Defense contractor agrees to pay United States $7.8 million to settle False Claims Act investigation

Published: Oct. 9, 2018 at 10:56 AM EDT
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SAVANNAH, GA (WTOC) - A defense contractor has agreed to a million-dollar settlement with the United States after allegations that it wrongfully obtained small business set-aside contracts with the Department of Defense.

The settlement states that Arena Event Services, Inc., which does business as Arena Americas, worked with Military Training Solutions, LLC (“MTS”) to obtain small business defense contracts that were supposed to be performed by MTS, but in reality, were performed by Arena Americas.

Arena Americas has agreed to pay $7.8 million to the United States to resolve the allegations.

The settlement states that as a result of this scheme, which was perpetuated at Fort Stewart, GA, and at other military installations across the United States, millions of dollars in defense contracts wrongfully were awarded to Arena Americas instead of legitimate small businesses.

Arena Americas fully cooperated with the United States’ investigation and has agreed to cooperate in the United States’ continuing investigation.

Congress mandates that a certain amount of government contracts go to small businesses as a way to encourage small business growth. These contracts prohibit the small business from being affiliated with a non-small business, while also limiting the amount of work that can be subcontracted to a non-small business.

Through its investigation under the False Claims Act, the United States determined that Arena Americas paid MTS to bid on and obtain small business contracts that ultimately would be performed by Arena Americas. MTS previously entered into a settlement agreement with the United States to resolve its liability under the False Claims Act, and MTS owner Robert Obradovich pled guilty to one felony count of receiving unlawful kickbacks in a similar scheme.

The claims resolved by the settlement agreement are allegations only, and there has been no determination of liability.

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