settlement | The Contracting Education Academy

July 14, 2020 By cs

Contractor to pay $1 million to settle claims of fraudulently representing airport work by small disadvantaged business

Williams Brothers Construction Inc. (WBCI) has agreed to pay $1 million to resolve allegations that it violated the False Claims Act by misrepresenting its use of a small disadvantaged business to obtain a federally-funded construction contract, the Department of Justice (DOJ) has announced.

“The Disadvantaged Business Enterprise (DBE) Program of the Department of Transportation creates important opportunities for small businesses to participate in construction projects paid for with federal funds,” said Assistant Attorney General Jody Hunt of the Department of Justice’s Civil Division. “We will hold accountable those who misrepresent their compliance with program requirements to obtain taxpayer funds to which they are not entitled, and thereby undermine the program’s goal of supporting small businesses.”

The settlement resolves claims arising from WBCI’s construction of a new terminal building at the Peoria International Airport using Federal Aviation Administration (FAA) grant funds, and is based on the following factors:

The FAA grant required the use of disadvantaged business enterprises for part of the construction.
DOJ contends that WBCI knowingly made false representations regarding its plans to use a disadvantaged small firm on the project and then falsified documents to make it appear that an eligible business did window, glazing, and curtain wall work.
Instead, WBCI allegedly used that business only as a pass-through and had the work done by an ineligible company.

The settlement was the result of a coordinated effort by the Civil Division, the U.S. Attorney’s Office for the Central District of Illinois, and U.S. DOT’s Office of Inspector General.

Readers are reminded that the claims resolved by the settlement are allegations only, and there has been no determination of liability.

Source: https://www.justice.gov/opa/pr/government-contractor-pay-1-million-settle-claims-fraudulently-representing-work-small

December 31, 2018 By AMK

Manufacturer agrees to pay $400,000 to settle False Claims Act violations

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.

Source: https://www.justice.gov/usao-mdpa/pr/michigan-corrugated-manufacturer-agrees-pay-400000-settle-false-claims-act-violations

November 12, 2018 By AMK

Northrop Grumman pays $27.5 million under False Claims Act

Nothrop Grumman Corp. on has agreed to forfeit $27.5 million under the False Claims Act while acknowledging that some employees inflated their work hours on bills for two battlefield communications contracts with the Air Force.

“Contractors that knowingly inflate their bills to the government will face serious consequences,” said Assistant Attorney General Joseph Hunt of the Justice Department’s Civil Division, in an announcement. “This settlement demonstrates, once again, that we will not tolerate those who falsely charge the armed forces or any agency of the United States to illegally profit at the expense of the American taxpayer.”

The Falls Church, Va.-based Northrop Grumman Systems Corp. agreed to settle over charges on the Air Force’s Battlefield Airborne Communications Node contract and the Dynamic Re-tasking Capability contract awarded during July 1, 2010, and Dec. 31, 2013. That action resolves allegations that the firm “billed the Air Force for labor hours purportedly incurred by individuals stationed in the Middle East who had not actually worked the hours claimed,” Justice said.

Keep reading this article at: https://www.govexec.com/contracting/2018/11/northrop-grumman-pays-2745-million-under-false-claims-act/152572

See Dept. of Justice announcement here: https://www.justice.gov/usao-sdca/pr/northrop-grumman-subsidiary-agrees-pay-3165-million-overbilling-us-air-force-civil-and

August 5, 2016 By AMK

Justice Dept. sues former executives for false claims on reconstruction contracts in Afghanistan and Iraq

As a follow-up to a $50.6 million corporate settlement in 2010, the U.S. Government now has filed suit under the False Claims Act against two former executives of Louis Berger Group, Inc. (LBG) for conspiring to overbill the U.S. Agency for International Development (USAID) and other government agencies for costs incurred performing reconstruction contracts in Afghanistan, Iraq, and other countries.

