Washington Gas Energy Systems  (WGESystems) entered into a deferred prosecution agreement and will pay more than $2.5 million in fines and monetary penalties for conspiring to commit fraud on the United States by illegally obtaining contracts that were meant for small, disadvantaged businesses.

WGESystems, based in Virginia, is a wholly owned subsidiary of WGL Holdings Inc. (WGL).

The company was represented by Howard Shapiro, Eric Mahr and Danielle Conley of Wilmer Cutler in Washington, D.C.

WGL is the parent company for all of the corporations within the Washington Gas family.  WGESystems plays no direct role in the delivery of natural gas, and it is not a utility.

It is a design-build firm that specializes in providing energy efficiency and sustainability solutions to clients.

A criminal information was filed in the U.S. District Court for the District of Columbia charging WGESystems with one count of knowingly and willfully conspiring to commit major fraud on the United States.

WGESystems waived the requirement of being charged by way of federal indictment, agreed to the filing of the information, and has accepted responsibility for its criminal conduct and that of its employees.

In addition, as part of a deferred prosecution agreement reached with the U.S. Attorney’s Office for the District of Columbia and the Antitrust Division, WGESystems will pay a fine of $1,560,000 and a monetary penalty of $1,027,261 within five days of the approval of the agreement by the court.

Federal officials alleged that WGESystems conspired with a company that was eligible to receive federal government contracts set aside for small, disadvantaged businesses with the understanding that the business would illegally subcontract all of the work on the projects to WGESystems.

In this way, WGESystems was able to capture a total of eight contracts worth $17,711,405 that should have gone to an eligible company.

These contracts, awarded in 2010, were focused on making federal buildings in the Washington, D.C., area more energy efficient.

Under the illegal agreement, the company that was awarded these government contracts was allowed to keep 5.8 percent of the value of the contracts for allowing WGESystems to use the company’s small business status to win these contracts.

“Conspiracies to violate federal procurement laws will not be tolerated,” said Assistant Attorney General Bill Baer for the Antitrust Division.  “Taxpayers deserve to have contracting processes that are fair and competitive, and fully comply with applicable laws and regulations.”