R&K Enterprises Inc. (R&K), a Newport News, Virginia-based company, has agreed to pay over $2.6 million to settle allegations that it violated the False Claims Act by misrepresenting its eligibility for federal small business set-aside contracts.
The settlement resolves claims that R&K improperly certified itself as meeting the size requirements for contracts designed to benefit small businesses.
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According to the U.S. Department of Justice, R&K falsely certified its compliance with size standards for the General Services Administration’s One Acquisition Solution for Integrated Services Small Business Pool 1 Contract. Federal rules require bidders to calculate their size based on average revenue over the previous three years. The government alleged that R&K attempted to circumvent these rules by novating a contract to another company, K&P Management Inc. (K&P), and claiming the two entities were unaffiliated.
However, investigators determined that the two companies were closely affiliated. Evidence suggested that the wife of R&K’s owner owned K&P, K&P’s revenue came exclusively from R&K, the companies shared executives, and R&K exercised control over K&P. As a result, R&K was required to include K&P’s revenue in its size calculation, which would have made the company ineligible for the small business contract.
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“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.”
Principal Deputy Assistant Attorney General Brian M. Boynton emphasized the importance of preserving opportunities for legitimate small businesses: “When ineligible companies fraudulently obtain contracts reserved for small businesses, they prevent the small business community from receiving the contracting opportunities that Congress intended.”
Deputy Inspector General Robert C. Erickson of the General Services Administration (GSA) stated, “We will work with law enforcement partners to investigate allegations of small business fraud, including companies that misrepresent their status to get federal contracts.”
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The settlement was achieved through coordinated efforts by the U.S. Attorney’s Office for the Eastern District of Virginia, the Justice Department’s Civil Division, and several federal agencies, including the GSA Office of Inspector General, Small Business Administration, and Department of Transportation Office of Inspector General.
The case was investigated by Assistant U.S. Attorney Clare Wuerker and Trial Attorney Danielle Rowan of the Justice Department’s Civil Division.
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