CFP Group: A VA Award and a HUBZone Office Without Employees

CFP Group and its president agreed to pay $150,000 to settle HUBZone set-aside fraud allegations over a Department of Veterans Affairs fire-alarm contract. The government alleged that the company claimed a principal office in Maryland while its president’s actual office was in Vienna, Virginia, outside a designated HUBZone. Someone who knew where the company worked could see a business very different from the one described to the government.

The Justice Department’s settlement announcement connects that office claim to a particular purchase: fire-alarm installation for the Department of Veterans Affairs. The alleged false application secured Small Business Administration certification, which CFP then used to obtain work reserved for a qualified HUBZone company.

The Maryland Office and the Vienna Office

The government’s allegation was specific: no CFP employees worked at the Maryland location listed as the company’s principal office. Its president had submitted the application on the company’s behalf, representing that the principal office was in a designated HUBZone. The government said his actual office was elsewhere.

That contrast mattered because the program ties contracting opportunities to economically distressed places. The location was part of the company’s claim to the work.

The Congressional Research Service’s 2017 report, Small Business Administration HUBZone Program, describes the purpose as creating jobs and increasing investment in distressed communities.

CFP’s alleged contradiction concerned the working office. For an employee who knew the daily operation, the Maryland representation could be tested against a concrete fact: whether any coworkers actually worked there. The president’s Vienna office supplied another part of that comparison.

We see the absurdity in asking a program built to bring work to a community to accept an office where, according to the government, nobody from the company worked. The address qualified. The alleged operation did not match it.

How the VA Fire-Alarm Set-Aside Followed

The Department of Veterans Affairs fire-alarm installation contract followed the Small Business Administration certification, according to the government’s account. Veterans Affairs had set the work aside for a qualified HUBZone company, and CFP used its certification to obtain the award.

That is what makes the application consequential to the purchase. The Small Business Administration decided whether the company qualified for the program. Veterans Affairs bought the installation work through a contract restricted to a qualifying business. The alleged false statement passed from one agency’s certification process into another agency’s purchasing decision.

Small business set-aside fraud can exploit precisely that connection. Federal small-business purchasing includes ordinary size-based set-asides alongside programs with their own certification requirements. Here, the relevant claim was HUBZone eligibility, and the reserved opportunity was the Veterans Affairs installation contract.

The Congressional Research Service reported $1.61 billion in HUBZone set-aside awards in fiscal 2015. These were contracting opportunities restricted to qualifying businesses, not simply purchases from any small supplier.

A false claim to that access cheats honest HUBZone competitors and undermines the program’s promise to distressed communities. In CFP’s case, the government alleged that a Maryland office where nobody worked helped secure a reserved award. We see the problem before the first fire alarm is installed: who got through the door to compete for the work.

The CFP Group Settlement

The Justice Department announced the settlement on November 10, 2010. Both CFP Group and its president agreed to pay to resolve the government’s claims that they used false statements to obtain the Department of Veterans Affairs contract.

The Paper-Office Pattern

Other HUBZone cases show how a claimed office can conceal different operating facts. In the October 2010 CSI settlement announcement, the government alleged that CSI Design Build claimed a HUBZone principal office while operating as part of non-HUBZone CSI Engineering. That allegation concerned the business behind the claimed office, a useful comparison with CFP’s alleged absence of employees at its claimed location.

Air Ideal’s case concerned allegedly fabricated documents supporting the office story. The government’s account of the allegations resolved in 2015 described a virtual office and fabricated leases used to support HUBZone certification, including another fabricated version supplied during the investigation. A lease was part of the alleged disguise.

Classic Site Solutions and its owner agreed to pay $1.3 million to settle allegations of false principal-office locations used to obtain HUBZone certifications, set-asides and bid preferences. The government’s 2019 settlement announcement also described further false location statements after the problem came to light.

When a Coffee Store Passed as a Principal Office

Undercover testing exposed the same gap between an address and an operating business. The Congressional Research Service’s report recounts a 2008 Government Accountability Office investigation in which fictitious employee information and fabricated documents secured HUBZone certification for four bogus firms.

One application makes the weakness memorable:

The address put the application in the right place on the map. It did not put the applicant’s business there. That is the comparison an insider can make when a certification gives an incomplete picture of the working company.

The report also describes the Small Business Administration’s response to fraud concerns. Beginning in fiscal 2009, the agency reworked application reviews to require supporting material including leases, tax returns and payroll records.

Yet in the report’s account of the 2010 undercover test, the agency certified three of four bogus applicants. The submitted office addresses included the Alamo, a public storage facility and a city hall. In those cases, the agency did not visit the addresses and failed to check the information adequately.

The people who know the workplace can explain what the paperwork leaves out.

What an Insider Can Recognize

The useful comparison in a case like CFP’s connects the claimed office, the people working at it and the reserved contract obtained through certification. An employee may know where the business operated. Someone involved in an application or bid may know which address the company gave the government. Someone administering the award may hold the connection between that certification and the work it opened up.

We examine those accounts together. A lease can speak to the space claimed, payroll records to the workforce, and the application to the representation made. Your knowledge of the daily operation gives those documents context. The question is how the company’s account of itself reached a government purchasing decision, and who inside the business knew the difference.

A whistleblower case under the False Claims Act can pay a whistleblower reward of 15% to 30% of what the government recovers.

You Know Where the Business Worked

If you know the office behind a HUBZone application, speak with our whistleblower experts about the location claim and the contract it helped secure. We help you build your strongest HUBZone whistleblower case around the operating facts, bring in government procurement whistleblower lawyers who understand HUBZone eligibility, and stay beside you as the case moves forward.