Type: Law Bulletins
Date: 12/20/2010

Small Businesses Suspended for Misrepresentation

The Small Business Administration has suspended two more small businesses from doing business with the federal government. The suspensions were based on allegations that the companies misrepresented the amount of work they would perform on a large Department of Homeland Security information technology contract. 

Both companies were awarded multi-million dollar task orders under the contract that were reserved exclusively for small businesses. In each situation, the SBA’s investigation determined that much of the contract work was actually being passed through to a larger company. In fact, the larger company’s subcontractor performed most, if not all, of the work to be done in connection with the contract’s task orders. 

The SBA found that each company had “committed fraud or a criminal offense in obtaining and attempting to obtain contracts and in its performance of those contracts,” and that there was “adequate evidence of a lack of business integrity or business honesty.”

The SBA and DOJ are becoming more aggressive in investigating allegations of large businesses performing more work than allowed by the FAR in connection with contracts awarded under any of the small business set-aside programs (MBE, SDB, 8(a), SDVOSB, HUBZone or WOSB). In addition, they are availing themselves of all remedies and penalties against the companies, including contract termination, forfeiture, prosecution of False Claims and suspension and/or debarment.

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