CON 216- Fraud

Question 1

What does fraud mean?

Answer 1

Fraud can constitute any intentional
deception designed to deprive the United States unlawfully of something of value or secure from the United States for an individual benefit, privilege, allowance, or consideration to which he or she is not entitled.

Question 2

Can you accidentally commit fraud?

Answer 2

• Fraud must be “knowingly” submitted!
• Must have actual knowledge that the claim is false!
• Must act in deliberate ignorance of whether it is true or false!
• Must act in reckless disregard of the truth or falsity!

Question 3

When can a “fraudulent” act occur?

Answer 3

Fraud can occur in, but is not limited to:
the offer;
payment or acceptance of bribes or gratuities;
making false statements;
bid rigging;
submission of false claims;
using false tests, weights and measures;
evading or corrupting inspectors or other officials;
deceit either by suppressing truth or misrepresenting it;
substituting defective materials;
falsifying records or books;
arranging secret profits, kickbacks, conspiracy, etc.

Question 4

Identify the process for investigating suspected fraud:

Answer 4

DOJ policy requires the coordination of parallel criminal, civil, and administrative proceedings so as to maximize the Government’s ability to obtain favorable results in cases involving procurement fraud.

DOD policy requires the coordinated use of criminal, civil, administrative, and contractual remedies in suspected cases involving procurement fraud.

Each DoD department must establish a centralized organization to monitor all significant fraud value and corruption cases.

The contracting officer and procurement fraud attorney (PFA) have the responsibility to initiate appropriate investigative action and to report potential fraud to higher authorities.

If a Government agency suspects that a contractor may be defrauding the Government, then one of the four DoD investigative services must be notified:

1. Army Criminal Investigation Command (CID).
2. Defense Criminal Investigative Service (DCIS).
3. Air Force Office of Special Investigations (OSI).
4. Naval Investigative Services (NIS).

Question 5

Identify common fraudulent practices that may occur during the procurement process

Answer 5

Defective Product/Product Substitution: Contractors deliver to the Government goods which do not conform to contract requirements knowingly without notifying the Government.

Defective Testing: Failure of a Contractor to perform testing as required in the contract by misrepresenting the test or test results.

Bid-Rigging: The absence of competition by the intentional actions of the bidding parties.

Bribery and Public Corruption: The breach of an employee’s duty of loyalty by a Contractor’s payment for a favorable decision or action.

Defective Pricing: Violation of TINA where the Contractor knowingly provided fraudulent cost and pricing data to secure a Government contract award.

False Invoices: Knowingly submitting a false invoice to the Government for payment.

Question 6

Identify administrative remedies for fraudulent conduct

Answer 6

• Suspensions.
• Debarments.
• Denial of claims.
• Termination for Default based on fraud.
• Voiding contracts.
• Suspending payments upon a finding of fraud.

Question 7

Identify criminal and civil statutes that prohibit fraudulent conduct

Answer 7

-Criminal False Claims Act – Criminal:
This can come from ANY request for payment from the Government that is based on a lie.

-Civil False Claims Act – Civil:
Civil counterpart to the Criminal False Claims Act.

-Contract Disputes Act – Civil:
Contractor claim for payment attributable to MISREPRESENTATION of facts or FRAUD.

-Major Fraud Act of 1988 – Criminal:
Applies to BIG contracts >$1M US. Applicable to Prime and Subcontractors within the US. Penalties include jail up to 10 years and/or $1M fine.

-Forfeiture of Claims Act – Civil:
Once fraud under a Government contract has been committed and proven, then ALL claims under the contract are forfeited, even the ones that are NOT related to the fraud.

-Fraud and False Statements Act – Criminal:
Applies to contractor representations applied and/or required by the FAR or DFAR. This includes reps and certs.

-Bribery of Public Officials – Criminal:
Anyone corruptly OFFERING or GIVING something of value to a public official, defined a any federal employee, to influence an official act or influence that official to commit fraud on the United States or refrain from performing a legal duty engages in bribery.

-Conspiracy to Commit an Offense or to Defraud the United States – Criminal:
If two or more persons conspire either to commit any offense against the United States or to defraud the United States, or any agency thereof, in any manner or for any purpose, and one or more of such persons do any act to effect the object of the conspiracy, each shall be fined not more than $10,000 or imprisoned not more than five years, or both.

-Anti-Kickback Act of 1986 – Civil & Criminal:
Act prohibits either offering or soliciting kickbacks on any type of Government contract or subcontract.

• Collusive Bids – Sherman Antitrust Act – Criminal:
  Any agreement or conspiracy in restraint of trade is illegal.

Question 8

What does the Sherman Anti-trust Act refer to?

Answer 8

Any agreement or conspiracy in restraint
of trade is illegal.

Any express or implied agreement between two
or more competitors for a Government contract
restricting full and open competition,
violates this Act.