In a Memorandum Opinion and Order issued last month in United States ex rel. Bid Solve, Inc., v. CWS Marketing Group, Inc., et al., No. 1:19-cv-01861 (D.D.C.), the U.S. District Court for the District of Columbia granted partial summary judgment in favor of a qui tam whistleblower who alleged that the defendant committed fraud against the government by falsely certifying its small business status to win a contract with the Internal Revenue Service (“IRS”). Specifically, the whistleblower had alleged that the defendant knowingly understated its calculation of “gross annual receipts,” as defined by regulations of the U.S. Small Business Administration (“SBA”), when it certified to the IRS that its average annual receipts totaled less than $7.5 million – the small business size threshold applicable to the procurement at issue.
After determining that the defendant’s calculation of gross annual receipts was contrary to the unambiguous language of SBA’s regulations, the court granted summary judgment on the specific issue of whether the defendant’s calculation of such receipts was “false” for purposes of the civil False Claims Act (“FCA”), 31 U.S.C. § 3729. This case should serve as a sobering reminder to government contractors competing for small business set-aside contracts that strict compliance with SBA regulations is important and that overly opportunistic interpretations of these regulations invite the risk of significant liability.
The facts of Bid Solve are as follows....
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