SALT LAKE CITY—The owner of a small Utah-based construction company will receive a $148,480 whistleblower reward for helping the U.S. government recover nearly a million dollars from another larger construction company that allegedly was conducting a scheme to defraud a Small Business Administration (SBA) program designed to help small businesses.
Saiz Construction and its owner Abel Saiz filed a lawsuit against Okland Construction Co. under the qui tam provisions of the False Claims Act, which allows individuals to sue on behalf of the U.S. government if they possess evidence of fraud, waste, abuse, and other wrongdoing targeting federal agencies and programs. Okland resolved the allegations by agreeing to pay the U.S. $928,000.
Saiz Construction alleged that Okland made false statements and submitted false claims to the SBA’s Section 8(a) Program for Small and Disadvantaged Businesses, which allows large businesses to mentor small businesses in an SBA-approved joint venture. The program gives large companies access to federal contracts designated for small businesses in return for mentoring a small business through the project.
According to the whistleblower lawsuit, Okland Construction never formed a qualifying joint venture with Saiz Construction and thus was not eligible to jointly bid on or perform the primary functions of eight 8(a) government contracts with Saiz Construction.
Nevertheless, Okland Construction prepared the bids for all of the 8(a) contracts and its employees served as project managers. Okland also submitted invoices and performed payroll and other accounting functions. The company then allegedly concealed its extensive involvement in the 8(a) contracts by lying to the government that its employees were employees of Saiz Construction.
The whistleblower lawsuit also alleged that Okland Construction’s relationship with Saiz Construction violated the terms of another SBA contract awarded to Saiz Construction that required it to perform at least 15 percent of the labor on the contract.
“Large businesses must not be allowed to fraudulently obtain access to contracts set aside for small businesses,” said SBA Inspector General Peggy Gustafson. “The SBA mentor-protégé program enhances the capability of 8(a) participants to compete more successfully for federal contracts through a relationship with another successful business; however, this program must not be used as a vehicle to improperly benefit large, non-disadvantaged companies.”