Free Consultation (800) 424-6690 Free Consultation (800) 424-6690 | [email protected]
October 9, 2015 Contractor Fraud

Fraud Under a Government Contract: 4 Red Flags

Government contracts are frequent fodder for fraud, and defendants tend to employ the same tactics when committing unlawful acts with government funds.
Image source: Wikimedia Commons

Government contract work can be lucrative, long-term, and plentiful – particularly in industries like defense and scientific research. With hundreds of billions of dollars in contracts awarded annually, there stands a heightened risk for fraud and misuse of funds awarded under these agreements. If you work in a government-funded private sector job and are curious about possible misuse of funds or improper billing on the part of your employer, consider these top four areas in which companies tend to cheat the government out of its financial resources:

#4: Unlawful Procurement – Under most contracts with the federal government, contractors are required to obtain raw materials from certain localities – namely, the United States. If materials must be obtained from overseas, only certain nations may provide goods to be used for government contract work. In some scenarios, a company will attempt to circumvent this requirement by misrepresenting the origin of parts from permissible nations when, in fact, the parts and products derived from a prohibited nation of origin.

#3: Unmet Labor Standards – In many government contracts, particularly those involving sensitive or highly-technical information, the contractor must agree to employ only qualified, highly-trained workers to complete the job. Naturally, this job pool will demand higher pay than less-qualified individuals, which means the company will be required to spend more on payroll. Some companies illegally avoid this burden by hiring workers that do not meet the requisite training, education, and/or experience standards in the agreement, which will quickly trigger liability under the False Claims Act.

#2: Overbilling or Double-billing – An issue that is increasingly common in defense contracts, overbilling or double-billing for services or products has proven to be a pervasive phenomenon in the contract fraud context. Contractors often believe they can get away with padding invoices due to the expansive, voluminous nature of the contract work. In one defense contract case, for instance, a False Claims Act defendant ultimately settled a case involving double-billing for water bottles provided to soldiers overseas. Presumably, the contractor figured the government wouldn’t notice – at least, until a whistleblower stepped in.

#1: Price Gouging – In any government contract, a contractor is required to offer the government the lowest possible price on goods or services, including any discounts or incentives offered to private sector customers. Sometimes contractors will bill the government at a rate exceeding that of other clients, or may offer clients discounts that are not also offered to the government. When this happens, a contractor may be held liable under the False Claims Act for not only the difference in what it should have charged the government, but also for statutory fines of up to $11,000 per violation.

Contact a whistleblower attorney at Berger Montague today

If you are considering a whistleblower action and would like to speak to a reputable whistleblower lawyer about your information, please do not hesitate to contact Berger Montague today.