United States ex rel. MC2 Sabtech Holdings, Inc. v. GET Eng'g Corp.
| Decision Date | 18 January 2022 |
| Docket Number | Case No.: 19-CV-1249 TWR (AGS) |
| Citation | 580 F.Supp.3d 876 |
| Parties | UNITED STATES of America EX REL. MC2 SABTECH HOLDINGS, INC., d/b/a IXI Technology, Inc., Plaintiffs and Relator, v. GET ENGINEERING CORP., Guille E. Tuttle, Rodney Tuttle, Greg MacNeil, David Grundies, Leslie Adams, Defendants. |
| Court | U.S. District Court — Southern District of California |
Charles E. Canter, AUSA - US Attorneys Office, Los Angeles, CA, Joseph J. Purcell, United States Attorney's Office, San Diego, CA, for Plaintiff United States of America.
Aaron S. Dyer, Kevin Reza Massoudi, James Matthew Carter, Todd John Canni, Pillsbury Winthrop Shaw Pittman LLP, Los Angeles, CA, for Plaintiff MC2 Sabtech Holdings, Inc.
Susan Leslie Mason, William Christopher Pate, DeVaney Pate Morris & Cameron LLP, San Diego, CA, for Defendants Get Engineering Corporation, Rodney Tuttle, Greg MacNeil, David Grundies, Leslie Adams.
ORDER (1) DENYING RELATOR'S MOTION FOR SUMMARY JUDGMENT, AND (2) GRANTING IN PART AND DENYING IN PART DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT
Presently before the Court are the cross-motions for summary judgment (the "Motions") filed by Plaintiff-Relator MC2 Sabtech Holdings, d/b/a IXI Technology, Inc. ("IXI") ("Rel.’s MSJ," ECF No. 101) and Defendants GET Engineering Corporation ("GET"), Rodney Tuttle, Greg MacNeil, David Grundies, and Leslie Adams ( ECF No. 102). The Motions are fully briefed, (see ECF Nos. 107–111, 113–114), and the Court held a hearing on November 10, 2021. (See ECF No. 112.) Having carefully considered the Parties’ arguments, the record, and the applicable law, the Court DENIES Relator's Motion for Summary Judgment and GRANTS IN PART AND DENIES IN PART Defendants’ Motion for Summary Judgment as follows.
Relator generally alleges that, between August 9, 2009, and December 10, 2015 (the "relevant time period"), Defendants falsely represented that GET was a Women-Owned Small Business ("WOSB") to obtain contracts with the federal government and prime contractors to which it was not entitled. (See generally ECF No. 1 ("Compl.").) Although not provided by the Parties, an overview of the statutory and regulatory framework incentivizing procurement contracts with WOSBs is critical to understanding Relator's claims and the Parties’ arguments.
Congress enacted the Small Business Act of 1953 with "the declared policy ... that the Government should aid, counsel, assist, and protect, insofar as is possible, the interests of small-business concerns in order to preserve free competitive enterprise ... and to maintain and strengthen the overall economy of the Nation." See PL 83-163 § 202, 67 Stat. 230, 232 (). One of the means identified by Congress was "to insure that a fair proportion of the total purchases and contracts or subcontracts for supplies and services for the Government be placed with small-business enterprises." See id. To carry out its identified policies, Congress created the Small Business Administration ("SBA"). See PL 83-163 § 204(a), 67 Stat. 230, 233 (codified at 15 U.S.C. § 633(a) ).
In 1978, Congress enacted a policy to ensure greater participation of small businesses in federal procurement contracts by establishing annual goals for the percentage of the total value of all prime and subcontract awards. See Act to Amend the Small Business Act and the Small Business Investment Act of 1958, PL 95-507, 92 Stat. 1757 (1978) (codified at 15 U.S.C. § 644(g) ). In 1994, Congress added an annual five-percent goal for small business concerns owned and controlled by women (the "WOSB Goal"). See Federal Acquisition Streamlining Act of 1994 ("FASA"), PL 103-355 § 7106, 108 Stat. 3243, 369 (). For purposes of FASA, Congress defined "a small business concern owned and controlled by women" as requiring "(1) at least 51 percent of [the] small business concern is owned by one or more women or, in the case of any publicly owned business, at least 51 percent of the stock of which is owned by one or more women; and (2) the management and daily business operations of the business are controlled by one or more women." Id. (codified at 15 U.S.C. § 632(n) ).
