We represent victims of reverse discrimination and anti-DEI whistleblowers

For decades, the federal government has emphasized the importance of contracting with businesses owned by veterans who served our country and individuals from groups that were previously underrepresented in government contracts. In many cases, these efforts have been mutually beneficial for the small businesses and the departments that have relied on their goods and services. Unfortunately, it can be time-consuming and expensive for agencies to conduct investigations as to whether the people who are listed as the proprietors of a woman-owned or veteran-owned company are actually reaping the profits. 

While not admitting to any illegal activity, Paragon Systems Inc., a Virginia-based contractor for the Department of Homeland Security (DHS), paid $52 million to settle allegations that it engaged in a fraudulent scheme to obtain contracts set aside for small businesses. According to the government, Paragon set up a network of purported small businesses under the guise of meeting DHS contract requirements for Woman-Owned Small Businesses (WOSBs), Service-Disabled Veteran Owned Small Businesses (SDVOSBs), and other small businesses. One specific claim filed by a whistleblower under the False Claims Act recovered $9 million, with an award of nearly $300,000 going to the whistleblower. 

The former executives allegedly enlisted women they knew, including family members, to act as figurehead owners of these companies. These businesses were then awarded contracts reserved for legitimate small business entities, ostensibly fulfilling the government’s intent to support underrepresented groups. However, the government contends that substantially all the work under these contracts was subcontracted back to Paragon, enabling the company to maintain control over the projects and profits while falsely presenting the contracts as being fulfilled by qualifying small businesses.

Companies seeking federal contracts must adhere to strict rules designed to promote transparency, fairness, and accountability. Unfortunately, there is substantial fraud in many procurement processes. Without honest workers pointing out deception, numerous large companies could get away with establishing phony small businesses with owners-in-name-only in order to gain preferential treatment. 

If you are aware of fraudulent practices in federal contracting, you may have the opportunity to take action under the False Claims Act as well. Whistleblowers play a vital role in exposing fraud, and they may be entitled to a portion of recovered funds. You can contact Kardell Law Group for a confidential consultation if you believe you have information about a company misleading DHS or another federal department.