulton, D-Mass., said the presence or absence of a specific term in official briefing materials “proves nothing — what matters is the substance.”

Also on Thursday, Sen. Tammy Duckworth, D-Ill., asked Esper in a letter whether the Defense Department is investigating if any American deaths in Afghanistan may have been linked with the alleged Russian bounty practices.

Her letter alluded to the families of such fallen troops, often denoted with a gold star, and the Russian military intelligence agency that has been connected with the practice, the GRU.

“It is unacceptable that to date, the Trump administration appears to be ignoring a matter of great importance to Gold Star family members whose loved ones were killed while serving in Afghanistan: Were any U.S. troop casualties in Afghanistan connected with the alleged GRU bounty payments to Taliban-linked militants?” Duckworth asked. “Gold Star families deserve an answer to this question.”

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Defense Trump

Trump will use Defense Production Act to ORDER meat-processing plants to stay open – Daily Mail

President Donald Trump on Tuesday will sign an executive order declaring the food supply chain is critical infrastructure and order meat processing plants to remain open amid scares of a shortage.

Trump will use the Defense Production Act to order the plants to stay open, a person familiar with the order told DailyMail.com, and the government will provide additional protective gear to the employees. 

The president confirmed to reporters he would be signing an order late Tuesday. 

‘We’re going to sign an executive order today, I believe,’ Trump said in the Oval office. ‘We’ll be in very good shape. We’re working with Tyson, one of the big companies in that world. We always work with the farmers.’

‘There’s plenty of supply, it’s distribution,’ he added. ‘And we will probably have that today solved. It’s a very unique circumstance, because of liability.’ 

Earlier Tuesday Trump tried to calm mounting fears of a food crisis by telling Americans ‘there is no shortage of meat.’

The country’s largest meat companies – including Smithfield Foods Inc , Cargill Inc , JBS USA and Tyson Foods Inc – have halted operations at about 20 slaughterhouses and processing plants in North America since April after workers became ill with the coronavirus, sparking fears of a meat shortage. 

The president took to twitter to try and calm concerns, retweeting a post from The Counter, a nonprofit that examines the nation’s food supply. 

‘First, there is no shortage of meat destined for the grocery store shelf. It might take stores longer than usual to restock certain products, due to supply chain disruptions. But we have many millions of pounds of meat in cold storage across the nation,’ it read.  

President Donald Trump tried to calm mounting fears of a food crisis by telling Americans ‘there is no shortage of meat’

President Trump retweeted a message about the country’s meat supply

The pork industry has been hit especially hard by the coronavirus as meat processing plants have closed throughout the country

The USDA reported last week there is 921 million pounds of chicken in storage and 467 million pounds of boneless beef, including hamburger, roasts and steaks. 

The demand for meat has gone up under stay-at-home orders with more Americans cooking instead of eating out.  

But before much of that meat could be sold at grocery stores it would need to be recut and repackaged, as restaurants buy in greater bulk than an individual at a market. 

Even if there is no shortage of meat, prices are expect to rise and selection is expected to decrease as companies warn that grocery shelves may take longer to fill.

The Agriculture said last week beef prices are expect to rise 1% to 2% this year, poultry as much as 1.5% and pork between by from 2% and 3%.

More than 5,000 meat and food processing workers have been infected by the coronavirus and 13 have died, the United Food and Commercial Workers International Union said last week.

Meanwhile, live stock farmers are facing difficult choices. With meat processing plants unable to take animals, the farmers are considering having piglets aborted and euthanizing animals as they run out of space to house them 

The pork industry typically slaughters around 510,000 pigs daily for bacon, hams and sausage. 

But, because of the coronavirus, plants that handle one-fifth of the daily total, or 105,000 pigs a day, have closed – leading to a backup on farms and raising the prospect of having to euthanize them and then render or bury the carcasses, The Wall Street Journal reported.

The pork industry has been hit especially hard. Three of the largest process plants in the United States have gone offline indefinitely: Smithfield Foods in Sioux Falls, South Dakota, JBS pork processing in Worthington, Minnesota and Tyson Fresh Foods in Waterloo, Iowa.

Unlike cattle, which can be housed outside in fields, hogs are fattened up inside temperature-controlled buildings. If they stay too long, they get big and injure themselves. Mature animals have to be moved out before the sows who were impregnated before the pandemic give birth. 

‘We have nowhere to go with the pigs,’ Iowa farmer Al Van Beek told Reuters. ‘What are we going to do?’

The president’s reassurance also comes as the chairman of Tyson Foods warned Sunday that ‘the food supply chain’ is breaking after coronavirus outbreaks forced the closure of their plants. 

John Tyson said ‘millions of pounds of meat’ will fail to reach stores and there will be a ‘limited supply of our products available in grocery stores’ until they are able to reopen facilities currently closed.  

Tyson Foods announced last week that it was shuttering two pork processing plants, including its largest in the United States, to contain the spread of the coronavirus. 

‘We have a responsibility to feed our country. It is as essential as healthcare. This is a challenge that should not be ignored. Our plants must remain operational so that we can supply food to our families in America,’ John Tyson said.

‘This is a delicate balance because Tyson Foods places team member safety as our top priority.’

