Florida-based contractors HX5 LLC, its CEO Margarita Howard, and the affiliated joint venture HX5 Sierra LLC will pay $7,759,693.92 to settle allegations of violating the False Claims Act. The United States government accused the companies and Howard of providing false information about their eligibility for federal set-aside contracts for small businesses owned and controlled by socially and economically disadvantaged individuals.
“Small business set-aside contracts assist small businesses, including socially disadvantaged companies, to compete in the American economy,” said Principal Deputy Assistant Attorney General Brian M. Boynton. “When companies misrepresent their eligibility for such contracts, other small businesses are denied the business opportunities intended by Congress.”
The Small Business Administration’s (SBA) 8(a) business development program, designed to aid small businesses owned and controlled by disadvantaged individuals, came into the spotlight with these allegations. The accused parties were alleged to have fraudulently procured six 8(a) contracts from January 1, 2015, to December 31, 2021.
Specifically, the government alleged that HX5 and Howard failed to report distributions and payments to Howard’s family members and provided false information to the SBA regarding Howard’s assets. If accurate information had been given, it would have led to HX5’s removal from the SBA 8(a) Program, making HX5 Sierra ineligible for 8(a) set-aside contracts. Due to the alleged false statements, HX5 maintained its 8(a) Program status, and HX5 and HX5 Sierra were awarded contracts from NASA, the U.S. Army, and the U.S. Air Force they were not eligible for.
“This result demonstrates a coordinated effort among our agency partners to ensure that disregard for the integrity of small business contracting will not go unchecked,” said U.S. Attorney Jason R. Coody for the Northern District of Florida.
The settlement includes the resolution of claims under the qui tam or whistleblower provisions of the False Claims Act by Vantage Systems Inc. As part of the resolution, Vantage Systems will receive $1,357,964.00. Qui tam provisions allow private parties to file an action on behalf of the U.S. and receive a portion of any recovery.
This case’s resolution underscores the importance of honesty and transparency in the pursuit of government contracts. For small businesses, the ramifications of false reporting and misleading actions can be financially devastating and lead to reputational damage. As small business owners vie for valuable government contracts, maintaining the integrity of the process is crucial to foster an equitable competitive environment.
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