California Firm to Pay U.S. $400,000 to Resolve False Claims

WASHINGTON – PRIDE Industries, and its subsidiary, PRIDE Industries One, has agreed to pay the United States $400,000 to resolve allegations that it knowingly submitted false claims relating to a contract to provide maintenance services at the Department of the Army’s Ft. Bliss Army Base in El Paso, Texas, the Justice Department announced today.

The maintenance contract at Ft. Bliss is part of the AbilityOne Program, which procures contracts for goods or services in order to provide employment opportunities to people who are blind or have other significant disabilities. Under this mandatory source program managed by the Committee for Purchase From People Who Are Blind or Severely Disabled, a federal agency, contractors must ensure that 75 percent of all direct labor hours are performed by severely disabled employees. Between 2007 and 2010, PRIDE, which is based in Roseville, Calif., employed a large number of temporary, non-disabled employees as part of its maintenance staff but did not count their hours as part of its overall ratio. Accordingly, PRIDE reported false ratio numbers to NISH, the central nonprofit agency designated by the committee to help oversee the AbilityOne Program, as well as to the committee itself.

In addition, PRIDE overcharged the Department of the Army under its maintenance contract by adding unallowable costs and charging too much for labor.

“Providing jobs for disabled workers is a critical purpose of the AbilityOne Program,” said Assistant Attorney General for the Civil Division Tony West. “This resolution demonstrates that the Department will vigorously pursue government contractors who overcharge on their contracts as well as misstate the number of non-disabled workers they actually employ.”

“Ensuring the integrity of federal contracting programs is one of the objectives of the Affirmative Civil Enforcement unit in the U.S. Attorney’s Office,” said U.S. Attorney for the Eastern District of California Benjamin B. Wagner.  “Results like these help accomplish that objective.”

The government’s investigation of PRIDE was initiated by a lawsuit filed under the False Claims Act’s qui tam or whistleblower provisions, which permit private parties to sue for false claims on behalf of the United States and to share in any recovery. The whistleblowers in this case, Timothy Hediger and Lois Perez, will receive $68,000 of the settlement.

“Today’s announcement is a testament to our solid and continued partnership with the Department of Justice and other law enforcement agencies in the fight against fraud,” said James Podolak, director of the Army Criminal Investigation Command’s Major Procurement Fraud Unit. “This clearly demonstrates our continued commitment to rooting out fraud, large or small, in the Department of the Army and that our commitment is stronger than ever.”

The government’s investigation was conducted by the Justice Department’s Civil Division; the U.S. Attorney’s Office for the Eastern District of California; the Army Criminal Investigation Command’s Major Procurement Fraud Unit; the Defense Criminal Investigative Service; and the Defense Contract Audit Agency.