Category Archives: Suspension Debarment and Penalties

Posts in this category deal with suspension, debarment, fines, and other penalties imposed on government contractors, as well as settlement agreements reached between the government and contractors to resolve these issues.

Convictions in Massive DOT DBE Fraud Case Put Spotlight on Illegal Small Business “Pass-Throughs”

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“Guilty.”

That was the verdict Pennsylvania jurors handed down on 26 of 30 charges against Joseph W. Nagle, stemming from what an FBI press release called a 15-year scheme to commit fraud within the DOT’s Disadvantaged Business Enterprise program.  Nagle, the former president, CEO and part-owner of Schuylkill Products Inc. was convicted of conspiracy to defraud the DOT, 11 counts of wire fraud, six counts of mail fraud, and 11 counts of money laundering, among other charges.  Nagle faces the possibility of many years in federal prison and millions of dollars in fines and restitution.

Nagle’s crimes, which involved using a small company as a “front” to pass DBE work through to non-DBE concerns, should serve as a warning that small government contractors can face penalties much more severe than a successful SBA size protest for serving as “pass-throughs” to other businesses.

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Ohio Firm Pays $500,000 to Settle DBE Fraud Claim–Is Subcontracting Plan Abuse Next?

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An Ohio-based construction company has paid $500,000 to settle federal False Claims Act allegations related to the Department of Transportation’s Disadvantaged Business Enterprise program, according to a statement published by the U.S. Department of Justice.

This case is particularly interesting because the allegations made by the government sound an awful lot like circumstances that, I have heard, may occur on many government projects requiring small business subcontracting plans.   Some in the industry have complained that sometimes, a small and/or socioeconomically disadvantaged business is named as a subcontractor under a large prime’s subcontracting plan, but the small business is expected to pass all or most of the work through to a large, second-tier sub.

It’s not that different from what happened in Ohio, and now the prime contractor in question is half a million dollars poorer.  The settlement begs the question: will the government use the False Claims Act to root out this type of subcontracting plan abuse in the near future?

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Illicit Payments to Contracting Officer’s Representative Result in Jail Time, Fines

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It should go without saying that making cash payments to a federal contracting official can bring stiff penalties.  Yet every now and then we hear about criminal convictions of government contractors who can’t seem to resist the lure of gifts, gratuities, and other illicit payments to government officials.

Speaking of which, here’s one right now…

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False SDVOSB Certification Results in Criminal Conviction

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In this era of enforcement, lost contracts are just the tip of the iceberg when it comes to false certifications of eligibility for the SBA’s and VA’s small business programs.  The story of John White and Mitsubishi Construction Corp. should serve as a dire warning about just how serious the consequences of false certifications can be.

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