Sage Consulting Group, Inc. (Sage), a Virginia-based IT consulting group, and Robert Pleghardt, its majority owner, agreed to pay $4.8 million to settle federal civil claims under the False Claims Act and the Anti-Kickback Act. The United States alleged that Sage and its owner submitted proposals to the government recommending the issuance of 8(a) sole source contracts to two certified 8(a) companies, stating in the proposals that the 8(a) companies would perform at least 50% of the work. The United States alleged that Sage actually performed 100% of the work and paid the 8(a) companies an hourly fee for every hour of work subcontracted to Sage. Further details can be found here. This serves as a cautionary reminder, whether it is a full or partial set-aside 8(a) contract, SDVO SBC contract, HUBZone contract, WOSB or EDWOSB contract, to ensure compliance with the SBA limitations on subcontracting provisions set forth in 13 CFR § 125.6.
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