Executive's Conviction Highlights Need To Manage Government Contracting Compliance

Updated: May 10, 2011

Dishonesty, Misrepresentations On Minority Recruitment Basis of Conviction

A U.S. District Judge sentenced Douglas E. Ritter, the former president of an Illinois refuse disposal container repair company, to serve 16 months in prison and to pay $35,303 in restitution for his participation in a conspiracy to defraud the city of Chicago on a contract for the repair of refuse carts from as early as November 2004 to as late as September 2008. The Justice Department had charged Ritter, along with his business partner Steven Fenzl, in an indictment filed on April 21, 2009, in U.S. District Court in Chicago. Ritter pleaded guilty to the conspiracy on June 3, 2010. Fenzl, a California resident, was found guilty by a jury on Sept. 28, 2010, of one count of conspiracy to commit mail and wire fraud, two counts of mail fraud and one count of wire fraud. Fenzl is scheduled to be sentenced on June 15, 2011.

According to the indictment, Ritter, Fenzl and their co-conspirator conspired to deceive city of Chicago officials about the number of legitimate, competitive bids submitted for the contract. Specifically, the Justice Department charged that Ritter and his co-conspirators fraudulently induced other companies to submit bids for the contract at prices determined by Ritter and his co-conspirators and greater than the price for which Ritter's company had submitted a bid. The Justice Department also charged that the submitted bids included fraudulent documents indicating that, if awarded the contract, the bidder would enter into subcontracts to buy goods or services for a specified percentage of the contract from a minority-owned business and a women-owned business, as required by the city of Chicago. According to the indictment, Ritter and his co-conspirators also fraudulently certified to the city on Ritter's company's bid that it had not entered an agreement with any other bidder relating to the price named in any other bid submitted to the city for the contract.

While the opportunity to do business with government agencies or their subcontractors can offer valuable business opportunities for many businesses, dealing with government agencies directly or as a subcontractor comes with special obligations and exposures.

Government contractors and subcontractors generally face special bidding and contracting, pricing, employment, subcontracting, purchasing, reporting, audit, attestation and certification and other obligations. While many of these requirements are long-standing, businesses contracting for many projects funded by Stimulus Bill or other legislation passed as part of efforts to stimulate the economic recovery since 2008 often apply to a broader range of businesses, apply stiffer nondiscrimination, audit and other requirements or carry other special obligations beyond those that may have historially applied to similar contracts. Violation of these responsibilities can result in contract termination or penalties, program disqualification, administrative or civil penalties and in some instance criminal prosecution. Since the Obama Administration has identified enforcement of Stimulus Bill and certain other government contracting requirements as a priority, businesses also should be prepared to deal with potentially heightened scrutiny of their conduct. Accordingly, businesses doing business directly or indirectly with federal, state or local governments should take steps to manage their compliance and associate risks.

Featured Research
  • 10 Reasons to Invest in Video Conferencing

    Have you been on the fence about implementing a video conferencing solution for your business? Not quite sure if your employees will utilize it or are concerned about the costs being too high? The modern workforce is adapting and evolving with more and more employees working remotely, it is essential that they have the tools to be able to communicate effectively. more

  • Checklist for Setting Up an In-House Contact Center

    As customer service continues to become the most important competitor differentiator, can you honestly state that your business ranks among the best in your industry? 93% of organizations expect that contact volume will either remain constant or increase over the next two years. It is absolutely essential that you have a contact center that has been set up for success. more

  • 2017 Business Intelligence Trends

    It's long been thought that business intelligence (BI) could only be utilized by highly trained analysts and was therefore unattainable for most businesses. However, advancements in BI have made it so that everyone can utilize BI solutions to help shape business decisions and drive companies bottom lines. more

  • Your Phone System and Your Bottom Line

    Businesses have been using phones to drive increases to their bottom lines for almost a century now. Telephony, much like the rest of the business world, has seen drastic changes with the increase in technological advancement. Voice Over Internet Protocol (VoIP), has enabled companies to connect with consumers at levels that have been seen as unheard of before. And trust us when we say this, it is doing wonders for the bottom line. more

  • How to Scale a Contact Center in 2017

    Are you on the fence about scaling your contact center and not sure how or whether or not now is the time? Studies have shown that 93% of executives expect that contact volume will remain constant or increase within the next two years. This means that now more than ever is the time to begin scaling and we are here to help. more