R&K Enterprises Inc. (R&K), headquartered in Newport News, Virginia, has agreed to pay over $2.6 million to resolve allegations under the False Claims Act and the common law that the company represented that it was a small business eligible for certain small business set-aside contracts when it did not meet the program rules to qualify as a small business.
The United States alleged that R&K represented and certified in its bid that it met the size standard for the General Services Administration’s One Acquisition Solution for Integrated Services Small Business Pool 1 Contract — measured in average revenue over the previous three years from the date of the bid — when it did not.
To appear to meet the size standard, R&K allegedly novated a contract to another company, K&P Management Inc. (K&P), and represented the two companies were not affiliated.
The U.S. government alleged that, under the applicable rules, the two companies were affiliated based on several factors, including that the wife of R&K’s owner owned K&P, all of K&P’s purported revenue came from R&K, the two companies shared executives, and R&K exercised control over K&P.
As a result, the United States contended that R&K should have included K&Ps revenue in R&K’s calculation of its size.
“Small business set-aside contracts assist small businesses to compete,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “When ineligible companies fraudulently obtain contracts reserved for small businesses, they prevent the small business community from receiving the contracting opportunities that Congress intended.”
“My office is committed to identifying, investigating and eradicating attempts to exploit programs intended to protect competition for contracts,” said U.S. Attorney Jessica D. Aber for the Eastern District of Virginia. “The complex, multi-agency investigation that culminated in this settlement exemplifies the importance of strong partnerships that maximize our expertise and authority to effectively enforce the law.”
“We will work with law enforcement partners to investigate allegations of small business fraud, including companies that misrepresent their status to get federal contracts,” said Deputy Inspector General Robert C. Erickson of the General Services Administration (GSA).
