PRIDE Industries and PRIDE Industries One: The Workers Missing From the Labor Count

In the PRIDE Industries and PRIDE Industries One settlement, the companies agreed to pay $400,000 to resolve allegations of false labor-ratio reporting and overcharges on Army maintenance work at Fort Bliss. The government alleged that temporary nondisabled workers helped staff the contract but disappeared from the count used to show compliance with a program meant to employ people with disabilities.

The Justice Department announced the settlement on July 11, 2011. PRIDE Industries, based in Roseville, California, and its subsidiary PRIDE Industries One faced allegations concerning maintenance services at the Army base in El Paso, Texas. The labor-ratio allegations covered 2007 through 2010, when the government said PRIDE left temporary workers’ hours out of its reported totals.

The AbilityOne Rule Behind the Fort Bliss Contract

The Fort Bliss maintenance contract belonged to AbilityOne, a federal purchasing program intended to create employment opportunities for people who are blind or have other significant disabilities. The program tied government purchases of goods and services to qualifying employment, making the composition of the workforce part of the contractor’s obligation.

The federal Committee for Purchase From People Who Are Blind or Severely Disabled managed the program. NISH was the central nonprofit agency the Committee designated to help oversee it. According to the Justice Department, PRIDE sent the allegedly false ratio numbers to both NISH and the Committee.

That requirement gave the staffing information a purpose beyond payroll. The reported hours were supposed to show that the contractor was meeting the employment condition attached to the program. We see the absurdity in the allegation: a program built to employ people with disabilities, satisfied on paper by leaving other workers out of the count.

How Leaving Workers Out Changed the Ratio

The government alleged that PRIDE employed a large number of temporary nondisabled maintenance workers and excluded their hours from its overall labor ratio. Leaving those hours out reduced the total against which the qualifying employees’ hours were measured. The resulting report allegedly made PRIDE appear to satisfy the AbilityOne requirement.

The denominator matters because the rule measured a share of all direct labor hours. A report can overstate that share by leaving some workers out of the total, even without adding hours to the qualifying group.

For someone who knew the Fort Bliss maintenance staff, the useful connection would be between the hours worked and the hours included in the report. A staffing employee might recognize the temporary workers, while someone preparing the ratio might know how their hours were treated. We would examine those accounts together to understand where the reported workforce diverged from the workforce doing the work.

The people with disabilities whom these government purchases were meant to employ had a stake in an honest count. The alleged omission made the employment promise look fulfilled on paper while concealing who actually performed the work.

The Separate Allegations About the Army’s Bill

The Justice Department also alleged that PRIDE overcharged the Army by adding unallowable costs and charging too much for labor. Those allegations concerned the money charged under the maintenance contract, alongside the alleged misstatement of the workforce used to perform it.

The cost-charging question follows an expense into the government’s bill. Under the federal cost-allowability rules, claimed costs need support showing that they were incurred and belonged to the contract, along with compliance with the contract’s terms and cost limits. Paying an expense and putting it in the ledger does not, on its own, make it the government’s bill.

For an insider who sees labor costs, that makes the supporting detail important: the work, the time, the contract charged and the amount presented for payment. We would use those connections to examine the alleged excess charge. The staffing report and the maintenance bill answer different questions, so each needs to be traced to the information behind it.

The Whistleblower Case and the Investigation

A False Claims Act qui tam lawsuit brought by whistleblowers prompted the government’s investigation of PRIDE. The Justice Department’s announcement also provided for the whistleblowers to receive a share of the settlement.

The Justice Department’s Civil Division and the U.S. Attorney’s Office for the Eastern District of California conducted the investigation with the Army Criminal Investigation Command’s Major Procurement Fraud Unit, the Defense Criminal Investigative Service and the Defense Contract Audit Agency. That brought civil enforcement, procurement investigators and contract auditors into the same case.

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. We work with insiders on defense contractor whistleblower claims by connecting what they know about the work to the representations and charges that reached the government.

What Evidence Is Needed to Prove Fraud?

For the PRIDE allegations, the evidence connects the maintenance workforce, the direct-labor hours counted, the ratio reported and the charges made to the Army. We examine the difference between the underlying work and the government’s account of it with you, including who prepared or approved the disputed information.

Knowledge of temporary staffing can explain an omission from the ratio, while knowledge of time records or cost assignments can explain an unsupported charge. A person who saw both may be able to connect the staffing decision to the report and the bill. Those are different views of the same contract, and we work through how they fit together.

Another Fort Bliss case shows why individual labor detail matters. The centers at Fort Benning and Fort Bliss processed workers before they deployed overseas on aviation support. The government alleged that L-3 Communications calculated each person’s processing time using the earliest arrival or latest departure of anyone at the center. L-3 agreed to settle those allegations in a resolution announced in September 2015.

That labor-billing allegation made one person’s attendance the basis for another person’s charged time. PRIDE’s labor-ratio allegation concerned hours left out of the total used to show program compliance. In both, an insider’s knowledge of who worked and when helps test a number presented to the government.

You Know Who Did the Work

If you know which workers disappeared from an AbilityOne report or how unsupported labor reached an Army bill, talk with our whistleblower experts about what you saw. We bring in defense contractor whistleblower lawyers who understand labor reporting, program eligibility and government billing. You bring the view from inside the work, and we stay beside you to build your strongest defense contractor whistleblower case.