R&W Builders, Inc. (R&W) of O’Fallon, Illinois, has agreed to pay the United States $400,000 to resolve allegations that it violated the False Claims Act by fraudulently obtaining construction contracts reserved for disadvantaged small businesses, U.S. Attorney Steven D. Weinhoeft announced today.
The Small Business Administration (SBA) 8(a) Business Development Program helps provide a level playing field for small businesses owned by socially and economically disadvantaged individuals by limiting competition for certain federal contracts to Program participants. To increase the opportunities available to these disadvantaged businesses, the SBA also permits Program participants to partner with another company on certain contracts through approved joint venture agreements. The SBA requires the joint venture agreements to include specific terms to ensure the relationship is fair and provides a benefit to the disadvantaged business, including provisions designating the disadvantaged business as the managing partner of the joint venture and requiring the disadvantaged business to perform a specified percentage of the work. It is important that 8(a) joint ventures comply with the SBA’s criteria because misuse of the Program deprives real disadvantaged businesses of valuable economic opportunities and undermines the Program’s integrity.
In 2014, after R&W was no longer eligible to participate in the 8(a) Program, it entered into a joint venture agreement with Global Environmental, Inc. (GEI), an 8(a) Program participant based in St. Louis, Missouri. R&W and GEI named the joint venture Patriot Commercial Construction, LLC (Patriot) and successfully secured an award set aside solely for Program participants on the Multiple Award Construction Contract (MACC) at Scott Air Force Base, Illinois.
The United States contends that R&W falsely represented it would abide by the Program requirements and the Patriot joint venture agreement to obtain the SBA’s approval. Immediately after Patriot received an 8(a) award on the MACC, R&W began managing the joint venture and using its own employees to complete nearly all of the work Patriot performed. Over the next two years, R&W caused Patriot to receive numerous MACC task orders set aside for 8(a) Program participants when Patriot was under R&W’s control, in violation of SBA requirements.
Continue reading at: U.S. Department of Justice
