On June 9th, the United States Department of Justice announced that government contractors Broadway Electric Inc. (Broadway), Cornerstone Contracting Inc. (Cornerstone), and their executives will pay $21.3 million to settle allegations that they wrongly obtained federal contracts reserved for service-disabled veteran-owned small businesses and other eligible small businesses in violation of the False Claims Act (FCA).
The civil settlement arose after two whistleblowers, a veteran of the United States Air Force and an executive with a service-disabled veteran-owned small business (SDVOSB) firm, sued under the qui tam provisions of the FCA. These provisions allow private citizens and parties to file suit on behalf of the United States alleging an individual or company is defrauding the government. The whistleblowers in this case will receive a $3,674,250 award as part of the settlement agreement under the FCA.
The DOJ alleged Broadway, Cornerstone, and their executives engaged in a coordinated scheme from approximately April 2017 to May 2025 to defraud the U.S. Small Business Administration’s (SBA) set-aside contracts for SBVOSBs. The defendants allegedly obtained these contracts through purported SDVOSBs and other small businesses, though they are not service-disabled veterans or small businesses.
As Special Agent in Charge Jason J. Sargenski of the Department of Defense Office of Inspector General’s Defense Criminal Investigative Service (DCIS), Southeast Field Office said, the SBA’s program was “designed to give service-disabled veteran-owned small businesses a fair opportunity to compete,” and when large contractors like Broadway and Cornerstone “fraudulently control small business entities to capture contracts they are not entitled to, they divert critical defense resources away from their intended purpose, undermine the competitive process, and betray the veterans these programs exist to serve.”
SBA General Counsel Wendell Davis credits the SBA’s enhanced efforts to combat misconduct within its contracting assistance programs with the help of the Department of Justice (DOJ) and other federal law enforcement partners with achieving this settlement. The DOJ Civil Division’s False Claims Act (FCA) enforcement and the work of whistleblowers are integral to exposing fraudsters that cost the government and taxpayers billions of dollars.
The claims resolved by the settlement are allegations only, and there has been no determination of the defendants’ liability.