$1.1 Million Settlement in FCA Suit Alleging SDVOSB Was Front

The Department of Justice has announced that Gilbane Building Company will pay $1.1 million to resolve allegations that W.G. Mills Incorporated – a company with which Gilbane merged in November 2010 – violated the False Claims Act by creating a front company, Veterans Constructors Incorporated, to obtain a Coast Guard contract that was designated for service-disabled veteran-owned small businesses.

VCI also agreed to pay $50,000 plus 5 annual contingency payments equal to 1 percent of VCI’s total annual revenues to resolve these same allegations.

The government alleged that W.G. Mills created VCI merely as a contracting vehicle and that VCI’s affiliation with W.G. Mills rendered it ineligible to be awarded set-aside contracts for SDVOSBs.  The government further alleged that W.G. Mills performed the work that VCI was required to perform under the Coast Guard contract, and alleged that if the Coast Guard and the Small Business Administration had known that VCI was nothing but a front company, the Coast Guard would not have awarded it the contract.

The settlement resolves allegations originally filed in a lawsuit by two relators.

For more information, see the DOJ release.

About William Van Huis

Bill Van Huis is a Senior Writer/Analyst for Wolters Kluwer Law & Business who tracks and analyzes new regulations impacting federal government contracting. He also follows court decisions involving bid protests and contract disputes. You can find his work in WK publications like Government Contract Reports and the FAR and DFARS Matrix Tools. Bill is a Certified Professional Contracts Manager, and he has a law degree from Southern Illinois University, where he graduated summa cum laude. Prior to joining WK, Bill worked both inside and outside state and local government in the areas of procurement and municipal finance. Bill also worked as a staff attorney for the Illinois Supreme Court.
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