Federal prosecutors in Ohio recently announced that an Ohio contractor has agreed to pay the U.S. Justice Department $500,000 to settle complaints that the contractor improperly claimed credit for minority contractors on a $130 million runway expansion at Cleveland Hopkins International Airport.
Federal prosecutors accused the contractor of submitting false claims that made it appear that the contractor was in compliance with the U.S. Department of Transportation disadvantaged business enterprise program, which was required for the contractor to obtain and keep its contract. The contract was funded by the U.S. DOT.
A Cleveland Plain Dealer article on the complaints and the settlement can be found here.
This settlement is proof, once again, that contractors who evade the DBE rules on federally-funded transportation contracts are at serious risk for significant civil sanctions and potentially criminal penalties, including enforcement action under the federal False Claims Act. Rather than seeking to meet DBE goals by using questionable “pass-through” entities, contractors should remember that the U.S. DOT DBE rules require only good faith efforts to meet the specified contracting goals. The DBE goals cannot be enforced as quotas, and a contractor’s failure to meet the goals should not disqualify it from receiving a contract, so long as the contractor can show that it has expended reasonable and good faith efforts to meet the goals. A denial of the contract for failure to meet the goals, in the face of good faith efforts, could subject the public entity to an equal protection claim.