Federal contractors should take note of a recent, record-setting False Claims Act (FCA) settlement between the Department of Justice (DOJ) and TriMark USA LLC involving alleged fraud with respect to small-business set-aside contracts. Specifically, food-service equipment supplier TriMark USA LLC, agreed to pay $48.5 million to resolve allegations that its subsidiaries, TriMark Gill Marketing and TriMark Gill Group Inc. (together, TriMark), which are other-than small businesses (OTSBs), improperly engaged in a “pass-through” subcontracting scheme, through certain resellers and distributors, to obtain federal small-business set-aside contracts they were ineligible to receive. This is the largest-ever False Claims Act settlement based on allegations of small-business set-aside contracting fraud.
Given the government’s focus on this area, suppliers, developers and distributors that sell products or software to the federal government through resellers or partners should ensure that they have adequate compliance policies and procedures in place to avoid similar conduct and repercussions.
DOJ alleged, and the settling defendants admitted, that TriMark engaged in a scheme to circumvent small business concern (SBC), veteran-owned small business (VOSB) and service-disabled veteran-owned small business (SDVOSB) contracting requirements by providing significant assistance to three small companies in obtaining set-aside contracts they would then pass along to TriMark for performance....
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