ADS Inc., an operational equipment supplier headquartered in Virginia, has opted to settle a defense contractor whistleblower lawsuit and pay $16 million to resolve purported claims that it allegedly violated the False Claims Act.

According to Law360, these allegations iterate that that company illegally took government contracts that were set aside to be allocated for small businesses or minority owned businesses.

From information purported within the defense contractor whistleblower lawsuit, ADS Inc., supplies logistic solutions and equipment to both Homeland Security and the U.S. Department of Defense.

However, ADS opted to settle the allegations that they allegedly had knowingly contracted with several small businesses they had in fact held control over in order to mislead the government into awarding them contracts.

The contracts in question were small business set-asides. ADS allegedly misled the government by inaccurately representing their eligibility requirements. Moreover, ADS allegedly hid the connections that the company had to these small businesses.

ADS was also accused of intentionally misrepresenting the size of their businesses, and allegedly categorizing them as “service-disabled” or “socially or economically disadvantaged businesses” to seize set-aside contracts.

According to the DOJ, the $16 million settlement with ADS and its small businesses serves as the largest alleged fraud accusation and connection with small business contracting eligibility.

“Small or disadvantaged businesses serve as important engines for economic growth, and the United States utilizes small business set-aside contracts to aid those businesses in their development,” the acting Assistant General of the DOJ’s Civil Division told Law360.

Additionally, he said that “[w]hen ineligible companies improperly obtain set-aside contracts, they prevent the small business community from receiving the assistance that Congress intended.”

A whistleblower was the one who brought the alleged violation of the False Claims Act to the D.C. federal court and filed the defense contractor whistleblower lawsuit. According to Law360, the whistleblower will receive a percentage of the claim, in this case roughly $2.9 million.

The U.S. Attorney said in a statement, according to Law360, “This settlement reflects the government’s commitment to ensure that its business partners are truthful in their dealings with the United States.” He continues to state, “Contractors who attempt to disguise or misrepresent themselves to obtain funds reserved to promote small and disadvantaged businesses will be held accountable for their fraud on the public fisc.”

Small businesses that are affiliated with ADS allegedly include: Mythics Inc., London Bridge Trading Co. Ltd., MJL Enterprises LLC., SEK Solutions LLC., and Karda Systems LLC.

As reported in Law360, although ADS has opted to settle this defense contractor whistleblower lawsuit, they make no admission of liability under any of the purported allegations or claims being filed against the company, and that the DOJ has made no findings as to the evidence of these purported claims.

ADS maintains that they have always complied and cooperated with Small Business Administration standards. The company says that after several months of cooperation and dealings with the federal government, they came to the conclusion that this issue would be best served by putting it behind them.

ADS states, “We are pleased that we were able to settle the matter amicably and that the settlement does not impede in any way ADS’s continuing service to all of its customers under its current contracts.”