Hard Hat Case Notes

• Pages: 58-62
• Date: 01 January 2025
• Author: Jennifer Lowndes,Daniel Rounds
• Subject Matter: Derecho Civil

Published in The Construction Lawyer Volume 44, Number 1, ©2025 by the American Bar Association. Reproduced with

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Forum on Construction Law The Construction Lawyer Winter 2025

58

HARD HAT CASE NOTES

By Jennifer Lowndes and Daniel Rounds

Jennifer Lowndes is a partner with Holland & Knight LLP. She is part of the firm’s Construction Industry

Practice Group and is based out of its Orlando and Atlanta offices. Daniel D. Rounds is counsel in the

Tysons Corner, Virginia, office of Haynes and Boone, LLP. Ms. Lowndes would like to extend a special

thank you to Curran Butcher, an associate in the Orlando office of Holland & Knight, for his contribution

to this edition of Hard Hat Case Notes.

Contractor Required to Maintain Section 8(a) Disadvantaged Business Eligibility for

Duration of Awarded Projects

Under the federal Minority Small Business and Capital Ownership Development Program—more

commonly known as the 8(a) program—government contracts are set aside and awarded to contractors

that satisfy certain requirements to qualify as a small disadvantaged business (an 8(a) business). One of

those requirements is the obligation to notify the Small Business Administration (SBA) when contractors

no longer satisfy the requisite ownership or control thresholds for inclusion in the program. A recent

decision from the Eleventh Circuit Court of Appeals claries the application of those requirements where

a contractor’s status as an 8(a) business changes while its performance of an awarded set-aside contract is

ongoing.

Gose v. Native American Services Corp. involves allegations raised in a qui tam suit under the False

Claims Act (FCA) filed by the relators against their former surety Great American Insurance Group, Inc.

(GAIC) and former partner Native American Services Corporation (NASCO). The relators had owned

an architectural and construction firm, DWG & Associates, Inc. (DWG). DWG qualified for the 8(a)

program because it was 51 percent owned and controlled by an individual (Mr. Gose) who qualified

as “disadvantaged” under the SBA regulations. DWG won several 8(a) set-aside contracts, including

indefinite-delivery, indefinite-quantity (IDIQ) contracts. DWG initially experienced success, growing

to the point where it “graduated” from the 8(a) program and was no longer eligible for new 8(a) set-

aside contracts. However, as long as Mr. Gose continued to control and had 51 percent unconditional

ownership of DWG, it could continue to bid and perform work under the set-aside IDIQ contracts it had

won prior to graduation.

Unfortunately for DWG, it suffered financial difficulties after graduating from the 8(a) program. As a

result of these financial difficulties, GAIC and NASCO allegedly took control of DWG and continued

to bid and perform new work under the 8(a) set-aside IDIQs despite Mr. Gose no longer having control

or majority ownership of DWG. Moreover, GAIC and NASCO did not notify the SBA of the change in

ownership and control as required by SBA regulations, nor did they seek or receive a waiver from SBA. In

response, the qui tam relators filed suit in the Middle District of Florida alleging false presentment, false

statement, and conspiracy under the FCA arguing that GAIC and NASCO fraudulently induced the award

of set-aside contracts for which DWG was no longer qualified.

The Middle District of Florida dismissed the qui tam action, determining that, among other things, GAIC

and NASCO were not required to seek a waiver because DWG had already graduated from the 8(a)

program at the time they took control of DWG and that fraudulent inducement to enter a contract cannot