A recent $21.3 million False Claims Act (FCA) settlement with an electrical contractor and its subsidiary highlights the U.S. Department of Justice’s (DOJ) focus on U.S. Small Business Administration (SBA) set-aside programs and scrutiny of whether companies improperly represent themselves as qualifying small businesses or—importantly for larger businesses—improperly represent their use of qualifying small businesses to secure federal contracts.

The settlement arrives as the SBA is simultaneously overhauling the eligibility standards for its 8(a) Business Development Program, moving away from race-based presumptions of social disadvantage toward a new, discrimination-based test. Together, these developments underscore why businesses participating in SBA set-aside programs must stay current on evolving eligibility rules and ensure their certifications are well-documented to avoid inadvertent misrepresentations that could expose them to FCA liability.

Quick Hits

• The DOJ announced a $21.3 million False Claims Act (FCA) settlement with two government contractors and their executives who allegedly used service-disabled veteran-owned small businesses (SDVOSBs) as pass-through entities to obtain federal set-aside contracts.
• The settlement illustrates the DOJ’s aggressive enforcement posture against businesses that misrepresent or manipulate SBA eligibility criteria across small business set-aside programs.
• Meanwhile, SBA eligibility criteria are themselves in flux. The SBA...

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