Falsely Induced Contracts
Providing false information to induce the government to enter into a contract.
Some contractors commit fraud against the government at the very beginning of the contracting process by providing false information about their or their subcontractors' qualifications or misrepresenting other critical information in order to win contracts to which they are not entitled. When contractors misrepresent themselves or their qualifications to obtain such contracts, they break the law and damage the integrity of the process.
Whistleblowers who bring such fraud to light help to ensure that governmental agencies hire the most qualified contractors and further important public policy, such as providing opportunities for minority and women-owned businesses.
False Claims Act cases help to deter such fraud and can result in monetary awards for the individuals who expose the wrongdoing.
Examples of providing false information to induce the government to enter into a contract include the following:
A Cleveland, Ohio-based construction firm, Anthony Allega Cement Contractor, Inc., settled a False Claims Act case with the federal government in April 2012 for $500,000. The settlement resulted from allegations that the company falsely reported that a minority-owned subcontractor had performed work on an airport runway expansion project.
The construction firm was the primary contractor for a project to build and pave a new runway at Hopkins International Airport in Cleveland, Ohio, between 2001 and 2006.
According to allegations by the U.S. Department of Justice, the company falsely reported that a subcontractor by the name of Chem-Ty Environmental provided some goods and services for the project, while in reality, Chem-Ty was only used to make it appear as though a minority-owned business had performed the work. The alleged fraud came to light when an owner of the subcontracting company told officials that she was paid for performing no work on the project.
To obtain and maintain its contract with the government, the company was required to subcontract some of the work to minority or women-owned businesses or businesses owned by economically or socially disadvantaged individuals, under the United States Department of Transportation Department's Disadvantaged Business Enterprise program.
The contractor, who denied the allegations, also allegedly violated a similar requirement by the City of Cleveland. City officials banned the contractor from future city contracts when the allegations came to light. The contractor tried to block the city from awarding a separate airport contract to a different contractor, but lost in court.
Whistleblowers who expose companies that profit from lying to the government provide a valuable public service
Contractors who lie in their proposals to win government bids hurt the integrity of the process and divert government funds from legitimate businesses. Whistleblowers who expose such illegal practices provide a valuable public service. The qui tam provisions of the False Claims Act entitle whistleblowers to a monetary award when the government recovers funds from the wrongdoers.