Two Army Corps of Engineers contracting officials and two other men were arrested and charged with conspiracy, bribery, kickbacks and money laundering on two Corps contracts.
The U.S. Attorney for the District of Columbia, Ronald C. Machen, Jr., said, “This indictment alleges one of the most brazen corruption schemes in the history of federal contracting.”
Two Corps contracts are at issue in the case: An indefinite delivery/indefinite quantity contract with a maximum value of more than $1 billion and a planned contract that was to have a maximum value of $780 million. Neither was competitively bid.
The indictment, returned by a grand jury on Sept. 16 in U.S. District Court in Washington, D.C., and unsealed on Oct. 4, did not say whether the contracts included any construction or related engineering work. It has a reference to “information assurance and security equipment and services.”
Federal officials said that those arrested on Oct. 4 included Kerry F. Khan, a program manager with the Corps’ directorate of contingency operations, and Michael A. Alexander, a program director with the same Corps directorate.
Also arrested were Lee A. Khan, who is Kerry Khan’s son, and Harold F. Babb, director of contracts with EyakTek, a Dulles, Va.-based subsidiary of Alaska Native-owned Eyak Corp.
The indictment alleges that from 2007 until this summer, Kerry Khan, Alexander and Babb helped to steer more than $45 million in payments to a firm that the indictment refers to as “Company A," through a Corps contract that they oversaw. It adds that those payments were fraudulently inflated by about $20 million, a sum that was paid “directly and indirectly” to the two Khans, Alexander and Babb.
The indictment says that with Khan’s “knowledge and direction,” the unnamed technology officer at Company A submitted inflated quotes to EyakTek for work carried out under an contract called TIGER, for Technology for Infrastructure, Geospatial and Environmental Requirements.
The TIGER contract, which runs from Oct. 1, 2009, through Sept. 30, 2014, is authorized at more than $1 billion. EyakTek was the prime contractor for the TIGER contract.
The inflated amounts were referred to as “overhead,” and were “fictitious and overpriced information assurance and security equipment and services,” the indictment said.