The United States Attorney’s Office for the Middle District of Pennsylvania has announced that Arvco Container Corporation of Kalamazoo, MI has agreed to pay $400,000 to settle False Claims Act allegations in connection with a contract with the Defense Logistics Agency (DLA) in New Cumberland, PA.
Arvco Container Corporation (Arvco) violated subcontract limitations imposed by federal regulations and the terms of a contract to provide corrugated boxes to the federal government from August 3, 2010 through August 3, 2014. The contract was awarded by the DLA to Fibre Technologies LLC (Fibre) located in Reading, PA.
The contract was set-aside for eligible HUBZone small businesses in accordance with program requirements administered by the U.S. Small Business Administration (SBA).
Federal regulations and the terms of the contract limited Fibre’s ability to subcontract the manufacturing of the boxes to no more than 50 percent. Arvco performed 100 percent of the manufacturing requirement.
Arvco’s gross profits for the performance of the contract total $246,682 which will be returned to DLA. Arvco also agreed to pay a civil penalty amount of $153,318.
Limitations on subcontracting provisions in federal contracts are designed to ensure that otherwise ineligible businesses do not use small or disadvantaged businesses merely as vehicles to access set-aside contracts.
This case was investigated by the U.S. Attorney’s Office for the Middle District of Pennsylvania, the SBA’s Office of Inspector General, and the Defense Criminal Investigative Service.
Readers are reminded that the claims resolved by the settlement are allegations only, and there has been no determination of liability.
