Spotlight on Government Contracting Fraud: False Data Fuels Fraud in Program Providing Work Opportunities for the Disabled

This week, CNN reported on rampant abuse in the federally-funded programs that help provide job opportunities for the severely disabled.  Sadly, the current investigations are just the latest chapter in a series of problems with fraud and abuse in this area.  If the allegations are true, this is yet another example of scammers taking taxpayer money and using it to line their own pockets rather than to support the noble cause for which it was marked.  Fraud in AbilityOne and other government programs is a serious issue and our government contract fraud law firm works with honest whistleblowers to root out these frauds and return funds to these important initiatives.

DoJ Joins Other Agencies Investigating Work Program for the Disabled

CNN reported last week that the Department of Justice (“DoJ”) has joined several other government offices investigating allegations of fraud involving AbilityOne, the leading federally-funded program helping the blind and severely disabled find work, and SourceAmerica, the nonprofit agency that manages the program.  AbilityOne uses contract2some $3 billion of taxpayer money annually to fund contracts nationwide.  In order to hold an AbilityOne contract, blind and/or seriously disabled individuals unable to hold another job must perform 75% or more of the company’s work.

According to CNN, up to half of the companies holding AbilityOne contracts for the severely disabled may not actually be meeting this standard.  Insiders told the media that the program failing to enforce or follow the law.  One lobbyist noted 10 large companies hold more than their share of agency contracts and suggested that conflicts of interest abound tying those approving AbilityOne contracts to these companies. CNN further notes that some companies who lost bids for AbilityOne contracts are suing and claiming the government fails to monitor compliance effectively.

A History of False Claims Act Allegations

Whether the current allegations include False Claims Act (“FCA”) charges is unclear, but there is a history of FCA claims involving AbilityOne.  In October 2012, the DoJ announced a $5 million settlement resolving FCA allegations against the National Center for Employment of the Disabled (“NCED”), a manufacturer now known as ReadyOne.  The qui tam action, initiated by a former NCED employee, alleged the company knowingly submitted false certifications stating the percentage of company work done by severely disabled individuals.  These certifications landed NCED government contracts under AbilityOne.  According to the lawsuit, NCED failed to properly account for certain work done by non-disabled employees between 2000 and 2006.  Notably, a settlement is not an admission of wrongdoing.

A similar suit was settled in July 2001.  Per a DoJ press release, PRIDE Industries and a subsidiary agreed to pay $400,000 (a relatively small figure that could add up if multiple organizations committed similar wrongs) to settle allegations it knowingly filed false statements in an effort to obtain an AbilityOne contract.  In this case, the contract involved maintenance services for the Fort Bliss Army Base.  According to the government, PRIDE did not include work performed by certain temporary, non-disabled employees when it calculated and submitted the relevant ratios.  Additionally, the suit claimed PRIDE overcharged the Army by including unallowable costs and charging more than the permissible amount for labor.

How Our Government Contracts Attorney and Private Whistleblowers Fight Fraud

In both the PRIDE and NCED/ReadyOne press releases, the DoJ emphasizes the importance of protecting the integrity of AbilityOne and declares a commitment to pursuing those who violate government contracting rules.  Given the enormous scope of government contracting, private individuals who see fraud are essential to helping stop it.  If you witness government contracting fraud such as companies using falsified information to steal from a government program and its beneficiaries, please call to learn about the role you can play in this fight.  Our False Claims Act lawyer can explain the law, the protections it provides to whistleblowers, and the possibility of a large reward if your information lead to a recovery.

See Related Blog Posts:

Spotlight on Government Contracts Fraud: The Threat of Government Set-Aside Fraud

Spotlight on Government Contracting Fraud: Violation of Price Reduction Clause in GSA Contracts

(Image by Dan Moyle)