Defense Contractor That Posed As Small Business Forfeits $7.8 Million

A company that rents tents and other outdoor structures for events agreed to pay the government $7.8 million to settle charges that it wrongly won Defense Department set-aside contracts reserved for small businesses.

Arena Americas, which does business from multiple locations as Arena Event Services, settled after a False Claims Act investigation conducted by the Army Criminal Investigation Command, the Defense Criminal Investigative Service and the inspector general of the Small Business Administration.

The agreement details how Arena Americas worked with Military Training Solutions LLC to obtain small business defense contracts that were represented as being performed by Military Training Solutions, but were actually performed by Arena Americas.

“As a result of this scheme, which was perpetuated at Fort Stewart, Ga., and at other military installations across the United States, millions of dollars in defense contracts wrongfully were awarded to Arena Americas instead of legitimate small businesses,” said Bobby Christine, U.S. Attorney for the Southern District of Georgia, in a statement. "The U.S. Attorney's Office will not tolerate any attempts to illegally exploit the system for a company's personal advantage” in obtaining the set-asides that Congress intended as a tool to help grow small businesses.

In addition to the financial settlement, Military Training Solutions owner Robert Obradovich previously had pleaded guilty to one felony of receiving unlawful kickbacks in a similar scheme, the Justice Department said.

Arena America's global headquarters is in London, but it has branches in California, Illinois, Wisconsin, New Jersey and Florida. Small business contracts prohibit a small business from being affiliated with a large business, and limit the amount of work that can be subcontracted.

Frank Robey, director of the Army Criminal Investigation Command’s Major Procurement Fraud Unit, said, “This should be a clear indicator to others who might try to manipulate government contracts and requirements. No matter how deep one tried to bury the evidence, we will find it.”

SBA General Counsel Christopher Pilkerton added, "The outcome in this case is the product of the enhanced enforcement efforts by federal agencies, such as the SBA, working with the U.S. Attorney’s Office and its Joint Procurement Fraud Strike Force.”