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Press Release

Government Contractor Pays $742,500 to Settle False Claims Act Allegations in Obtaining Contracts Reserved for Eligible Small Businesses

For Immediate Release
U.S. Attorney's Office, Eastern District of Virginia

ALEXANDRIA, Va. – Advanced Systems Technology & Management, Inc. (AdSTM), a government contractor specializing in science and technology-based engineering and consulting located in McLean, and AdSTM’s former CEO, Bing Ran, also of McLean, agreed to pay $742,500 to settle allegations that AdSTM used alter ego companies to allow AdSTM to obtain contracts “set aside” for contractors participating in the Small Business Administration’s (SBA’s) 8(a) Program, after AdSTM was no longer eligible under the 8(a) Program.

“It is vital to the purpose of the SBA’s programs that government contracts set aside for disadvantaged small businesses are issued only to those companies that are eligible. EDVA encourages anyone to come forward with information about instances where the small business set aside program has been victimized,” said Jessica D. Aber, U.S. Attorney for the Eastern District of Virginia.

The settlement arises in connection with a lawsuit filed by a former AdSTM employee under the whistleblower provision of the False Claims Act. United States ex rel. Guan v. AdSTM, et al. The settlement resolves allegations that AdSTM and Ran conspired to fraudulently induce federal agencies to award multiple small business set-aside contracts to Qi Tech and Foredata for which they were not eligible because they were controlled by AdSTM and Ran after AdSTM was no longer eligible under the 8(a) program because of its size. Among other criteria, to be eligible to participate in the SBA’s 8(a) Program, a company must be (1) a small business, (2) at least 51% owned by U.S. citizens who are socially and economically disadvantaged, and (3) the management and daily operations of the company must be controlled by one or more individuals that are both socially and economically disadvantaged.

“We are very pleased with today’s announcement,” said Special Agent in Charge L. Scott Moreland of the Department of the Army Criminal Investigation Division’s Major Procurement Fraud Field Office. “This settlement, which is the result of great cooperative efforts among our law enforcement partners, is yet another example that misuse of the government contracting process will not go unchecked.”

A whistleblower suit, or qui tam action under the False Claims Act, is commenced by an individual, known as a “relator,” filing a complaint under seal in the U.S. District Court, and providing a copy of the complaint and other evidence to the U.S. Attorney’s Office. The United States then has an opportunity to investigate the claims. The False Claims Act provides whistleblowers with a share of the government’s recovery. The relator here, a former AdSTM employee, will receive a share of the False Claims Act settlement.

The resolutions obtained in this matter were the result of a coordinated effort between the U.S. Attorney’s Office for the Eastern District of Virginia, the Department of Defense Office of Inspector General, Defense Criminal Investigative Service’s Mid-Atlantic Field Office, the Nuclear Regulatory Commission Office of the Inspector General, U.S. Army Criminal Investigation Division Major Procurement Fraud Field Office, and the Defense Contract Audit Agency.

The matter was handled by Assistant U.S. Attorney Kristin Starr.

A copy of this press release may be found on the website of the U.S. Attorney’s Office for the Eastern District of Virginia at Related court documents and information from the civil lawsuit can be accessed on PACER by searching for No. 1:18-cv-795 (E.D. Va., Alexandria Div.).

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

Updated March 23, 2023

False Claims Act