Feds May've Been Rooked for Small Business Deal
WASHINGTON (CN) - A federal judge advanced some claims that Computer Sciences Corp. deceived the U.S. government for a contract it was supposed to share with small businesses.
Tien Tran, the relator of the False Claims Act lawsuit, alleges that his small business Infotran was manipulated in the scheme by Computer Sciences Corp., the director contractor, and another large business, Modis Inc.
Computer Sciences Corp.'s $200 million deal designated it as the prime contractor to perform information-technology work for the U.S. Citizenship and Immigration Service.
To qualify, however, the contractor had to subcontract certain of the work to qualified small businesses. Tran said Computer Sciences wanted to appear like it was subcontracting to small businesses while actually giving the work to Modis, a larger company it trusted.
The so-called pass through scheme involved alleged coordination with a small IT firm like Sagent Partners, which in turn subbed out work to Modis.
U.S. District Judge Ketanji Jackson dismissed the claims against Sagent last week, however, noting that "the complaint is devoid of any allegations concerning Sagent's knowledge of the small business requirements under the September 2008 Task Order and the Small Business Subcontracting Plan imposed on CSC, nor are there any allegations of fact that would support any inference that Sagent knew there was a link between those contract requirements and the pass-through dynamic."
The judge deemed Tran's claims against Computer Sciences and Modis more plausible.
"Relator's claims that Modis caused CSC to present false claims and to make material false statements are also plausible, as is relator's claim that CSC and Modis conspired to commit each of these violations of the FCA," the opinion states. "But relator has not satisfied the requisite pleading standards with respect to its retaliation count against CSC and Modis, nor are there sufficient allegations in the complaint to support the presentation and material false statements counts against Sagent, so those counts must be dismissed."
The judge concluded: "It may well be that, once discovery in this case proceeds, all of relator's claims will be proven unfounded, either because the pass-through scheme did not operate in the way relator has alleged, or was immaterial to the payment of CSC's claims, or for some other reason. But based on the facts alleged in the complaint, and taking all of the allegations therein at face value, relator has stated certain plausible claims against CSC and Modis based on their alleged agreement to implement a pass-through scheme in order to sidestep the promised small business requirements in a manner that rendered false CSC's submissions and representations to the government regarding its fulfillment of those requirements."
Computer Sciences and Modis argue that their pass-through operation was legitimate and not in violation of the False Claims Act.