Virginia Contractor Fined $2.6 Million for Gaming Small Business Contracts

Small business set-aside programs are meant to give the little guys a fighting chance in the competitive world of government contracting. But for one Virginia company, bending the rules to snag those contracts came with a hefty price tag.

R&K Enterprises Inc. (R&K), based in Newport News, has agreed to pay over $2.6 million to settle allegations that it misrepresented itself as a small business to win lucrative federal contracts. According to the U.S. Department of Justice, the company’s scheme involved presenting itself as small-business-compliant when it wasn’t—a move that didn’t sit well with federal watchdogs.

Here’s what went wrong: R&K certified that it met size requirements under the General Services Administration’s (GSA) One Acquisition Solution for Integrated Services Small Business Pool 1 Contract, which calculates eligibility based on a company’s three-year average revenue. However, investigators discovered that R&K transferred a contract to K&P Management Inc. (K&P)—a company owned by the wife of R&K’s owner—to appear compliant.

Despite claiming independence, the two entities were closely intertwined:

• K&P relied entirely on R&K for revenue.
• The companies shared executives.
• R&K retained operational control over K&P.

Federal rules require affiliated companies to pool their revenues when determining small business status. By ignoring this, R&K gained an unfair advantage, effectively blocking legitimate small businesses from opportunities designed to support their growth.

Speaking Out on the Impact

Principal Deputy Assistant Attorney General Brian M. Boynton didn’t mince words, “When ineligible companies fraudulently obtain contracts reserved for small businesses, they prevent the small business community from receiving the contracting opportunities that Congress intended.”

Jessica D. Aber, U.S. Attorney for the Eastern District of Virginia, added, “This settlement exemplifies the importance of partnerships in identifying and eradicating exploitation of programs meant to protect competition.”

It’s a sharp reminder that actions like these aren’t just rule-bending—they’re outright roadblocks for businesses that play by the rules.

Small business set-aside programs are more than just a checkbox; they’re a lifeline for entrepreneurs and small enterprises to grow, compete, and contribute to the economy. When companies like R&K game the system, the ripple effects are real—contracts meant for small businesses end up in the hands of those who don’t need the boost.

The $2.6 million fine isn’t just about punishing R&K. It’s a signal to the contracting world that the federal government is watching—and it’s willing to act. Missteps—or outright misrepresentations—can lead to hefty fines, reputational damage, and the loss of future opportunities. Staying compliant means more than just meeting requirements on paper; it means embracing transparency, maintaining accurate records, and ensuring that every certification reflects the truth.

Government contracting isn’t just a high-stakes game—it’s one with rules that exist for a reason. And as this case shows, trying to cheat the system can cost you more than just a contract.

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