Tyson Foods, the largest U.S. meat supplier, said it will indefinitely suspend operations at its largest pork plant in Waterloo, Iowa, pictured, after operating at reduced capacity

ATyson Foods Inc unit said on Thursday it will temporarily halt production at a beef facility in Pasco, Washington, pictured, adding to the meat processing plant the company has had to shutter as it tests workers for COVID-19

Tyson also closed a pork processing facility in Logansport, Indiana, pictured, while its more than 2,200 workers at the plant undergo testing for COVID-19

Tyson Foods, the largest U.S. meat supplier, said it will indefinitely suspend operations at its largest pork plant in Waterloo, Iowa, after operating at reduced capacity. 

Tyson also closed a pork processing facility in Logansport, Indiana, while its more than 2,200 workers at the plant undergo testing for COVID-19. 

John Tyson, pictured, has warned that ‘the food supply chain’ is breaking

The company also temporarily closed a beef processing plant in Pasco, Washington. 

The closures are limiting the amount of meat the United States can produce during the outbreak and adding stress on farmers who are losing markets for their pigs.

Lockdowns that aim to stop the spread of the coronavirus have also prevented farmers around the globe from delivering food products to consumers. 

Millions of laborers cannot get to fields for harvesting and planting, and there are too few truckers to keep goods moving. 

Tyson’s statement, in the form of an advert in a number of newspapers on Sunday, came after workers at plants argued they were not being protected by their employer. 

Employers have struggled to contain the virus in meatpacking plants, where workers toil side by side on production lines and often share crowded locker rooms, cafeterias and rides to work. 

One Tyson worker at the plant in Waterloo told CNN he called HR amid concerns coronavirus was at the facility. 

Ernest Latiker said: ‘I was scared for me and my family. They told me I was safe and they told me that everything was ok.

‘They told me I have a better chance of catching the coronavirus going out to Walmart than at Tyson, if you come to work you’re safe. 

‘I wanted to believe to them and I needed the money at the same time so I went to work.’  

Tyson Foods worker Ernest Latiker, pictured, said he called HR amid coronavirus concerns

Tyson’s statement in the form of an advert in a number of newspapers on Sunday came after workers at plants argued they were not being protected by their employer

Spread of coronavirus closes meat plants

Some of the facilities that have shut or reduced production as coronavirus spreads:

JBS USA said it would indefinitely close a pork plant in Worthington, Minnesota, that processes 20,000 hogs a day.

JBS closed a beef plant in Greeley, Colorado, until April 24. 

Smithfield Foods indefinitely shut a Sioux Falls, South Dakota, plant that produces about 4% to 5% of U.S. pork. 

Smithfield also shuttered two plants in Wisconsin and Missouri that process bacon and ham.

Tyson Foods Inc closed a hog slaughterhouse in Columbus Junction, Iowa. It has since reopened

National Beef Packing Co suspended cattle slaughtering at an Iowa Premium beef plant in Tama, Iowa

 National Beef said it suspended operations at a Dodge City, Kansas, beef plant for cleaning and to install stainless steel partitions 

Aurora Packing Company temporarily closed a beef plant in Aurora, Illinois

JBS shut a beef plant in Souderton, Pennsylvania. It reopened on April 20

Cargill closed a plant in Hazleton, Pennsylvania, that produces meat for U.S. grocery stores

The health department in Ogle County, Illinois, on April 17 ordered a Rochelle Foods plant owned by Hormel Foods Corp to close for two weeks

Hormel-owned Alma Foods suspended production at a Kansas plant until May 4 

Sanderson Farms Inc reduced chicken production to 1 million birds a week from 1.3 million at a plant in Moultrie, Georgia.

‘Consumers will see an impact at the grocery store as production slows,’ Tyson Fresh Meats Group President Steve Stouffer had said last week.

‘It means the loss of a vital market outlet for farmers and further contributes to the disruption of the nation’s pork supply.’

After the closure of the Logansport facility, slaughterhouses that account for 19 per cent of pork production in the United States will be shut. 

And coronavirus-related staffing shortages at chicken processing plants will lead farms in Maryland and Delaware to destroy nearly two million chickens.

The Baltimore Sun reported Friday that the plants are unable to keep pace with the number of birds that are ready for harvest. They had been placed into poultry houses as chicks several weeks ago.

The chickens will not be processed for meat.

The trade group the Delmarva Poultry Industry said that every poultry plant on the Delmarva Peninsula has struggled with a reduced worker attendance. The reasons include workers being sick with the coronavirus and people following guidance to stay home if sick.

The Delmarva Peninsula includes parts of Delaware, Maryland and Virginia.

The trade group said that one unidentified company has become the first to do what’s called ‘depopulation.’ The trade group said the company was unable to find other options, such as allowing another company to take the chickens.

Delmarva Poultry Industry Inc said the chickens will killed ‘using approved, humane methods’. 

The former Chief Veterinary Officer for the U.S. Department of Agriculture, John Clifford, said at the time of avian flu ‘the fastest way and probably the most humane way to take care of this’ was to ‘shut off ventilation systems.’

The trade group said that the extermination methods have been approved by the American Veterinary Medical Association for handling cases of infectious avian disease.      

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