Insight Settles Small-Biz Misrepresentation Claim For $1M

Insight Public Sector has agreed to pay $1 million to settle allegations that the company misrepresented itself as a small business, according a statement released by the Small Business Administration (SBA) this week. The settlement could open the floodgates, as other companies claiming small-business status under false pretenses find themselves in the spotlight.

According to the SBA, the settlement came as a result of a complaint that stated Comark Government and Education Services (CGES), now Insight Public Sector, certified itself as a small business on its application for inclusion on the GSA Schedule, and subsequently received preference on an award as a result. A two-year investigation ensued, which discovered CGES had misrepresented its size in 1996, and was acquired by its parent company, Tempe, Ariz.-based Insight Enterprises, in 2002. The company withdrew the small-business certification in 2005 -- too late to wash it clean of penalty for set-aside contracts already received as a certified small business.

"Basically, this is another example of a large company using a subsidiary to masquerade as a small business," says Lloyd Chapman, president of the American Small Business League, and allegedly the individual who initially filed the complaint to the Office of the Inspector General (OIG). "I wouldn't be surprised if this leads to a domino effect. I've already turned in two other companies for the same claims," though neither could be named for legal reasons.

No admission of liability was made by Insight Public Sector or the federal watchdogs, though acting inspector general Peter McClintock referred to the settlement as a "strong message to the contracting community about the need for accuracy in making small business certifications."