On January 22, a New Jersey construction firm, Veteran Construction, reached a $1.3 million settlement with the U.S. Department of Veterans’ Affairs (VA) in order to settle claims that it misrepresented itself as a service-disabled veteran-owned small business (SDVOSB) by using a veteran “nominee” for SDVOSB status. From 2008 through 2011, Veteran Construction used this status to receive over $6.5 million in set-aside contracts from the VA.
In the settlement agreement reached between Veteran Construction and the DOJ, in addition to the $1.3 million payment, Veteran Construction has agreed to never again seek any veteran set-aside government contracts. It will not seek any U.S. government contracts for three years. It also agreed that for three years, none of its current or former members will maintain more than a 10 percent interest in any company seeking SDVOSB set-aside contracts.
The company admitted that it was liable to the U.S. under the False Claims Act (a law criminalizing the act of submitting false claims/requests for payment to the government). It is unclear, however, how the DOJ and Veteran Construction reached $1.3 million as the settlement amount given that it received $6.5 million in set-aside work. Under the False Claims Act, a company found liable under its provisions is responsible for “treble” damages; i.e., it must pay the government’s claim, times three. Other penalties are also involved. (Access the DOJ’s primer on the False Claims Act here).
This isn’t the only SDVOSB set-aside fraud to come out of the Garden State recently. In October, a Teaneck, New Jersey woman was sentenced to eight months home confinement (and to pay $100,000 in restitution) for pretending her business was owned by a disabled veteran so she could score $1.2 million in VA set-aside contracts from 2010 through 2011. She had asserted SDVOSB status for her company, Office Dimensions, claiming her father-in-law, a veteran, owned and controlled the company. The problem? Not only did he have no involvement with the company, but he was not service-disabled. Eventually the misrepresentation caught up with her.
This illustrates why it is important that we now have an official certification (verification) program to verify eligibility for the VA’s Veterans First Contracting Program. Based on when these actions took place (i.e., before verification existed), these companies must have checked the appropriate boxes to self-certify and then bid on the set-aside contracts. They were under the radar enough that no one questioned or protested their status. This may not have happened if they had gone through the wringer at the VA’s Center for Verification and Evaluation first.
So yes, the verification process is a pain, but as a veteran, wouldn’t you rather have to go through it rather than know that companies like this are getting the set-aside work designed for veterans like yourself?
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