Utah Construction Company Settles Whistleblower Lawsuit Alleging False Claims Act Violations

April 24, 2014 — When contractors submit false information to apply for government contracts, this is procurement fraud. American taxpayers pick up the tab for the deception. Construction contractors that lack the integrity to comply with regulations governing federal programs should be held accountable. Employees working inside the business are often the first to spot misconduct. The False Claims Act gives conscientious whistleblowers the power to file suit on the government’s behalf. To reward informants who collaborate with the government, the qui tam language in the Act permits tipsters to share in any recovery.

Utah Construction Company Allegedly Violated Rules of SBA Section 8(a) Program

Okland Construction Co. Inc., a large Utah company, has consented to pay $928,000 to settle a whistleblower lawsuit alleging that Okland submitted false claims to the government concerning the Small Business Administration’s (SBA) Section 8(a) Program for Small and Disadvantaged Businesses to falsely induce a contract with the government.

The SBA Section 8(a) program exists to give small and disadvantaged businesses a chance to grow, create jobs and compete in our economy. Contracts set aside under Section 8(a) may be awarded by federal agencies only to eligible small businesses. Section 8(a) contains a

mentor-protégé program by which a large business mentor and a small business protégé create a joint venture that is eligible to bid jointly on Section 8(a) contracts. Unless the SBA approves of the qualifying joint venture, however, the mentor and protégé are not permitted to submit a joint bid and the mentor is prohibited from carrying out the primary work of the contract.

Okland Construction and Saiz Construction Co., an 8(a) program participant, entered into a mentor-protégé agreement. But according to the Justice Department, Okland Construction and Saiz Construction did not form a qualifying joint venture. Okland Construction, therefore, was ineligible to enter into Section 8(a) contracts.

Despite its ineligibility, Okland Construction allegedly prepared joint bids for projects under the 8(a) program. After Section 8(a) contracts were awarded, Okland Construction employees allegedly worked as project managers, invoiced the government and ran payroll and other accounting services associated with the contracts. In addition, Okland Construction allegedly hid its performance of the terms of the Section 8(a) contracts by falsely representing to the government that Okland Construction employees were Saiz Construction employees.

The whistleblowers in the case were Saiz Construction and Abel Saiz, its owner. After Saiz Construction ended its mentor-protégé relationship with Okland Construction, the False Claims Act lawsuit was filed. Saiz and Saiz Construction will receive $148,480, pursuant to the qui tam provisions of the Act.

Collaborating to Battle False Claims Act Violations by Construction Contractors

The qui tam lawyers with Waters & Kraus understand the pressure that whistleblowers feel from their employers to keep the lid on scams that cheat the American taxpayers. While our law firm is not handling this particular contract fraud case, we are representing whistleblowers in similar False Claims Act lawsuits. Chances are we’ve counseled many tipsters in circumstances similar to yours. Contact us by email or phone our False Claims Act attorneys at 855.784.0268. With offices in California, Texas and Ilinois, we’re available nationwide to protect your rights throughout the qui tam process.

Waters Kraus Paul & Siegel is the West Coast practice of Waters & Kraus, LLP, a national plaintiffs’ law firm.

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