A government contractor agreed to pay $7.8 million to settle claims it falsely represented itself as a small disadvantaged business, illegally qualifying for federal contracts under the Small Business Administration's 8(a) program.
LB&B Associates agreed to the multimillion-dollar settlement after two former employees filed suit as whistleblowers under the False Claims Act, stating that the principal, Lily Brandon, was not actually overseeing day-to-day operations.
As part of the 8(a) program, companies managed by socially and economically disadvantaged persons can compete for select set-aside contracts that might have otherwise gone to larger firms. While Brandon qualified under this description, she "allegedly failed to exercise actual control over LB&B's operations," according to the Department of Justice.
The LB&B website lists Brandon as honorary chairman of the board. David Van Scoyoc is listed as the company's chief operating officer.
"The purpose of the 8(a) program is to assist small disadvantaged businesses to compete in the American economy," said Principal Deputy Assistant Attorney General Benjamin Mizer, head of DOJ's Civil Division. "The Justice Department is committed to making sure that those who participate in 8(a) contracts do so honestly and fairly."
The settlement resolves the allegations without a determination of guilt or liability.
The former LB&B project managers who brought the suit — Steven Sansbury and James Buechler — will get $1.5 million of the settlement for their role as whistleblowers.
"The purpose of the 8(a) program is to help disadvantaged business and not to take opportunities away from businesses that truly need the leg up," said attorney Brian Markovitz, who served as co-counsel representing Sansbury and Buechler. "Steve Sansbury and Jim Buechler bravely came forward and persevered through years of litigation to remedy the injustice they witnessed."
The suit was initially filed in February 2007 and Justice intervened in April 2011. The settlement was announced on July 6.
"This case shows the lengths we will go to protect the integrity of SBA's 8(a) program," said Melvin Williams, SBA general counsel. "Both the Justice Department and SBA are prepared to do what it takes to make certain that the program helps folks who are really disadvantaged and for whom it is intended to assist."
Aaron Boyd is an awarding-winning journalist currently serving as editor of Federal Times — a Washington, D.C. institution covering federal workforce and contracting for more than 50 years — and Fifth Domain — a news and information hub focused on cybersecurity and cyberwar from a civilian, military and international perspective.