"The [WOSB G]oal was implemented by procurement regulations effective in fiscal year 1996[,]" see United States General Accounting Office, GAO-01-346, Federal Procurement: Trends and Challenges in Contracting With Women-Owned Small Businesses 8 (2001), https://www.gao.gov/assets/gao-01-346.pdf; see also, e.g. , Federal Acquisition Regulation; Small Business, 60 Fed. Reg. 48258-02, 48261 (Sept. 18, 1995) (), and the legislative history of FASA "indicated that the 5-percent [WOSB G]oal was not intended to create a new set-aside or program of restricted competition for WOSBs." See GAO-01-346 at 8; see also United States Government Accountability Office, GAO-19-168, Women-Owned Small Business Program: Actions Needed to Address Ongoing Oversight Issues 26 (2019), https://www.gao.gov/assets/gao-19-168.pdf ("Federal dollars obligated for contracts to all women-owned small businesses ... include contracts for any type of good or service awarded under the WOSB program, under other federal programs, or through full and open competition."). Although the general twenty-three percent procurement goal for all types of small businesses has been met consistently since Fiscal Year 2013, the WOSB Goal has only been achieved twice, in Fiscal Years 2015 and 2019. See Robert Jay Dilger, Cong. Rsch. Serv., R46322, SBA Women-Owned Small Business Federal Contracting Program 8–9 (2021).
Another means Congress has used to help small businesses receive a fair proportion of federal contracts and subcontracts are various contracting preferences, such as "restricted competitions (set-asides), sole source awards, and price evaluation adjustment/preference in unrestricted competitions[.]" See id. at 1; see also id. at 10 & n.30 (). Slow progress in achieving the five-percent WOSB Goal led some to advocate for the creation of a new set-aside program for WOSBs (the "WOSB Program"). See id. at 10. Accordingly, the WOSB Program was authorized by the Equity in Contracting for Women Act of 2000, H.R. 4897, 106th Cong. (2000), which was incorporated into the Small Business Reauthorization Act of 2000, itself enacted within the Consolidated Appropriations Act, 2001. PL 106-554, 114 Stat. 2763 ().
The WOSB Program "authorizes the contracting officers to restrict competition to eligible ... WOSBs for federal contracts in industries in which the SBA determines that women-owned small businesses are underrepresented or substantially underrepresented in federal procurement." See Anna S. Molina, The Sisyphean Course of Combating Gender Discrimination in the Federal Marketplace for Prime Contracts: Rolling the Boulder of Small Business Size , 22 Cardozo J.L. & Gender 109, 126 (2015) ; see also 48 C.F.R. § 2.101 (eff. Apr. 1, 2011) ("Women–Owned Small Business (WOSB) Program means a program that authorizes contracting officers to limit competition, including award on a sole source basis, to ... WOSB concerns eligible under the WOSB Program for Federal contracts assigned a NAICS code in an industry in which SBA has determined that WOSB concerns are substantially underrepresented in Federal procurement."). For purposes of the WOSB Program, "[t]he term ‘small business concern owned and controlled by women’ has the meaning given such term in section 632(n) of this title, except that ownership shall be determined without regard to any community property law." § 811, 114 Stat. 2763 (codified at 15 U.S.C. § 637(m)(1)(B) ). The statute allowed "a contracting officer [to] restrict competition for any contract for the procurement of goods or services by the Federal Government to small business concerns owned and controlled by women" under certain circumstances, see id. (codified at 15 U.S.C. § 637(m)(2) ), and required the SBA Administrator to "establish procedures" to verify eligibility for the WOSB Program. See id. (codified at 15 U.S.C. § 637(m)(5) ).
"[T]he WOSB [P]rogram's implementation was delayed for over 10 years, primarily due to the SBA's difficulty in identifying an appropriate methodology to determine ‘the industries in which WOSBs are underrepresented (and, by inference, substantially underrepresented) with respect to federal procurement contracting.’ " Dilger, supra , at 14. On October 7, 2010, the SBA finally implemented regulations effectuating the WOSB Program. See Women-Owned Small Business Federal Contract Program, 75 Fed. Reg. 62258-01, 62282–91 (Oct. 7, 2010) (). Among other things, these regulations provided the requirements to qualify as a WOSB for purposes of the WOSB Program, see 13 C.F.R. §§ 127.200 – 127.203, and the requirements for certification of WOSB status for purposes of the WOSB Program. See 13 C.F.R. §§ 127.300 – 127.305.
The Federal Acquisition Regulation ("FAR") amended its definition of WOSB in 2011, distinguishing between those entities eligible for inclusion in the WOSB Goal as opposed to those eligible for the WOSB Program:
To continue reading
Request your trial