If you’re involved with Federal construction projects and government set-aside programs like SDVOSB, know that your bonding company may ask a few more questions.
On July 31, 2017, the U.S. District Court for the District of Columbia issued a ruling in a reverse False Claims Act case that says bonding companies can be held liable for treble damages if they issue surety bonds to companies that try to defraud the government by falsely claiming to be a Service-Disabled Veteran-Owned Small Business (SDVOSB).
The Veterans Benefits Act of 2003 established a procurement program that allows federal contracts to restrict bid competition and award these set-aside contracts exclusively to small businesses that meet specific criteria, as in the case of SDVOSBs. Given that the government has exceeded its Federal contract goals for SDVOSBs four years in a row with $13.8 billion in small business contracts awarded, it’s easy to see why some contractors might be tempted to falsify their SDVOSB or other small business program status to get a piece of the action.