Fort Walton Beach contractor resolves false claims allegations with settlement

FLORIDA – A Fort Walton Beach contractor and its owner have agreed to a multi-million-dollar settlement to resolve False Claims Act allegations relating to the procurement of small business contracts, the US Department of Justice (DOJ) has announced. 

HX5 LLC and its owner and Chief Executive Officer, Margarita Howard, located in Fort Walton Beach, and an affiliated joint venture HX5 Sierra LLC, located in Cleveland, Ohio, have agreed to pay the United States $7,759,693.92 to resolve allegations that they violated the False Claims Act, the DOJ said. 

According to the DOJ, HX5, HX5 Sierra, and Howard knowingly provided false information to the Small Business Administration relating to HX5’s and HX5 Sierra’s eligibility for federal set-aside contracts intended for small businesses owned and controlled by socially and economically disadvantaged individuals. 

“Small business set-aside contracts assist small businesses, including socially disadvantaged companies, to compete in the American economy,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division.  

“When companies misrepresent their eligibility for such contracts, they prevent others from receiving the business opportunities Congress intended.” 

The SBA’s 8(a) business development program is intended to help small businesses owned and controlled by socially and economically disadvantaged individuals. Once certified, 8(a) Program participants are eligible to receive federal contracting preferences.  

According to the DOJ, the settlement resolves allegations that HX5, HX5 Sierra, and Howard fraudulently obtained six 8(a) contracts from Jan. 1, 2015, to Dec. 31, 2021. More specifically, the government alleged that HX5 and Howard failed to report distributions and payments to Howard’s family members and allegedly provided false information to SBA regarding Howard’s assets.  

The government further alleged that if HX5 and Howard had provided accurate information, it would have resulted in HX5’s termination from the SBA 8(a) Program, which, in turn, would also have made HX5 Sierra ineligible for 8(a) set-aside contracts.  

As a result of the alleged false statements, HX5 improperly maintained its status as an 8(a) Program participant, and HX5 and HX5 Sierra were awarded 8(a) set-aside contracts by the National Aeronautics and Space Administration (NASA), the U.S. Army, and the U.S. Air Force for which the companies were not eligible.  

“We are very pleased with today’s agreement,” said U.S. Attorney Jason R. Coody for the Northern District of Florida.  

“This result demonstrates a coordinated effort among our agency partners to ensure that disregard for the integrity of small business contracting will not go unchecked.” 

The civil settlement includes the resolution of claims brought under the qui tam or whistleblower provisions of the False Claims Act by Vantage Systems Inc. Under those provisions, a private party can file an action on behalf of the United States and receive a portion of any recovery. As part of the resolution, Vantage Systems will receive $1,357,964.00. 

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