Contractor Settles Suit Related to Set Aside Contracts

According to the Department of Justice, LB&B Associates, Inc. (“LB&B”) has agreed to settle a qui tam lawsuit alleging it violated the False Claims Act by claiming it qualified as a Small Disadvantaged Business when it did not. LB&B is a North Carolina corporation that was formed in 1992 and is headquartered in Columbia, Maryland.

According to its website, LB&B provides a variety of contractor services to federal and state government agencies, the military, NATO, hospitals, churches, research centers, educational facilities, and other commercial business entities. Its business divisions include facilities management, operations and maintenance services; logistical support; systems and technology support; base operations support; and commercial support.

The U.S. Small Business Administration, created by Congress in 1953, runs the 8(a) Business Development Program (“8(a) Program”). The 8(a) Program assists small and disadvantaged businesses with competing in the marketplace, by giving them access to government contracts that are set aside specifically for small and disadvantaged businesses.

To be eligible to participate in the 8(a) Program business, the business must meet specific criteria, including the following:

• It must be majority owned, controlled, and managed by socially and economically disadvantaged individual(s);
• The control person(s) must be American citizen(s);
• It must be a small business able to demonstrate the potential for success; and
• The principals of the business must demonstrate good character.

For purposes of the 8(a) Program, minority individuals are presumed to be socially disadvantaged. The socially disadvantaged control person(s) must provide documentation to the Small Business Administration demonstrating that he or she is also economically disadvantaged. They must provide a narrative statement of economic disadvantage and personal financial information such as income tax returns.

According to the government, two former employees of LB&B filed a whistleblower lawsuit under the qui tam provisions of the False Claims Act alleging that LB&B falsely certified that Lily Brandon, a socially and economically disadvantaged person, controlled the operations of LB&B when she did not. The whistleblowers further alleged that LB&B was improperly awarded government set aside contracts as a result of its false certification.

LB&B has agreed to pay $7.8 million to settle the allegations. The whistleblowers will share in $1.5 million of the settlement proceeds as their reward under the qui tam provisions of the False Claims Act.