2014 Kraftson Caudle. All rights reserved. Annual Transportation Construction Law and Regulatory Forum: DBE Compliance and Case Law June 11, 2014 Jon Straw Kraftson Caudle McLean, Virginia www.kraftsoncaudle.com

2014 Kraftson Caudle. All rights reserved. Preview Commercially Useful Function Responsible vs. Responsive in Bid Evaluations DBE False Claims Act Violations

2014 Kraftson Caudle. All rights reserved. Commercially Useful Function

2014 Kraftson Caudle. All rights reserved. Commercially Useful Function Services: perform, manage, supervise Materials & Supplies: negotiate price, determine quality and quantity, ordering, installing (if applicable), and pay for material. 49 C.F.R. 26.55(c)(1).

2014 Kraftson Caudle. All rights reserved. Hypothetical: Type of Work Omitted Bid Form C-111 (VDOT minimum DBE requirements). DBE goal = 25% Lowest bidder DBE performance = 28% But, type of work not identified for one of three DBEs. So, cannot count that DBEs percentage. Upon rebid, DBEs work was furnishing and installing only.

2014 Kraftson Caudle. All rights reserved. Hypothetical: Overconcentration Unsuccessful, Non-DBE Traffic Controls Contractor Bidding on State Hwy Job Alleged overconcentration of DBEs within traffic controls industry as violation of EP Clause. Experts argued differently: Compare traffic controls industry to transportation construction industry. Compare other contractors in traffic controls industry.

2014 Kraftson Caudle. All rights reserved. Responsible vs. Responsive Consider whether jurisdiction DBE component of bid submission is judged as responsive or responsible element. Cf., Virginia, Maryland, Illinois, D.C.

2014 Kraftson Caudle. All rights reserved. Hypothetical: Responsible vs. Responsive Pre-bid goal = 25% Prime had 7 DBE subs in bid (23%) and GFE. Owner requested Prime revise DBE submission finding one subs percentage should have been 75% instead of 100%. Prime revised form and added another DBE sub; Owner did not object. (25%+ now) NOIA stated Prime was responsive and responsible. Prime submitted another form substituting a DBE because removed DBE had not submitted letter of intent. (still 25%+) Removed DBE sub still would perform other work, just not listed on form. Prime argued 49 C.F.R. 26.53(b)(3).

2014 Kraftson Caudle. All rights reserved. Contractor liable if: Knowingly does (presents or submits); OR Knowingly does not do (withholds or non- verification). See 31 U.S.C. 3729

2014 Kraftson Caudle. All rights reserved. Actual DBE FCA Violations Manafort Brothers, Inc. ($2.4M) Structural Steel Retaining Walls

2014 Kraftson Caudle. All rights reserved. Actual DBE FCA Violations Schuylkill Products, Inc. ($119M + 2 years prison for executives)

2014 Kraftson Caudle. All rights reserved. Annual Transportation Construction Law and Regulatory Forum: DBE Compliance and Case Law June 11, 2014 Jon Straw Kraftson Caudle McLean, Virginia www.kraftsoncaudle.com