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News

Company Agrees To Pay $2.8M To Resolve Fraud Allegations In Two States, Including NY

A construction company will pay nearly $3 million to resolve allegations that it illegally manipulated a federal subcontract meant for small businesses owned by disabled veterans.
A construction company will pay nearly $3 million to resolve allegations that it illegally manipulated a federal subcontract meant for small businesses owned by disabled veterans. Photo Credit: Pixabay/Maklay62

A construction company will pay nearly $3 million to resolve allegations that it illegally manipulated a federal subcontract meant for small businesses owned by disabled veterans.

Colorado-based Hensel Phelps Construction performs large scale private construction and public works projects across the US, including in New York.

In 2011, the company was awarded a federal contract to build the Armed Forces Retirement Home’s New Commons and Healthcare Center in Washington, D.C., the US Attorney’s Office said.

The organization provides retirement communities and residential facilities for veterans.

Federal government contracts and subcontracts are often reserved for various categories of small businesses, including those owned and operated by US veterans who suffered a disability in the course of their military service.

But federal prosecutors said instead of subcontracting with service-disabled, veteran-owned small businesses(SDVOSBs) and other small companies for the project, as was required, Hensel Phelps negotiated with another large company.

Hensel Phelps admitted that after negotiating with the company, they turned around and entered into a subcontract with a SDVOSB for the exact same terms and pricing, but with an additional 1.5% fee added.

Prosecutors said Hansel Phelps admitted that it should have known that the SDVOSB was just a passthrough for the first business, which provided all of the work on the subcontract, and that the SDVOSB’s only role was to make it appear that such a company was performing the work.

In February 2022, Trimark USA, an equipment vendor headquartered in Mansfield, Massachusetts, paid $48.5 million to resolve allegations that the company’s subsidiaries had improperly manipulated and obtained contracts set aside for SDVOSBs across the United States, including the Armed Forces Retirement Home subcontract.

“This settlement holds accountable another large company for scheming to obtain a contract set aside for a veteran-owned small business,” said Carla Freedman, US Attorney for the Northern District of New York.

“Working closely with our colleagues in the Eastern District of Washington and our agency partners, we have returned millions of dollars to taxpayers over the past three months while demonstrating the serious consequences for those who divert contracting opportunities away from veterans," she continued.

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