Construction Management Company Agrees to Pay the U.S. Government More than $1.1 Million To Settle a Qui Tam Case Alleging that the Company Falsely Claimed “Disabled Veteran” (SDVOSB) Status
National Law Review March 23, 2015
On March 18, 2015, the Department of Justice (DOJ) announced that W.G. Mills, a construction management company located Florida, agreed to pay the U.S. Government a settlement of $1.1 million for allegedly violating the False Claims Act (FCA) by intentionally creating a front company in order to qualify for Service Disabled Veteran Owned Small Business (SDVOSB) contracts. Rules and regulations outlined by the government regarding SDVOSB contracts states that only companies that are managed and operated by service-disabled veterans can be considered for SDVOSB contacts and cannot be affiliated with a large company. According to the allegations of the case, W.G. Mills is neither managed nor operated by service-disabled veterans and is therefore not eligible to compete for SDVOSB contracts.
In November 2010, Gilbane Building Company, a construction management and related services provider based in Rhode Island, merged with W.G. Mills Inc., allowing W. G. Mills to expand its operations and establish a larger client base. However, according to a qui tam lawsuit filed in the Middle District of Florida by Michael Jeske and Samuel McIntosh, the whistleblowers in this case, W.G. Mills allegedly created Veterans Constructors Incorporated (VCI), a SDVOSB located in Florida, in order to qualify to bid on government contracts specifically designated for SDVOSBs. But because VCI is allegedly owned and operated by W.G. Mills, it was not actually eligible to be awarded contracts set aside specifically for SDVOSBs, and therefore violated the FCA when it claimed that it was. Moreover, even if W.G. Mill had not been affiliated with VCI, it would still have been in violation of the FCA because most of the work outlined in a Coast Guard contract awarded to VCI was performed by W.G. Mills, and SDVOSB contracts forbid large companies from performing the work outlined in SDVOSB contracts.
In addition to W.G. Mills’ agreement to pay the government $1.1 million to resolve allegations of fraud on the government, it further agreed to pay the government $50,000 plus five annual contingency payments equal to one percent of VCI’s total annual revenues.
Committing fraud against the government is a violation of the FCA and is punishable under the law. However, the government is not able to detect all cases of fraud by its contractors, and therefore depends on those who recognize fraudulent or illegal practices to report it to the government through the whistleblower provisions of the FCA. A qui tam lawsuit—which is a lawsuit brought by a whistleblower, but in the name of the government–can be filed under the FCA. That statute also allows a whistleblower–technically called a “relator” under the FCA–to receive an award of up to 30 percent of the amount ultimately recovered by the government.
For help with Government Contracting: contact your nearest Procurement Technical Assistance Center (PTAC). Funded through Cooperative Agreements between the U.S. Department of Defense and state and local governments/institutions, PTACs provide free and low-cost assistance in virtually all areas of government contracting.