Federal Procurement Fraud

Federal Procurement Fraud: Government Contracting Fraud

Government contractors face unique fraud risks. Procurement fraud-bid rigging, false claims, cost mischarging, product substitution-is aggressively prosecuted by DOJ and agency Inspectors General. Penalties include criminal sentences up to 20 years, treble damages under the False Claims Act, and debarment from all government contracting.

Types of Procurement Fraud

Bid rigging - Collusion with competitors to fix contract awards
False claims - Billing for work not performed or costs not incurred
Product substitution - Delivering inferior products for premium prices
Cost mischarging - Allocating costs to wrong contracts
Kickbacks - Payments for subcontract awards
Small business fraud - Misrepresenting business status for set-aside contracts
Bribery - Paying government officials for contract awards

Federal Charges

Bid rigging (Sherman Act) - Up to 10 years
False Claims Act - Treble damages, $27,894 per claim
Anti-Kickback Act (41 USC 8702) - Up to 10 years
Wire/mail fraud - Up to 20 years
Bribery (18 USC 201) - Up to 15 years

Debarment

Beyond criminal penalties, procurement fraud results in debarment-exclusion from all government contracting. For companies dependent on government contracts, debarment is a death sentence.

Defense Strategies

Contract Interpretation

Many procurement "fraud" allegations involve contract interpretation disputes. What prosecutors call fraud may be legitimate disagreement about contract terms.

Cost Accounting Complexity

Cost Accounting Standards are extraordinarily complex. Misallocations often reflect confusion, not fraud.

Voluntary Disclosure

The FAR mandatory disclosure rule requires reporting certain violations. Proper disclosure can prevent or mitigate prosecution.

Act Now

Procurement fraud investigations often start with competitor complaints, whistleblowers, or audit findings. Contact government contracts and criminal defense counsel immediately if your facing investigation.