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Government Bars Supplier For Made-In-USA Fraud
Vol. 804 
April 5, 2011

Following a lengthy investigation, Illinois-based supplier EPS Solutions (asi/51198) has been placed on the federal Excluded Parties List, prohibiting the company from receiving government contracts for a still undetermined period of time. The action was taken against EPS and its owner Jeffrey Richardson after the supplier allegedly provided the U.S. Army with beach towels that were produced overseas, in violation of the Buy American Act and the Berry Amendment.

"Based on a preponderance of the available evidence, Mr. Richardson supplied the Army with an inferior product," officials wrote in a memo obtained by Counselor. "A preponderance of the available evidence shows Mr. Richardson made false statements during the investigation."

According to Army documents, EPS Solutions was awarded a contract to produce 60,000 towels in September 2009 for a total cost of $388,200, or $6.47 per item. Believing the bid price was extremely low for 100% U.S.-made towels, competitors of EPS unsuccessfully protested the awarding of the bid. It wasn't until March 2010 – when EPS offered a questionable pre-production sample that did not include a tag showing product origin – that an investigation was launched. Evidence later showed the towel sample was produced outside of the U.S. and Richardson intended to complete the order with in-stock materials that were essentially a mixture of foreign towels. "Mr. Richardson admitted that the pre-production towel was in fact of Pakistani origin," the memo states.

In July 2010, Army investigators questioned Richardson in greater detail, finding he had altered information on his computer, attempting to avoid further suspicion. "Mr. Richardson obstructed a federal investigation by means of falsifying records in an effort to conceal his crimes," officials wrote.

Then last month, EPS and Richardson were placed in proposed debarment status pending a formal determination by a government official. According to the Army, EPS can protest the allegations and can request a hearing. Multiple calls placed to Richardson by Counselor have not been returned. It is unknown whether criminal charges will be filed, as FBI and Army Fraud Division officials have refused comment on the matter at this time.

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