IRS May Have Awarded $500 Million Based on Personal Relationships

Oversight Committee Chairman Darrell Issa sent a letter to Acting Treasury Secretary Neal Wolin over contracts awarded to Signet Computers because there is a personal relationship between the owner and an IRS contracting official.

In 2012, Signet Computers was given almost $500 million in federal contracts and the majority were with the IRS. They received two Blanket Purchase Agreements (BPA) worth $380 million in December. However, Signet Computers never had federal contracts before this one, and Issa wants to know how they managed to gain these expensive contracts without a history.

Issa told Wolin that whistle blowers told the Committee the Director of IT Procurement at the IRS (his name is blacked out in the letter) is very good friends with Braulio Castillo, owner of Signet Computers. The director “told several individuals that if they want their companies to receive contracts from the IRS they must speak with Braulio Castillo.” The director also told many people he helped Signet Computers land these contracts.

This is not the only infraction. Whistle blowers also claim Signet Computers may have lied in order to gain Historically Underutilized Business Zones (HUBZone) contracts. The company said their main office was at 519 H Street NW in D.C, which was in a HUBZone at the time, but Issa points out this address is a row house with many tenants, including Capital Hemp. That company recently closed because of a deal with federal prosecutors.

It turns out Signet Computers was renamed many times and witnesses claim it was to avoid any review from the U.S. Small Business Administration (SBA). The company is known as Strong Castle Inc and Strong Castle, LLC. Issa notes they “are owned and controlled by Castillo, and they share the same business address and website.”

Issa goes on to tell Wolin that the contract petitions may have been drafted specifically for Signet Computers. The petition for the $300 million BPA included language “for a HUBZone small business as a Lead contractor.” According to Issa, this is called a pass through, “where a non-responsible small business entity is awarded a contract only to subcontract it to a large integrator.” The $80 million BPA petition said a HUBZone status would be rated excellent, and a Service-Disabled Veteran-Owned Small Business (SDVOSB) would be rated as good. Signet falls under both categories, which makes Issa question if this petition was really “full and open in nature.”

It does not help that a whistle blower went to the Office of Treasury Inspector General for Tax Administration in August, 2012 about the director of IT Procurement giving contracts to Signet. The whistle blower gave the IG evidence that Signet gained the HUBZone and SDVOSB certifications illegally. Despite the overwhelming evidence, Signet was still awarded these lucrative contracts.

Issa is demanding any and all documents related to these accusations no later than 5:00PM on March 6, 2013.