This article shows you how to get a reward for reporting SBA fraud by companies that lie about qualifying as small businesses to get Small Business Administration (SBA) contracts or set aside contracts with the military, Department of Defense (DoD) or under other government contracts of programs.
The SBA Set Aside Program
Generally, federal government contracts over $500,000 have to include a small business subcontracting plan so that small businesses can get work under large government contracts. In other words, the government requires large government contractors to set aside a certain portion of their contracts to small businesses. Although the SBA’s definition varies based on the industry, to qualify as a small business the company must both (1) have less than 500 employees, and (2) have less than $5 million in annual revenue. If they exceed either, they are not entitled to or eligible for a SBA set aside contract.
Unfortunately, nearly ten percent (10%) of all spending by government, including small business set aside contracts, is lost to fraud, and many small government contractors are lying about being eligible as a small business. The problem with cheating or lying about being a small business is so rampant that the SMA just modified the penalties for those that are not eligible.
The Presumed Loss Rule for SBA Contracts
On August 27, 2013, the new “Presumed Loss Rule,” 13 CFR 121.108(a), issued by the Small Business Administration (SBA) took effect, and spells out the penalty for lying about meeting the SBA requirements. Under the new presumed loss rule, a federal contractor or subcontractor can be held liable under the False Claims Act (FCA) for up to three times the total proceeds it receives from a government contract for fraudulently misrepresenting itself as a small business, even if the government received the full benefit of the contractor’s services.
In the past, if a company lied about being a small business and received a SBA set aside contact, it raised the defense that the government was not harmed because it received the benefit of the services. In other words, the company was allowed to keep its profits from being awarded the contract because it satisfactorily completed the work. However, the contract should never have been awarded, and defeated the very purpose of the SBA program.
Now, the Presumed Loss Rule creates a presumption that the loss to the government is the total amount of the contract paid by the government to the company claiming to be a small business, regardless of whether the federal contractor provided value to the government.
The SBA further broadened the scope of the Presumed Loss Rule to subject federal prime contractors to FCA liability for small business false certification by its subcontractors. Thus, whistleblowers can also report prime contractors for making fraudulent misrepresentations made by their subcontractors in cases where the prime contractor has not made a good faith effort to review the size and status certifications of its subcontractors. Neglectful prime contractors can no longer avoid FCA liability under the Presumed Loss Rule.
Rewards for Reporting SBA Fraud
The government is offering rewards to anyone who can prove that a company is lying about being eligible for a SBA set aside contact and also if you report a prime contractor for turning a blind eye to a subcontractor not being eligible for SBA contracts. Today, whistleblowers are entitled to large monetary rewards for reporting companies that lie about being a small business in order to receive SBA contracts or Small Business Administration set-asides.
How much reward for reporting SBA fraud?
The size of a whistleblower reward is calculated based on the size of the SBA fraud. The reward amount is between 15 and 25 percent of the amount the government recovers back from the company defrauding the government. To receive a million dollar whistleblower reward, assuming you meet all of the requirements, the amount of the SBA fraud needs to be $5 million or more.
How to report SBA Fraud
If you know of a company that is lying about being a small business to obtain SBA contracts or small business set-aside contracts under defense contracts or other government programs, you could be eligible for a significant monetary reward for reporting the fraud.
The Hesch Firm would be pleased to review in complete confidence your potential whistle blower reward case. The Hesch Firm’s website take you step-by-step through the entire process of reporting SBA fraud and applying for a whistleblower reward. The website also contains the extensive experience of Mr. Hesch as an attorney working for the Civil Fraud Section of DOJ in the whistle blower reward office and more recently acting as a whistle blower attorney helping whistleblowers collect rewards. Mr. Hesch left a rewarding 15-year career with DOJ to form The Hesch Firm and exclusively represent whistle blowers file for rewards. He has also written books to guide whistle blowers through this process.
The link at the bottom of the page below “Do I have a case” shows you how to ask The Hesch Firm to review your potential SBA fraud case and how to get a reward for reporting SBA fraud.