While government procurement fraud can take many different forms, certain forms are more common than others. These forms of fraud within the procurement process cost taxpayers hundreds of billions of dollars per year, and they impact agencies across the federal government. 

Although federal agencies have the authority to audit their contractors, and while the U.S. Department of Justice (DOJ) and Offices of Inspectors General (OIGs) specifically target procurement fraud, the federal government still relies heavily on whistleblowers to report fraud, waste, and abuse. This makes it critical for whistleblowers to come forward when they have information that could help uncover procurement fraud cases—and the False Claim Act’s whistleblower reward provisions provide a direct financial incentive to do so. 

“Whistleblowers play a critical role in the federal government’s ongoing fight against government procurement fraud. From bid rigging and collusion to violations of the Buy American Act (BAA), whistleblowers can receive financial rewards for reporting all types of procurement fraud to the appropriate federal authorities.” – Dr. Nick Oberheiden, Founding Attorney of Oberheiden P.C.

With all of this in mind, when can (and should) employees, former employees, and others consider serving as a federal whistleblower? Here is an in-depth look at three of the most common types of government procurement fraud: 

3 Common Types of Government Procurement Fraud

1. Bid Rigging and Collusion 

The U.S. General Services Administration’s Office of Inspector General (GSAIG) identifies bid rigging and collusion as being among the most common types of government procurement fraud. It specifically identifies five forms of bid rigging and collusion that are particularly common within the federal contracting sector: 

Even when competitive bids are submitted, the integrity of the bid evaluation process can be compromised through coordinated efforts to mislead contracting officials. As a result, recognizing unusual patterns in the bids governments receive can be a key first step toward identifying collusion or fraud in the procurement process. 

If left undiscovered and unreported, all forms of bid rigging and collusion can lead to federal agencies paying more than necessary for essential products and services. In many cases, contractors will engage in multiple forms of bid rigging, price fixing, and collusion in an effort to create the appearance of legitimate competition. Contractors’ current and former employees will often have access to information that federal agencies have no practical way of discerning on their own—and this is one of several reasons why whistleblowers play such an important role in the federal government’s fight against procurement fraud. 

According to the GSAIG, the following are common indicators (among others) of potential bid rigging and collusion: 

2. Defective Pricing and Other Pricing Violations 

Defective pricing and other pricing-related violations are also extremely common forms of procurement fraud. Here too, federal agencies often rely heavily on whistleblowers to inform them of suspect pricing practices, as they otherwise have limited options for uncovering pricing violations without initiating a costly and time-consuming audit or investigation. While conducting an audit or investigation can be well worth it when there is something to find, auditing all federal contractors to search for evidence of a potential pricing violation or another fraudulent scheme simply is not feasible. 

Some common examples of pricing-related violations in the federal procurement sector include: 

Similar to bid rigging and collusion, pricing-related violations can result in substantial overpayments and allow unqualified contractors to acquire contracts they wouldn’t win with accurate pricing disclosures. Whether intentional or inadvertent, these violations warrant correction to help preserve taxpayer funds and maintain the integrity of the federal procurement system. When committed intentionally, defective pricing and other pricing-related violations may warrant criminal enforcement action as well. 

According to the GSAIG, the following are common indicators (among others) of potential pricing-related violations under federal contracts: 

3. Charging Violations 

Charging violations also involve improperly billing the government under procurement contracts, but they relate more to the products and services provided (or lack thereof) than the pricing offered. For example, as identified by GSAIG, some of the most common forms of government procurement fraud that involve charging violations are: 

Violations of the Buy American Act (BAA) and Trade Agreements Act (TAA) fall into this category as well. The BAA requires the federal government to buy “articles, materials, and supplies” from domestic producers unless an exemption applies, while the TAA restricts the sources of end products delivered to federal agencies. Noncompliance with these statutes and falsely certifying compliance with these statutes are both common forms of federal procurement fraud. 

According to the GSAIG, the following are common indicators (among others) of potential charging violations: 

Again, these are just three of the most common types of government procurement fraud. From manipulating the bidding process to paying kickbacks and falsely claiming small business or veteran-owned status, procurement fraud can take many other forms as well. If you believe that you may have information about any form of procurement fraud and are thinking about serving as a federal whistleblower, you should consult with an experienced attorney promptly. 

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