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Small Business Administration Fraud

The Small Business Administration’s (SBA) 8(a) Business Development Program promotes minority-owned small businesses by setting aside certain government contracts for these businesses. The SBA has similar set-aside programs for small businesses owned by women and disabled veterans. Small businesses that receive set-aside awards under these programs must perform specified minimum quotas of the work on the contract and are limited in what they may subcontract to other entities.

The SBA small business programs are rife with fraudulent schemes that undermine the programs’ legitimate goal of supporting small businesses in the federal contracting market. It is all too common for large contractors to affiliate with small businesses to obtain set-aside contracts and then to perform all or most of the work and reap all or most of the profits from the contract. It is also common for large contractors to misuse the SBA’s All Small Mentor-Protégé Program—which partners established contractors with small businesses to make them more competitive—for similar improper ends.

Murphy Anderson is familiar with the various ways that contractors cheat on the required performance quotas and use the small business programs in violation of the law. Contractors that falsely certify compliance with SBA program requirements may face liability under the False Claims Act.

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