Some companies have multi-billion dollar annual contracts with the US government. The discretionary budget for defense was nearly 700 billion dollars as of 2019, which means that the majority of these projects are going to military and engineering firms. Because of how much the government spends on their military and construction projects, they also have extremely strict oversight.
If federal authorities believe that fraud has been committed, they may use a Civil Investigative Demand to receive information. This subpoena lets federal agents gather all the information they need to audit a project and build a case alleging fraud. They don’t actually need to go through a court to do it. But contractors who don’t comply may still be held in contempt of court.
Government Contract Fraud Defense Attorneys
If you or your company is the target of a federal fraud investigation, you need a lawyer as soon as possible. It’s important to go with a law firm that staffs lawyers who are experienced with fraud investigations, federal legislation, and dealing with federal law enforcement.
The right law office can assist you in speaking with the Department of Defense, Department of Justice, Department of Homeland Security, and other important federal agencies.
Common Allegations Regarding Government Contract Fraud
If a Civil Investigative Demand is issued to a military or construction company regarding their federal project, the investigation usually centers on the False Claims Act. The False Claims Act is a body of legislation that allows for both criminal and civil proceedings if contractors commit fraud toward any government agency.
Fraud may include giving false information about the price of materials or time needed to complete a project. Similarly, if a company conspires with its competitors to rig the bidding system, all involved parties may be subject to fraud proceedings. If you are prosecuted for violating the FCA, it’s common for the federal government to bring other specific charges against you at the same time. Some of these charges might include money laundering, mail fraud, and stealing government property.
Some of the contract fraud allegations that the federal government might investigate include:
- Bid rigging and fraud
- Substitution of cheaper materials and products
- Inflation of material and labor costs
- Delivery of substandard services
- Cross-charging between contracts
- Improperly allocating costs to contracts
- Fraudulent quality control testing results
- Unlawful kickbacks and bribery
- Violations of the Truth-In-Negotiations Act
Federal prosecutors will often target one contractor or a group of key contractors with multiple allegations. A successful defense hinges on your ability to assess the government’s case. A good defense lawyer can help you determine which of the allegations is most important to address, while also protecting information that might cause the investigation to drag on further.
If You Receive a CID
The CID is often the first sign that you have that your company is involved in a federal investigation. It tends to be issued before an investigation has even been brought before the court in an official capacity.
First, be aware that there are many reasons you might receive a CID. Your company might not be the target of the investigation. The government may be looking for information relevant to another company.
Second, be aware that you may still be subject to criminal prosecution even if you receive a CID. CIDs are only issued in civil proceedings, but what the government finds during those proceedings can lead to criminal investigations.
Third, be aware that CIDs can be used to demand massive amounts of information. You may need to give the government several hundred thousand documents related to your contract work.