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Dive Brief:
- A Rahway, New Jersey-based highway contractor has agreed to pay $950,000 to settle claims that it misrepresented itself as disadvantaged in order to snare federal jobs, the Department of Justice announced in a news release last week.
- MV Contracting won several set-aside contracts funded by the Federal Highway Administration between October 2016 and April 2019 under the DOT’s Disadvantaged Business Enterprise program, according to the release. DOT sets goals for 10% of funds to go to DBEs, which include women- and minority-owned businesses.
- But the U.S. Attorney’s Office for the District of New Jersey contended MV Contracting wasn’t qualified as a DBE and knowingly submitted improper claims to be paid through the program using federal funds anyway.
Dive Insight:
MV Contracting did not immediately respond to a request for comment. The U.S. Attorney’s Office said that in light of the settlement agreement, its claims are merely allegations and that there has been no determination of liability on the part of the contractor.
DBE fraud, in which uncertified contractors claim to qualify for programs aimed at underrepresented businesses, has been a recurring issue in construction. In 2022, the New York attorney general announced a $1.3 million settlement with 10 companies for supplier diversity fraud, where purchase orders for materials were rubber stamped by “pass through” minority- and women-owned businesses that didn’t have meaningful participation on jobs.
Set up in the 1980s to give traditionally underrepresented businesses a better chance at getting a piece of federal contracts, DOT’s DBE program has recently faced constitutional challenges.
Last week, a federal judge partially blocked the DBE program for contracts bid on by two companies in Indiana and Kentucky, and said it was likely certain criteria for determining DBE status would ultimately be found unconstitutional.