Gilbane Construction Settles Allegations of Fraudulently Claiming Status as a Disabled Veteran-Owned Business

In a recent case involving Florida’s W.G. Mills, a prolific construction company, the government alleged that it unlawfully certified one of its subsidiaries as owned and operated by disabled veterans, thereby qualifying the company for contract jobs specifically set aside for these types of historically disadvantaged businesses. However, W.G. Mills’ attempt to increase profits not only ran afoul of the requirements set forth by the Small Business Administration, but also deprived valid veteran-run businesses from the opportunity to engage in contract work with the federal government.

The case was commenced by two whistleblowers formerly associated with the construction outfit. The details of their reward were not immediately available, but the False Claims Act allows whistleblowers to receive up to 30 percent of the total recovery amount.

Details of the case against W.G. Mills

In 2010, W.G. Mills merged with Rhode Island’s Gilbane Construction to expand its client base across the East Coast. In so doing, W.G. Mills also created a subsidiary known as Veterans Constructors Incorporated (VCI), which was thereafter registered with the SBA as a Service-Disabled Veteran-Owned Small Business (SDVOSB).

Under current guidelines, SDVOSB’s are entitled to a certain percentage of contract government work, which is set aside each year to give these small businesses the opportunity to thrive despite difficult circumstances. There are several eligibility requirements, however, including the caveat that a SDVOSB be just that – a small business – and not actually run by a larger corporation. In addition, any work awarded to an SDVOSB must be actually completed by the service-disabled veterans and staff employed by the company, and may not be contracted out or shared with non-SDVOSB’s.

Allegedly, W.G. Mills created VCI to qualify itself for additional contract work, including one recent lucrative contract with the U.S. Coast Guard. However, upon further investigation, VCI was in violation of both requirements of a valid SDVOSB award. First, it was not an actual independently-owned small business, but instead was a subsidiary of the larger conglomerate known as W.G. Mills. Second, during the investigation for the whistleblower lawsuit, it was revealed that W.G. Mills and its workers actually completed the work on the Coast Guard contract and VCI was hardly involved. In sum, VCI is alleged to have been nothing but a “front company” designed to help win additional contracts.

The Small Business Administration said in a statement:

“SBA’s contracting programs, including the Service-Disabled Veteran-Owned Small Business Program, provide eligible small businesses with the opportunity to grow and create jobs….SBA has no tolerance for fraud or abuse in any government contracting program and is committed to working with our federal partners to ensure the benefits of these programs flow only to the intended recipients.”

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