This suit involves a business that allegedly violated the False Claims Act by misrepresenting their eligibility for a Small Business Administration (SBA) program in order to qualify for millions of dollars in federal government contracts. In order to qualify for set-aside and no-bid government contract work, the defendant certified that its subsidiaries qualify as small businesses. However, it was alleged that the defendant ran itself as one large business, such that its subsidiaries exist only on paper, share employees, and had only “placeholder” managers who work solely to advance the interests of the defendant parent company.
Question(s) For Expert Witness
- 1. Do you have experience helping subsidiaries owned by applicants qualify for 8(a) status?
- 2. Please describe your experience working with the SBA and more specifically, the 8(a) small business program.
Expert Witness Response E-109855
I served the US Small Business Administration for 34 years before my retirement. When I served as the Associate Administrator for Minority Small Business and Capital Ownership Development, I was the only person authorized to approve businesses into the 8(a) Program. My work with capital access and government contracting directly affected these corporations, as I was in charge of approving financing for them. I have testified before Congress on these businesses and their impact on the 8(a) Program, specifically the policies and procedures that had been put in place to reduce fraud and abuse in the program. I have continued to research legislation and policies regarding the SBA, ANCs, and the 8(a) Program in my current position as a senior manager of small business at a nonprofit agency. I can speak to the materiality of representation to the SBA and the requirements to certify subsidiaries as small businesses.
Expert Witness Response E-111067
I am qualified to address regulations regarding 8(a) status qualifications. I regularly form 8(a) companies. I am the senior vice president of my ANC holding company and my responsibilities include supervising federal practices, which includes overseeing seven subsidiaries. Five subsidiaries have 8(a) status and two put in their applications and were approved last year. In addition, I was the senior policy advisor for the US Department of Commerce from 2009 to 2011, where I addressed 8(a) status issues. I continue to advise companies regarding applications at my local SBD center. Companies are annually asked by their regional offices to recertify for 8(a) status. There are codes that dictate what qualfies as a small business. If companies exceed their annual revenue per year or employee headcounts three years in a row, they do not qualify as small businesses. However, ANCs can sidestep this regulation by creating more companies in different industries.