On 10 August, 2017, the US Department of Justice announced that Virginia Beach-based ADS, Inc had agreed to pay $16 Million to “settle allegations that they violated the False Claims Act by knowingly conspiring with and causing purported small businesses to submit false claims for payment in connection with fraudulently obtained small business contracts.”
According to the DoJ, “the settlement resolves allegations that ADS engaged in illegal bid rigging schemes that inflated or distorted prices charged to the government under certain contracts.”
The settlement with ADS resolves a lawsuit filed under the whistleblower provision of the False Claims Act, which permits private parties to file suit on behalf of the United States for false claims and share in a portion of the government’s recovery. The civil lawsuit was filed in federal district court in the District of Columbia by Ameliorate Partners LLP. As part of today’s resolution, the whistleblower will receive approximately $2.9 Million of the $16 Million received by the US government.
It is important to note that the claims resolved by the settlement are allegations only, and there has been no determination of liability. It also puts to bed a long rumored investigation into ADS’s involvement with small businesses in contracting.
We reached out to ADS this morning for a statement but they did not respond.
UPDATE: ADS issued a stamens later the same day. The heart of their statement is summarized in this excerpt.
Notwithstanding any incorrect comments to the contrary, the DOJ did not intervene in the case, ADS settled the matter with no admission of liability on any of the allegations underlying the investigation, and there were no such findings, including any of fraud. ADS made the decision to settle after incurring millions of dollars in legal fees and countless hours of time value over three years responding to interrogatories and burdensome document requests by the government, hindering the company’s ability to continue serving its customers and employing its people.
We will update you if any additional information comes to light.
Proof the small business, disabled vet, etc set asides has turned into a scam
Drawing a $16M fine might make some people honest. I knew ADS was big but a fine that large? Wow, just wow. Also, this kind of fraud is very difficult to sustain without due diligence failures (at the very least) on the procurement side.
S/DVBE program is a royal PITA (for vendors AND buyers) but it does sustain local economies. This is ESPECIALLY true when the government (or sectors like utilities and health care that also have the scale to run these programs) are the only market players with funds to spend.
I worked for a DVBE during the ’01-’02 recession and did S/DVBE procurement in the ’08-’09 recession, so I’m clearly biased. That work kept money local and braces on kids teeth…
Nothing new. I once did a contract job for a very well known Beltway-Bandit firm. The pay stubs were from some front company I’d never heard of. I asked about it, and learned that one of the Partners (all retired GO’s or political insiders), or maybe he was a Board member, was brought on because he was married to an Asian woman (or maybe he married her for business reasons).
The front company was set up in her name to take advantage of the governmental double preference quota for “woman” and “minority” owned businesses.
Last year I had a conference call with a proposed partner on a .gov contract bid. The lady literally started the call with the announcement to all parties (multiple vendors on the call) that she was an “American Indian Disabled Veteran Female” and that she fully expected to be selected as Prime on the agreement paperwork with a premium paid to her for her involvement. I got off the call shortly after.
Wise move.
I drill with a Public Corruption guy who’s stewarding the prosecution of a west coast woman known for starting conference calls with similar statements. Just being a witness to those shenanigans is costing honest people money…