STUPID CONTRACTOR TRICKS – SOMETIMES CONTRACTORS DO GO TO PRISON
While most federal contract enforcement actions are settled with civil penalties, it’s important to remember that there is a criminal side to the False Claims Act. Contractors, even those selling commercial items, can go to prison for flagrant violations. The latest GSA Office of the Inspector General Semi-Annual report touches on two such cases that closed in just one six-month period. Although not the case with the longest sentence, the matter in which a business falsely claimed small, disadvantaged business size is the one that should grab the attention of any company tempted to call itself “small” when it is not. In this case, the company owner was sentenced to 30 months in federal prison and a $5 million fine for bidding on and winning procurements set aside for small, disadvantaged businesses when they did not have that status. Left out of the IG’s report is the fact that the owner, and the company, were almost certainly suspended or debarred from conducting future government business. The fine alone likely wiped out any profit that the company made on the deals it fraudulently won. Neither does the IG list attorney’s fees that the owner incurred, nor the disruption to family members and others. We cannot say it often enough: Do not claim to be a small business when you are not. The prison time, ruined reputation, and other expenses should make any contractor think more than twice about clinging to a small business status that it no longer has. The other contractor-related case involves a company that provided counterfeit uniforms, likely made in a non-TAA compliant country. The convicted contractor official will be a guest of the federal government for 40 months for this infraction. In hindsight which, as they say, is often 20-20, the perpetrator likely now understands that it was not worth over three years of his life to provide counterfeit goods for what was likely an order of only several hundred thousand dollars. Those old enough to remember ‘70’s TV likely remember the tag line from Baretta – “Don’t do the crime if you can’t do the time”. Sadly, this is a reminder that some companies need to still keep in mind.