Labor
Be Certain When You Sign Consequences Ramping Up For Those Who File False Claims BY ANDY COLE Any piece of paper with your signature and your company’s name on it carries a tremendous amount of weight. If you’re working on a project at the federal, state or city level, that weight could come in the form of a lot of cash if you aren’t careful. The False Claims Act has been protecting the government from business fraud since the days of Abraham Lincoln, but a recent aggressive increase in fines and application of federal law when it comes to meeting quotas for minority and women-owned businesses on federal projects has caught the attention of experts. Close to 30 states – including Illinois – have similar provisions for state projects. Throw in the City of Chicago’s well publicized requirements, and it’s easy to see how the importance of honest paperwork escalates. Co-Managing Partner Steven M. Charney of Peckar and Abramson has presented to large groups of AGC of America chapter leaders and contractors on both the False Claims Act and the risks of “green” building. While digging through requirements in federal regulations is anything but simple, there’s a simple message when it comes to contractors on those projects: Know exactly what the firms you’re working with are doing, and document everything correctly. “If there’s a mistake on the percentage you hired and you’ve signed that piece of paper, a regulator can come to you and say ‘you can buy your way out of this, or we’re going to prosecute or de-bar you,’” Charney said. “You have to answer, and the fines are a huge amount of money. I’ve seen fines levied anywhere up to $20 million. “The reality is, one way or another, your business can be devastated by just being looked at for this. It’s not so much the regulations themselves. It’s the way regulators are handling this.” If a contractor submits a claim that it has reason to believe violates these requirements, it is subject to penalties. Signing something that states your company achieved proper compliance can come back to trip up a general contractor if they neglect to deduct from that percentage the payroll value of any workers or equipment lent to the specialty contractor to complete the job. The regulations are in place to limit fraud and make smaller firms grow and become strong so they can continue to work on federal projects. While the law has changed some in recent years, Charney sees a big difference in the way the law is being applied, and says it will take a different mindset from the contracting community to deal with it. One of the difficulties Charney has noticed is that contractors misunderstand how agreements between companies or municipalities fit or do not fit into federal regulations. Even if a contractor
is working in what is a federally sanctioned mentorship program with a smaller company, or the speciality contractors it hires are approved for MBE/WBE work by a level of government, it doesn’t guarantee compliance. “You can’t rely on an approved mentorship program alone,” Charney said. “What you put your name on will be scrutinized.” One contractor Charney cited as an example was levied with a $2.5 million fine. The press release from the Department of Transportation stipulated that the fined company was using a certified MBE and was working in an approved mentorship program. The DOT believed, however, that the specialty contractor was not performing the required amount of work unassisted. “If you put a few guys from your business on the part of the project that other contractor’s business is doing, regulators can say that’s a violation of what you’ve signed,” he said. “What they’re looking at is the actual percentage of compliance, whether or not the subcontractor is serving a commercially useful function without being assisted.” If contractors can’t meet the goals, Charney encourages them to face reality as opposed to reporting a false percentage or trying to make something happen that can’t happen. “Contractors have to be very careful when determining exactly what percentage to write down,” Charney said. “They need to have a well-designed program for meeting this goals and for proving that they’re exercising good faith efforts to meet those goals.” Contact Denise Herdrich at the Builders Association for more on any labor issue, and make use of the Builders Association’s free legal hotline, which gives you access to a free 20-minute consultation with a lawyer in the Association. Look for more on the False Claims Act as it deals with state projects in future issues of The Builder.
Operators Allocations, Other Trades Updated View the revised allocations for Operating Engineers Local 150, effective June 1 of this year. They include an allocation of $13.45 to health and welfare funds for all Operators, $9.55 to the pension fund for those under the MARBA Building agreement and $8 to the pension fund for apprentices. View the Labor section of www.bldrs.org for more information on this and any other trade, including a comprehensive comparison of year-by-year wages and allocations for nearly every local trade union.
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