In a settlement with the federal government, Forrester Construction Co., Rockville, Md., has agreed to pay $2.15 million to resolve a criminal probe into alleged fraud concerning the firm’s use of small disadvantaged businesses on more than $145 million in contracts with the District of Columbia.

Under a non-prosecution agreement, which federal officials announced on Dec. 15, Forrester admitted that it failed to abide by D.C.’s regulations concerning Certified Business Enterprises or CBEs.

The government said the agreement ends a two-year probe of Forrester and CBEs with which it worked on the projects.

Attorneys for Forrester did not respond immediately to ENR's requests for comment on Dec. 16.

Forrester ranked No. 319 on ENR's latest Top 400 Contractors list, down from No. 173 on last year's list.

The federal officials said that along with its payment, Forrester also agreed to take steps to ensure it complies with D.C. and federal requirements for small disadvantaged firms.

According to federal officials, in a statement of facts to which Forrester agreed, the firm and EEC of D.C. Inc., a local CBE, had formed joint ventures on several projects.
According to the government, the contracting team said in its filings with the D.C. government that EEC was the majority partner of the joint venture, with a 51% interest, and thus would be eligible for 51% of the profits on the jobs.

The EEC-Forrester teams won three D.C. contracts: a $64-million headquarters for the D.C. Dept. of Employment Services; a $5.4-million senior wellness center; and a $56-million Anacostia High School renovation and modernization.

According to the government's press release, the joint venture “received the maximum amount of contracting preferences for which the CBE partner was eligible,” which gave the team “a competitive advantage” in bidding.

But after the D.C. government certified the joint venture, Forrester and EEC signed “Action of Management” memoranda or a letter agreement that “effectively increased” Forrester’s control over project operations and cut EEC’s share of the profits.

The federal officials said Forrester and EEC did not disclose the memos or letter agreement to D.C. government officials during the contract procurements.

U.S. Attorney for D.C. Ronald C. Machen Jr. said in a statement, “Forrester entered secret side deals that wrested control of those contracts away from their historically under-represented partners and undermined the purpose of the CBE program.”

In 2013, Forrester reached an agreement with the D.C government to accept $1 million less than it had requested on the Anacostia High School project because the D.C. officials said the firm had misrepresented its work with EEC on that job and two others.

Forrester told ENR in a statement last year, “The theories and allegations raised were decidedly without merit.”