Dive Brief:

• International architecture firm CannonDesign will pay a $12 million fine to settle federal liability for its alleged role in a bribery and kickback scheme between several of its employees and a U.S. Department of Veterans Affairs medical center official, according to Buffalo Business First.
• Federal authorities claim that CannonDesign employees, including former executive Mark Farmer, paid William Montague, former director of the Cleveland Veterans Affairs Medical Center, for privileged information about VA construction projects in order to increase CannonDesign's chances at winning related contracts.
• As part of the deal, CannonDesign also withdrew from a VA project in California, accepted legal responsibility for the actions of its employees and cooperated with the government in cases against them. The employee-owned company also agreed to make $2.5 million in company-wide revisions of its policies and procedures aimed at detecting and eliminating fraud.

Dive Insight

Farmer gave details about his role in the conspiracy in February after his conviction and was subsequently sentenced to nearly three years in prison. According to Farmer, he had knowledge of nearly $4 million in deals resulting from the information gleaned from Montague, although others at CannonDesign said that number was closer to $20 million. Montague, who reportedly received cash and a consulting contract to divulge confidential information, was sentenced to nearly five years in prison.

Industry insiders pointed to the CannonDesign controversy as another example of the VA's mismanagement of construction projects. The behind-schedule and over-budget VA hospital in Aurora, CO, is the most high-profile example of the agency's continuing problems. The project is more than four years overdue and has left taxpayers with a price tag three times higher ($1.7 billion) than the original estimate.

As a result of the apparent chaos over at the VA's construction department, the U.S. House of Representatives passed a bill in February requiring that any VA project estimated at $100 million or more be run by the Army Corps of Engineers. The bill also mandates a 60-day funding notice requirement on any VA project. In an attempt to placate critics, the VA conducted an investigation into the Aurora project but ended up placing most of the blame with three former VA employees, absolving current staff of any responsibility.