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What is Government Contract Fraud?

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  • Government contract fraud occurs when there is a misrepresentation or concealment of a material fact made to the government or an omission of a material fact regarding the contracting and procurement process.
  • There are many types of government contract fraud, including compliance fraud, cross-charging and mischarging, violations of the Truth in Negotiations Act, and procurement fraud.
  • In addition to federal legislation—such as the False Claims Act—that regulates the government contracting process and combats fraud in the process, it is also possible for whistleblowers to come forward to the government and disclose instances of government contract fraud.
  • Consider hiring an experienced and well-qualified team of defense attorneys to combat charges of government contract fraud.

Experienced Defense Team

If you need advice regarding government contract fraud, do not hesitate to contact one of our defense attorneys.

A charge of government contract fraud or other fraudulent behavior pertaining to contracting could result in substantial fines, jail time, debarment, reputational damage, and loss of customer base and business partnerships—including business with the government.

It is critical that you as a potential client take action as soon as possible in your defense. Despite the severity of the charges against you, remember that you are entitled to due process and have rights. Let us make sure you are afforded those rights.

At Oberheiden, P.C., our attorneys regularly provide legal representation to individuals and companies who have been charged with government contract fraud, including procurement fraud and compliance fraud.

Do not wait to get in touch with a qualified defense attorney today. Put Oberheiden, P.C. on your side to advise you on these charges and develop a personalized defense strategy to fight for your reputation, liberty, and future.

Definition

Government contract fraud refers to a knowing misrepresentation or concealment of a material fact made to the government or causing such knowing misrepresentation or concealment of a material fact to occur. This is done to induce another to act to their detriment.

Government contract fraud can include not only misrepresentations and concealments but also material omissions. Making an omission in a document that another uses and relies upon to make a decision is also considered fraud.

For example, making an illegal kickback or bribing a government official to secure and maintain a government contract is a typical example of a government contracting fraud offense.

Types of Government Contract Fraud

Below we offer some examples of government contract fraud and related fraudulent behavior:

  • Compliance fraud: Government contracting has a complex set of compliance requirements. If a company falsely certifies that it is in compliance with those requirements, it has engaged in compliance fraud. To prevent this, there are numerous reporting, auditing, monitoring, and reporting requirements imposed on companies. These companies must also maintain fraud-prevention and monitoring plans.
  • Cross-charging and mischarging: When a company with more than one contract engages in conduct to shift costs from one contract to another in order to increase its profits, it has committed cross-charging or mischarging. Specifically, cross-charging occurs when a company performs work on one contract and charges the costs of this work to another contract. Mischarging occurs when a company inflates its costs charged to the government usually by including labor, material, or other costs that are greater than the costs that the company actually incurred. Both cross-charging and mischarging are done to gain a financial advantage to the benefit of the company engaging in such offenses.
  • Truth in Negotiations Act Violations: The Truth in Negotiations Act (10 U.S.C. § 2306a) requires contractors to submit cost information or pricing data—or modifications thereof—for negotiated contracts beyond a certain amount. Violating these provisions, or making defective pricing, could result in substantial consequences.
  • Procurement fraud: When a company engages in certain fraudulent conduct such as delivering inferior goods, misrepresenting their qualifications, making false statements, overbilling, bribing public officials, or other acts of deceit regarding the bidding or contracting process, it has committed procurement fraud. Broadly put, procurement fraud refers to making false statements or making omissions of material facts regarding the process of awarding government contracts. This typically occurs in the bidding stage when the government is soliciting bids for an upcoming project. Any individual or entity connected to the bidding process and the related fraud could be charged with procurement fraud.

Statutes and Related Provisions Combating False Statements to the Government

There is a host of statutes, regulations, and other related provisions that are designed to combat false statements made to the government. Federal authorities rely on these provisions to charge companies with conduct involving government contract fraud.

We provide some brief examples below:

  • The False Claims Act: The False Claims Act prohibits knowingly presenting false claims to the government for payment or causing such claims to be presented and knowingly making false records or material false statements in connection with fraudulent claims. Anyone who is accused of engaging in fraudulent behavior can face both civil and criminal liability under the False Claims Act. The Act provides for treble damages, or three times the amount of damages that the government sustains.
  • Provisions for Whistleblowers under the False Claims Act: Under the False Claims Act, a private individual—known here as a whistleblower—can bring a Qui Tam lawsuit on behalf of the federal government. This special type of lawsuit entitles them to sue the company defrauding the U.S. government. The whistleblower can recover damages from the violating parties if any of the funds are recovered by the government. Therefore, this provision is a very powerful tool that incentivizes both private individuals to report instances of government contract fraud and, at the same time, incentivize companies to comply with federal laws regulating the contracting process.
  • U.S. Code Section 1001:This Section punishes making false statements to the government and could lead to fines and imprisonment. Specifically, Section 1001 prohibits (1) falsifying, concealing, or covering up by trick, scheme, or device a material fact; (2) making any materially false, fictitious, or fraudulent statement; or (3) making or using any false writing or document knowing that it contains any materially false, fictitious, or fraudulent statement. Other federal charges that could be brought in conjunction with charged under this section include mail and wire fraud charges.

The above list is representative of the statutes and provisions regarding government contract fraud. Both civil and criminal penalties are possible under federal laws and regulations.

However, civil penalties may pose a greater challenge to companies because there is a much lower burden of proof that is required before the company can be held civilly liable. In criminal cases, on the other hand, the government must prove the contract fraud beyond a reasonable doubt.

Either way, the consequences of government contract fraud can be severe and demands the assistance of an experienced, dedicated defense attorney. Contact our office today to further discuss these issues.

Need Advice Regarding Government Contract Fraud?

Government contracting is a complicated process that is filled with a mound of legal regulations and laws. It has the potential for civil and criminal penalties that can substantially and permanently damage your business.

If you need advice on how to proceed in response to an allegation or investigation for government contract fraud, you need the advice of a qualified and experienced team of defense attorneys.

The attorneys at Oberheiden, P.C. have the experience and knowledge needed to advise you on changes to regulations, compliance standards, the bidding and procurement process, and all charges relating to government contract fraud.

We can help you decide how to best minimize your liability, eliminate unwarranted allegations, and fight for your freedom at every stage of the litigation or investigation process.

Call us today or contact our office for a free consultation to help resolve these legal issues and fight for your reputation, business, and future.

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