Ontario, California-based GS Foods Group Inc. (GS Foods) has agreed to pay $949,696.90 to settle allegations that it improperly bid on federal contracts reserved for small businesses, despite not qualifying as one. The contracts in question involved supplying food to facilities operated by the Federal Bureau of Prisons and U.S. Immigration and Customs Enforcement (ICE).
The settlement resolves claims that GS Foods subsidiaries, GoodSource Solutions Inc. and Dori Foods Inc., bid on and secured contracts specifically set aside for small businesses between October 1, 2018, and March 8, 2024. During this period, GS Foods was allegedly ineligible for these contracts due to its affiliation with other companies, which disqualified it from small business status.
Cooperation and Remedial Measures
In a statement, the U.S. Department of Justice acknowledged that GS Foods took significant steps to cooperate with the investigation, which contributed to the resolution. The company self-reported the misconduct to the Department of Justice Office of the Inspector General (DOJ-OIG) and provided key documents, identified witnesses, and made employees available for interviews. Additionally, GS Foods implemented several remedial measures, including:
- Updating its code of conduct
- Establishing an Ethics and Compliance Management Committee
- Creating the position of Chief Compliance Officer
- Developing and implementing enhanced employee training programs
“Businesses that participate in federal small business contracting programs must ensure that they comply with applicable rules and regulations relating to eligibility,” said Acting Assistant Attorney General Brett A. Shumate of the Justice Department’s Civil Division. “When businesses run afoul of small business contracting requirements, they can mitigate the consequences by making timely self-disclosures, cooperating with investigations, and taking appropriate remedial measures.”
“It is a disservice to small businesses when contracts that were expressly set aside to create opportunities for small businesses are awarded to ineligible organizations,” said Special Agent in Charge Andrew Hartwell of DOJ-OIG’s Fraud Detection Office.
The Justice Department emphasized its commitment to ensuring that small business contracts are awarded fairly and in accordance with federal regulations. The resolution was the result of a coordinated effort between the Justice Department’s Civil Division, Commercial Litigation Branch, Fraud Section, and DOJ-OIG.
As the Justice Department continues to crack down on fraud and misconduct in federal programs, businesses are urged to self-report violations and take proactive steps to ensure compliance. For small businesses, the case reaffirms the government’s commitment to protecting their opportunities in the competitive federal marketplace.
