On March 15, 2016, Judge Ketanji B. Jackson of the United States District Court for the District of Columbia approved $1,769,294 in criminal penalties and forfeiture for a Colorado construction firm that pled guilty last month to conspiring to illegally obtain federal contracts set aside for small, disadvantaged businesses. At the hearing, Judge Jackson said the sentencing deal between MCC Construction Corp. and the Department of Justice (DOJ) “reasonably accounts” for the company’s “harmful” acts.
As U.S. Attorney Channing D. Phillips of the District of Columbia explained when the deal was announced in February, “MCC Construction Company secured millions of dollars in contracts by hiding behind two small businesses that did not perform labor on the projects. Its conduct took away opportunities that could have gone to companies that truly are socially and economically disadvantaged and deserving of the work.”
More particularly, as alleged in Court documents filed by the DOJ, MCC, a construction management company and general contractor headquartered in Colorado, conspired with two companies that were actually eligible to receive federal government contracts set aside for small, disadvantaged businesses with the understanding that MCC would, illegally, perform all of the work. In return, MCC allowed the small businesses to keep 3 percent of the value of the contracts they turned over to MCC to perform. This scheme violated the provisions of the SBA 8(a) program, which for contracts like those involved here, requires 8(a) awardees to perform at least 15 percent of the contract work with its own employees. Between 2008 and 2011, the arrangement allowed MCC to win 27 government contracts worth over $70 million. MCC handled accounting and government reporting for the two 8(a) companies on certain projects and falsely represented to the government that MCC employees were in fact employees of the 8(a) companies. According to DOJ, the scope and duration of the scheme resulted in a significant number of opportunities lost to legitimate small and disadvantaged businesses.
We’ve said it before and expect to keep saying it: Crime doesn’t pay. Needless to say, that includes criminal conspiracies designed to improperly take advantage of set-aside programs and profit from contracts you’re not eligible to win.
Eric Whytsell is responsible for the contents of this Short Take.
© 2016 Jackson Kelly PLLC