Rep. Darrell Issa, R-Calif.

Rep. Darrell Issa, R-Calif. Charles Dharapak/AP

IRS Under Fire Again, for Handling of IT Contract Fraud Case

Agency deputy tells oversight panel her team is likely to cancel part of the larger software deal.

A top Internal Revenue Service deputy switched course on Wednesday and agreed that an information technology contractor who allegedly misrepresented himself to qualify for preferences should be denied a pending contract. The statement came during a hodgepodge hearing of the House Oversight and Government Reform Committee that touched on everything from the scandal at the IRS tax-exempt division to the 2010 Affordable Care Act to the value of contract set-asides for enterprise zones and contractors with disabilities.

Beth Tucker, deputy IRS commissioner for operations support, backed off of previous statements and said her procurement team is likely to cancel the part of a large software contract destined for Strong Castle/Signet Computers, given new information made available this week by congressional investigators detailing false statements about the friendship between the company’s CEO and Gregory Roseman, recently relieved of his post as deputy director of IRS Enterprise Networks and Tier Systems Support.

The two also exchanged at least 350 text messages that agency supervisors and lawmakers called “offensive and unprofessional” in using anti-gay slurs against IRS colleagues. This was done while Roseman was allegedly steering a contract toward Strong Castle chief executive Braulio Castillo, who stands accused of making false statements about his physical disability and the qualifications of his firm.

Committee Chairman Rep. Darrell Issa, R-Calif., on Tuesday released a report on the panel’s three-month finding that Castillo’s company had only $250,000 in annual revenue, but that his personal relationship with Roseman -- they were college roommates -- “facilitated” consideration for contracts worth up to $500 million in just six months. It also found that Strong Castle/Signet Computers “gained an advantage over competitors by gaining a socioeconomic HUBzone business designation by making false representations to the Small Business Administration.

Issa’s investigators said the company hired mostly Catholic University students to round out its roster and falsely dubbed more senior employees who lived in other areas as “consultants” so that they would not harm the 35 percent employee threshold minimum. They found the company had opened a new “headquarters” office in Leesburg, Va., but also opened a small office in Chinatown that it said was its “principal office.”

Castillo is also said to have represented his military prep school experience as military service and to have cited a 27-year-old college football injury to his foot as qualifying him as a contractor with a disability.

“Today, the IRS cannot look taxpayers in the eye and truthfully say they are protecting their contributions to government,” Issa said, adding that the agency and Strong Castle “have made a mockery of fair and open competition for government contracts.”

Issa said the conduct “exposes a staggering vulnerability in the IRS acquisition process that, frankly, begs the question of whether we can afford to have the agency implement Obamacare,” noting that the agency’s recent budget request for 2,000 new employees would cost $500 million, about what the disputed contracts are worth. Referencing the 30-day review report on biased handling of applications for tax-exempt status issued on Monday by acting IRS Commissioner Danny Werfel, Issa said, “Unfortunately, this completely undermines the IRS narrative” that the agency’s management problems are confined to its tax-exempt division.

Ranking member Rep. Elijah Cummings, D-Md., was just as critical of the software contract’s handling, accusing Castillo of “not taking responsibility” for what has gone wrong and blasting Roseman for failing to disclose to colleagues that the two had friendship even as Roseman participated as a voting member of the IRS contract review board. But he parted company with Issa on whether the episode disqualifies the IRS from implementing the Affordable Care Act. “All of us have fired people,” he said, “but bad actors do not stop the show. We are a can-do nation.”

Roseman invoked his Fifth Amendment rights and did not answer questions other than to confirm his previous title at IRS.

Castillo testified that he “never received any preferential treatment” and “competed fairly for every contract received” while also making a “meaningful contribution to the IRS,” with whom he has worked, he said, for 15 years. He said he worked for the contractors with guidance from the Small Business Administration, and that he has cooperated with the investigation.

