A Newport News-based business, R&K Enterprises Inc. (R&K), has agreed to pay over $2.6 million to resolve allegations that it falsely claimed eligibility for federal contracts meant for small businesses. The settlement addresses accusations under the False Claims Act that R&K misrepresented its qualifications to win a General Services Administration (GSA) contract.
The Allegations
The U.S. government alleged that R&K improperly certified it met the small business size standard for the GSA’s One Acquisition Solution for Integrated Services (OASIS) Small Business Pool 1 Contract. This standard calculates size based on a company’s average revenue over the previous three years. To appear eligible, R&K allegedly transferred a contract to another company, K&P Management Inc. (K&P), and claimed the two firms were independent.
According to investigators, K&P was closely tied to R&K: the owner of K&P is married to R&K’s owner, all of K&P’s revenue originated from R&K, the two companies shared executives, and R&K exerted control over K&P’s operations. These factors suggested the companies were affiliated, meaning K&P’s revenue should have been included in R&K’s size calculation—making them ineligible for the small business designation.
Federal Response
The U.S. Attorney for the Eastern District of Virginia, Jessica D. Aber, emphasized the importance of protecting programs designed for small businesses. “My office is committed to identifying, investigating, and eradicating attempts to exploit programs intended to protect competition for contracts,” Aber said.
The Justice Department echoed this sentiment, with Principal Deputy Assistant Attorney General Brian M. Boynton stating, “When ineligible companies fraudulently obtain contracts reserved for small businesses, they prevent the small business community from receiving the opportunities that Congress intended.”
Broader Implications
The case highlights federal efforts to enforce accountability in government contracting. GSA Deputy Inspector General Robert C. Erickson reinforced the agency’s dedication to investigating small business fraud: “We will work with law enforcement partners to investigate allegations…including companies that misrepresent their status to get federal contracts.”
This settlement serves as a warning to businesses attempting to skirt rules and underscores the government’s commitment to ensuring fair competition.