In a Memorandum Opinion issued on June 17, 2016, the U.S. District Court for the District of Columbia applied the so-called “presumed loss” rule to assess the full contract value as the measure of the government’s loss for purposes of sentencing an individual convicted of misusing the SBA’s 8(a) program to win set-aside contracts.  (See United States v. Singh, Criminal Action No. 15-173 (RBW) (D.D.C. Jun 17, 2016).

This appears to be the first published court decision enforcing the controversial rule since its passage by Congress as part of the Small Business Jobs Act of 2010.

As brief background, prior to the 2010 Jobs Act, the Government had difficulty proving damages under the False Claims Act where a contractor misrepresented its size or socio-economic status to win set-aside government contracts. Practically speaking, the Government rarely suffers any actual economic harm in such cases. The fact that an ineligible firm improperly receives a contract set aside for small businesses may violate public policy, but it rarely increases the price of the contract.

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