News | June 14, 2022

Connecticut Companies Pay $5.2 Million to Resolve Allegations of False Claims Act Violations Concerning Fraudulently Obtained Small Business Contracts

By DCAA Staff Writer

DCAA auditor Igor Yegoroff and supervisory auditor Myron Antoniw assisted in an investigation into Numet Machining Techniques, LLC (Numet), Numet Industries, Inc., KCO Numet, Inc., and Kidd & Company, LLC (collectively the Numet Entities). The investigation resulted in the parties entering into a civil settlement agreement with the United States and paying $5.2 million to resolve allegations that they violated the False Claims Act when Numet improperly obtained set-aside contracts reserved for small businesses that it was ineligible to receive.

Numet manufactures and provides aerospace engine machined components for commercial and U.S. military purchases.  On August 30, 2011, Numet was acquired by Numet Industries, Inc., which was owned by KCO Numet, Inc., which was ultimately owned by individuals associated with Kidd & Company, LLC, a family office investment company located in Greenwich, Connecticut.

The government contends that, after Numet’s acquisition in August 2011, it ceased to qualify as a “small business concern” within the meaning of the Small Business Administration (SBA) regulations relating to government contracts due to Numet’s affiliation through stock ownership with other  businesses.  Nevertheless, between August 2011 and February 2016, Numet falsely certified that it was a “small business concern” and, as a result, it was awarded 22 small business set-aside contracts that it was ineligible to receive.  In addition, between September 2013 and February 2016, Numet falsely certified that it was a “women-owned small business concern.”

Government contractors are required to timely disclose to the government, in writing, whenever they have credible evidence that they have committed a violation of the False Claims Act.  On November 4, 2019, in connection with due diligence performed relating to Numet’s sale to another entity, Numet voluntarily disclosed to the government facts concerning its potential affiliation with other businesses that the government contends made it ineligible to be awarded contracts set aside for small businesses. The Numet Entities received credit in the settlement for Numet’s voluntary disclosure and cooperation with the government during its investigation.

This investigation was conducted by the Defense Criminal Investigative Service, the Air Force Office of Special Investigations, the Defense Contract Audit Agency Operations Investigative Support Division, and the SBA Office of General Counsel. The DCAA auditors assisted in the investigation by participating in meetings and discussions, searching DCAA archives for relevant audit history, conducting data analysis and assisting with the calculation of the damages and interest. 

Read the Department of Justice press release.