In response to Issa’s characterization of the IRS as a “troubled agency,” Tucker began her testimony by saying how proud she was to have spent 29 years at the IRS “alongside dedicated employees who are vital to keeping our government strong.” She challenged Issa’s characterization of Strong Castle’s contracts as being worth $500 million (as did Castillo), calling it a small subset of a larger contract that is being awarded mostly to IBM.

She said when Issa’s committee first contacted her in February she referred the matter to the Treasury Inspector General for Tax Administration, whose probe of the Strong Castle case continues. But on Tuesday, on receiving more details, “we found the text messages from Roseman’s personal phone, and they were deeply disturbing and so we took steps to reassign him,” she said.

“We are now taking steps to sever IRS from any ongoing business relationship with Strong Castle,” Tucker said, adding that she is conducting a “top to bottom review” of her unit’s business practices and staffing and has asked the Treasury Department to more deeply review IRS set-aside programs for helping small businesses. Treasury in 2012 named Strong Castle/Signet Computers as Small Business Prime Contractor of the Year, a decision, Tucker stressed, that the IRS was not involved in.

Issa’s panelists also included specialists from SBA, the Veterans Affairs Department and the General Services Administration. Michael Chodos, associate administrator of the SBA’s Office of Entrepreneurial Development, reported that Castillo’s company in January had been decertified.

X
This website uses cookies to enhance user experience and to analyze performance and traffic on our website. We also share information about your use of our site with our social media, advertising and analytics partners. Learn More / Do Not Sell My Personal Information
Accept Cookies
X
Cookie Preferences Cookie List

Do Not Sell My Personal Information

When you visit our website, we store cookies on your browser to collect information. The information collected might relate to you, your preferences or your device, and is mostly used to make the site work as you expect it to and to provide a more personalized web experience. However, you can choose not to allow certain types of cookies, which may impact your experience of the site and the services we are able to offer. Click on the different category headings to find out more and change our default settings according to your preference. You cannot opt-out of our First Party Strictly Necessary Cookies as they are deployed in order to ensure the proper functioning of our website (such as prompting the cookie banner and remembering your settings, to log into your account, to redirect you when you log out, etc.). For more information about the First and Third Party Cookies used please follow this link.

Allow All Cookies

Manage Consent Preferences

Strictly Necessary Cookies - Always Active

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data, Targeting & Social Media Cookies

Under the California Consumer Privacy Act, you have the right to opt-out of the sale of your personal information to third parties. These cookies collect information for analytics and to personalize your experience with targeted ads. You may exercise your right to opt out of the sale of personal information by using this toggle switch. If you opt out we will not be able to offer you personalised ads and will not hand over your personal information to any third parties. Additionally, you may contact our legal department for further clarification about your rights as a California consumer by using this Exercise My Rights link

If you have enabled privacy controls on your browser (such as a plugin), we have to take that as a valid request to opt-out. Therefore we would not be able to track your activity through the web. This may affect our ability to personalize ads according to your preferences.

Targeting cookies may be set through our site by our advertising partners. They may be used by those companies to build a profile of your interests and show you relevant adverts on other sites. They do not store directly personal information, but are based on uniquely identifying your browser and internet device. If you do not allow these cookies, you will experience less targeted advertising.

Social media cookies are set by a range of social media services that we have added to the site to enable you to share our content with your friends and networks. They are capable of tracking your browser across other sites and building up a profile of your interests. This may impact the content and messages you see on other websites you visit. If you do not allow these cookies you may not be able to use or see these sharing tools.

If you want to opt out of all of our lead reports and lists, please submit a privacy request at our Do Not Sell page.

Save Settings
Cookie Preferences Cookie List

Cookie List

A cookie is a small piece of data (text file) that a website – when visited by a user – asks your browser to store on your device in order to remember information about you, such as your language preference or login information. Those cookies are set by us and called first-party cookies. We also use third-party cookies – which are cookies from a domain different than the domain of the website you are visiting – for our advertising and marketing efforts. More specifically, we use cookies and other tracking technologies for the following purposes:

Strictly Necessary Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Functional Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Performance Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Social Media Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Targeting Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.