The government’s complaint alleges that Derish M. Wolff and Salvatore J. Pepe, respectively the former CEO and CFO of LBG, designed and directed various accounting schemes that resulted in the company billing the government for indirect overhead costs at inflated rates.

According to the complaint, Wolff and Pepe shifted portions of salaries of LBG executives and accounting personnel from contracts paid for by foreign and state governments and private entities to contracts paid for by the United States. Wolff and Pepe allegedly certified the false rates and submitted them to the government in annual financial reports.

In November 2010, the U.S. resolved criminal and civil claims against LBG arising from this conduct. At that time, LBG entered into a Deferred Prosecution Agreement and paid $50.6 million to resolve False Claims Act allegations. Pepe pleaded guilty on that date to a charge of conspiracy to defraud the government and was later sentenced to one year probation. Wolff pleaded guilty to the same charge on Dec. 12, 2014, and was later sentenced to 12 months of home confinement and required to pay a $4.5 million fine for his role in the scheme. The complaint filed on July 28, 2016 asserts civil claims against Wolff and Pepe.

The government filed its complaint in a lawsuit originally brought under the qui tam, or whistleblower, provisions of the False Claims Act, by Harold Salomon, an LBG accountant from March 2002 to October 2005. Under the Act, a private citizen can sue on behalf of the U.S. and share in any recovery. The U.S. is also entitled to intervene in the lawsuit, as it has done in this case.

This matter is being handled by the Civil Division’s Commercial Litigation Branch and the U.S. Attorney’s Office for the District of Maryland, with investigative support from the FBI, USAID’s Office of Inspector General, the Defense Criminal Investigative Service and the Defense Contract Audit Agency.

The case is United States ex rel. Harold Salomon v. Derish M. Wolff & Salvatore J. Pepe, Civ. No. RWT-06-1970 (D. Md.). The claims asserted against Wolff and Pepe are allegations only to the extent not admitted in their criminal pleas, and there has been no determination of civil liability.

July 27, 2016 By AMK

Settlements reached with 3 Puerto Rico firms for misrepresenting small business status

The Justice Department and the Nuclear Regulatory Commission have reached a financial settlement of $132,000 with three entities that allegedly misrepresented their small business status in order to pay reduced nuclear material handling fees.

While denying the allegations, the three entities — Constructora Santiago II, Corp., Centro Cardiovascular and Hospital Del Maestro — collectively agreed to pay the settlement.

In order to possess and handle radioactive materials, an entity has to obtain a license from the Nuclear Regulatory Commission (NRC) and pay an annual fee. The NRC permits companies to pay a reduced fee if it qualifies as a small business.

In order to certify small business status, a business must average gross receipts of $7 million or less over its last three completed fiscal years. Each small business entity is required to complete a form certifying that it meets the criteria to qualify as a small business entity.

According to the settlement agreements, Constructora Santiago II, Corp., Centro Cardiovascular and Hospital Del Maestro falsely certified that each had gross receipts of less than $7 million when the government contends that in fact, all three companies had gross receipts that greatly exceeded $7 million. As a result of their false claims, each of the three entities paid reduced NRC license fees.

Source: https://www.justice.gov/usao-md/pr/united-states-reaches-settlements-three-puerto-rico-entities-falsely-certifying-small

Williams Brothers Construction Inc. (WBCI) has agreed to pay $1 million to resolve allegations that it violated the False Claims Act by misrepresenting its use of a small disadvantaged business to obtain a federally-funded construction contract, the Department of Justice (DOJ) has announced.

Nothrop Grumman Corp. on has agreed to forfeit $27.5 million under the False Claims Act while acknowledging that some employees inflated their work hours on bills for two battlefield communications contracts with the Air Force.

The Justice Department and the Nuclear Regulatory Commission have reached a financial settlement of $132,000 with three entities that allegedly misrepresented their small business status in order to pay reduced nuclear material handling fees.

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