National Procurement Fraud Task Force

Back in 2006, the Department of Justice established the National Procurement Fraud Task Force for the sole purpose of detecting and prosecuting fraud in government contracting. Its members include representatives of both the Criminal and Civil Divisions of the Department of Justice as well as the U.S. Attorney's Office and twenty-some agencies including the FBI, the CIA, Homeland Security, Inspector General's, GSA, SBA, and every defense-related investigative command (e.g. AFOSI, NSI, and Army CID).

Initially, the task force focused on the following areas of procurement fraud:

• Defective pricing
• Product substitution
• Misuse of classified and procurement sensitive information
• False claims
• Grant funds
• Labor mischarging
• Accounting fraud
• Fraud involving foreign military sales
• Ethics and conflict of interest violations, and
• Public corruption associated with procurement fraud.

Lately, it seems the Task Force has been working a lot of cases involving contractors misrepresenting their socio-economic status. One such case, announced yesterday, involved an individual who fraudulently obtained $2.8 million in Government contracts by representing to the U.S. Government that his business was veteran owned, a small disadvantaged business, a Hispanic-American owned business, a minority-owned business, and a service-disabled veteran owned business. In fact, the individual was not a member of any racial or ethnic minority, was not a disabled veteran and was not a member of a socially disadvantaged group. This fellow has been sentenced to 42 months in prison and must forfeit $700 thousand.

We don't have the statistics but it does seem to us, based on the number of Justice Department press releases we read, that the Government has been cracking down on abuses in its socio-economic programs - especially by contractors who misrepresent their status. Of course, it doesn't seem to be a particularly difficult crime to uncover and prosecute, especially with lots of competitors looking for ways to appeal awards they were unsuccessful in, disgruntled insiders, and whistle-blowers hoping to make a buck by filing Qui Tam actions.