Labor

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 work-

ing 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 fi nes and application of federal law when

it comes to meeting quotas for minority and women-owned busi-

nesses 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 chap-

ter 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 mes-

sage when it comes to contractors on those projects: Know exactly

what the fi rms you’re working with are doing, and document ev-

erything 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 fi nes are

a huge amount of money. I’ve seen fi nes levied anywhere up to

$20 million.

“The reality is, one way or another, your business can be devas-

tated by just being looked at for this. It’s not so much the regula-

tions themselves. It’s the way regulators are handling this.”

If a contractor submits a claim that it has reason to believe vio-

lates these requirements, it is subject to penalties. Signing some-

thing 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 equip-

ment lent to the specialty contractor to complete the job.

The regulations are in place to limit fraud and make smaller

fi rms 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 com-

munity to deal with it.

One of the diffi culties Charney has noticed is that contractors

misunderstand how agreements between companies or municipali-

ties fi t or do not fi t 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 fi ne. The press release from the Department of Trans-

portation stipulated that the fi ned company was using a certifi ed

MBE and was working in an approved mentorship program. The

DOT believed, however, that the specialty contractor was not per-

forming 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 with-

out 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 consulta-

tion 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.

Be Certain When You SignConsequences Ramping Up For Those Who File False Claims

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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