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Case Number: 14-cv-5002-SMJ
Judge: Salvador Mendoza, Jr.
Court: United States District Court for the Eastern District of Washington (Spokane County)
Description: Spokane, WA: CH2M Hill Plateau Remediation Company (CHPRC), a prime contractor at the Department of Energy’s Hanford Site, has agreed to pay $3,038,270 million to resolve allegations that CHPRC violated the False Claims Act by submitting false and fraudulent small business subcontract reports.
In 2008, CHPRC, a Washington subsidiary of CH2M Hill Companies Ltd., which is headquartered in Englewood, Colorado, was a DOE prime contractor responsible for environmental remediation and cleanup of the Central Plateau area of the Hanford Site, which includes the Plutonium Finishing Plant and other legacy plutonium production facilities. Pursuant to its contract, DOE fully reimbursed CHPRC for its costs, including hundreds of millions of dollars in subcontractor costs. Accordingly, CHPRC’s contract required that CHPRC make efforts to award a certain percentage of those subcontracts to small businesses, including businesses located in Historically Underutilized Business Zones (HUBZones). CHPRC’s contract also required CHPRC to regularly report to DOE regarding its efforts to subcontract to HUBZone businesses. CHPRC’s contract provided for fee-based incentives regarding CHPRC’s success in subcontracting to HUBZone businesses, and for the imposition of monetary penalties if CHPRC missed its goals and failed to exercise good faith efforts to award HUBZone subcontracts.
This settlement resolves allegations that CHPRC falsely reported to DOE regarding its HUBZone subcontracting efforts. Specifically, the settlement resolves allegations that CHPRC falsely represented that subcontract awards to two companies, Indian Eyes, LLC, and Phoenix-ABC A Joint Venture (“PABC”), were to HUBZone businesses, when in fact CHPRC knew that both entities did not have HUBZone status during the time period of the subcontracts.
Joseph H. Harrington, Acting U.S. Attorney for the Eastern District of Washington, said, “Small business fraud not only harms the taxpayers and the vital cleanup mission at Hanford, but legitimate small disadvantaged businesses that do not have the opportunity to fairly compete for and perform subcontracts. This resolution demonstrates that we will continue to work with courageous whistleblowers and our law enforcement partners to ensure accountability for small business fraud at Hanford and elsewhere.”
“The whistleblower complaint alleged that CHPRC knowingly misrepresented PABC and Indian Eyes as legitimate HUBZone entities and falsely claimed HUBZone credit and status as part of CHPRC’s small business subcontracting plan,” said Teri Donaldson, Inspector General of the Department of Energy. “This settlement affirms the OIG’s commitment to protecting the integrity of the Department of Energy’s procurement process to provide opportunities for small and disadvantaged businesses through programs like the Small Business Administration’s HUBZone and Disadvantaged Woman-Owned programs. The OIG will aggressively investigate any allegations of false claims, overbilling, kickbacks and any other fraud scheme threatening the Department of Energy and ultimately the American taxpayers. The OIG has enjoyed a very collaborative relationship with the United States Attorney’s Office and will continue to join forces with DOJ to investigate and hold accountable those perpetrating fraud against Department of Energy resources and programs.”
The case is captioned as United States of America ex rel. Salina Savage, et al. v. CH2M Hill Plateau Remediation Company, et al., 14-cv-5002-SMJ. The case originally arose out of a whistleblower complaint filed by Savage Logistics LLC, a Hanford-area small business, and Salina Savage, its owner. The whistleblowers will receive $865,907 as a result of the settlement. The investigation was conducted by the Department of Energy Office of Inspector General. The United States was represented by Assistant U.S. Attorneys Dan Fruchter and Tyler Tornabene.
False Claims Act, 31 U.S.C. 3729, which provides:
(a) Liability for Certain Acts.—
(1) In general.—Subject to paragraph (2), any person who—
(A) knowingly presents, or causes to be presented, a false or fraudulent claim for payment or approval;
(B) knowingly makes, uses, or causes to be made or used, a false record or statement material to a false or fraudulent claim;
(C) conspires to commit a violation of subparagraph (A), (B), (D), (E), (F), or (G);
(D) has possession, custody, or control of property or money used, or to be used, by the Government and knowingly delivers, or causes to be delivered, less than all of that money or property;
(E) is authorized to make or deliver a document certifying receipt of property used, or to be used, by the Government and, intending to defraud the Government, makes or delivers the receipt without completely knowing that the information on the receipt is true;
(F) knowingly buys, or receives as a pledge of an obligation or debt, public property from an officer or employee of the Government, or a member of the Armed Forces, who lawfully may not sell or pledge property; or
(G) knowingly makes, uses, or causes to be made or used, a false record or statement material to an obligation to pay or transmit money or property to the Government, or knowingly conceals or knowingly and improperly avoids or decreases an obligation to pay or transmit money or property to the Government,
is liable to the United States Government for a civil penalty of not less than $5,000 and not more than $10,000, as adjusted by the Federal Civil Penalties Inflation Adjustment Act of 1990 (28 U.S.C. 2461 note; Public Law 104–410 1), plus 3 times the amount of damages which the Government sustains because of the act of that person.
(2) Reduced damages.—If the court finds that—
(A) the person committing the violation of this subsection furnished officials of the United States responsible for investigating false claims violations with all information known to such person about the violation within 30 days after the date on which the defendant first obtained the information;
(B) such person fully cooperated with any Government investigation of such violation; and
(C) at the time such person furnished the United States with the information about the violation, no criminal prosecution, civil action, or administrative action had commenced under this title with respect to such violation, and the person did not have actual knowledge of the existence of an investigation into such violation,
the court may assess not less than 2 times the amount of damages which the Government sustains because of the act of that person.
(3) Costs of civil actions.—A person violating this subsection shall also be liable to the United States Government for the costs of a civil action brought to recover any such penalty or damages.
(b) Definitions.—For purposes of this section—
(1) the terms "knowing" and "knowingly"—
(A) mean that a person, with respect to information—
(i) has actual knowledge of the information;
(ii) acts in deliberate ignorance of the truth or falsity of the information; or
(iii) acts in reckless disregard of the truth or falsity of the information; and
(B) require no proof of specific intent to defraud;
(2) the term "claim"—
(A) means any request or demand, whether under a contract or otherwise, for money or property and whether or not the United States has title to the money or property, that—
(i) is presented to an officer, employee, or agent of the United States; or
(ii) is made to a contractor, grantee, or other recipient, if the money or property is to be spent or used on the Government's behalf or to advance a Government program or interest, and if the United States Government—
(I) provides or has provided any portion of the money or property requested or demanded; or
(II) will reimburse such contractor, grantee, or other recipient for any portion of the money or property which is requested or demanded; and
(B) does not include requests or demands for money or property that the Government has paid to an individual as compensation for Federal employment or as an income subsidy with no restrictions on that individual's use of the money or property;
(3) the term "obligation" means an established duty, whether or not fixed, arising from an express or implied contractual, grantor-grantee, or licensor-licensee relationship, from a fee-based or similar relationship, from statute or regulation, or from the retention of any overpayment; and
(4) the term "material" means having a natural tendency to influence, or be capable of influencing, the payment or receipt of money or property.
(c) Exemption From Disclosure.—Any information furnished pursuant to subsection (a)(2) shall be exempt from disclosure under section 552 of title 5.
(d) Exclusion.—This section does not apply to claims, records, or statements made under the Internal Revenue Code of 1986.