Government Contracts Monitor

“Wired Contract” Investigation at USAID Comes to a Close with a Civil Penalty

November 22, 2013

A Justice Department investigation into a conflict of interest involving the former CFO of USAID, David Ostermeyer, was recently resolved with a civil penalty. The investigation focused on an allegation of a “wired contract” that Ostermeyer allegedly helped USAID draft so he could apply for the position after his retirement. According to the DOJ’s press release, “in an effort to ensure he would be awarded the position, Ostermeyer allegedly tailored the solicitation to his specific skills and experiences.” The position was a “senior government-to-government assistance adviser” contract that would have paid Ostermeyer between $125,758 and $155,500 for working with foreign governments. The contract bidding was canceled after questions were raised in connection with the investigation.

The federal conflict of interest statute, 18 U.S.C. §208(a), provides for either a criminal penalty that has misdemeanor and felony provisions, or a civil penalty with a maximum of $50,000 for each violation or the amount of compensation which the person received or offered for the prohibited conduct. The investigation in this case was resolved with a $30,000 civil penalty. The DOJ’s press release stated that the settlement resolved allegations with no determination of liability. Conflict of interest allegations are taken seriously by the DOJ, therefore the fact that the matter was resolved by a civil penalty rather than a criminal penalty suggests that the case may not have been very strong against Ostermeyer, and the parties desired to move forward and close the investigation with the less harsh outcome.

Brian Stolarz is the attorney responsible for the content of this article.