Date: March 24, 2023
Patch, a local news Web site, reported on the partial settlement of a fraud case brought against a Virginia-based government contractor by TELG whistleblower client Fei Guan. Mr. Guan filed a False Claims Act complaint against parties including his former employer, Advanced Systems Technology & Management (AdSTM), which he claimed had fraudulently benefited from federal contracts that were set aside for qualifying small businesses. AdSTM and its founder agreed to pay the U.S. government almost $750,000 in penalties; as the whistleblower, Mr. Guan will receive a portion of that amount. Several claims remain active in the case, including fraud allegations against other parties and a retaliation claim against AdSTM. Mr. Guan is represented by TELG principal Janel Quinn.
McLean Contractor Agrees To Pay $742K To Settle Whistleblower Lawsuit
MCLEAN, VA — Advanced Systems Technology & Management, Inc., a McLean-based contractor specializing in science and technology-based engineering and consulting, and its CEO Bing Ran, also from McLean, agreed to pay $742,500 Thursday to settle allegations that they had used an alter ego to obtain contracts for which the company was ineligible, according to a release.
A former AdSTM employee filed a lawsuit under the whistleblower provision of the False Claims Act. The lawsuit alleged that AdSTM and Ran had conspired to convince federal agencies to fraudulently award multiple “set-aside” contracts to Qi Tech and Foredata, two companies controlled by AdSTM.
Government contractors who participate in the Small Business Administration’s 8(a) Program can obtain “set-aside” contracts meant to help smaller contractors. To be eligible for set-asides, a company must be a small business, at least 51 percent owned by U.S. citizens who are disadvantaged, either economically or socially; and controlled by one or more people who are economically or socially disadvantaged.
AdSTM was not eligible to receive the set-aside contracts, and since it controlled Qi Tech and Foredata, they were also ineligible, according to court documents.
Government Contractor Pays $742,500 to Settle False Claims Act Allegations in Obtaining Contracts Reserved for Eligible Small Businesses
From the U.S. Department of Justice (Mar. 23, 2023)
ALEXANDRIA, Va. — Advanced Systems Technology & Management, Inc. (AdSTM), a government contractor specializing in science and technology-based engineering and consulting located in McLean, and AdSTM’s former CEO, Bing Ran, also of McLean, agreed to pay $742,500 to settle allegations that AdSTM used alter ego companies to allow AdSTM to obtain contracts “set aside” for contractors participating in the Small Business Administration’s (SBA’s) 8(a) Program, after AdSTM was no longer eligible under the 8(a) Program.
“It is vital to the purpose of the SBA’s programs that government contracts set aside for disadvantaged small businesses are issued only to those companies that are eligible. EDVA encourages anyone to come forward with information about instances where the small business set aside program has been victimized,” said Jessica D. Aber, U.S. Attorney for the Eastern District of Virginia.
United States ex rel. Guan v. Advanced Systems Technology and Management, Inc.
U.S. District Court for the Eastern District of Virginia
Original complaint filed on June 27, 2018
First amended complaint filed on September 22, 2020 (available here)