When people think about government contractor fraud, they often think about defense contractors.
While fraud on the Department of Defense (DOD) often involves sophisticated multi-billion dollar weapons systems and enormous Fortune 500 companies like General Electric and Lockheed, many frauds involve smaller companies and contracts for such ordinary items as computers, uniforms, vehicle parts, and office equipment. Even small janitorial companies that perform services for the military can engage in conduct that cheats the government and implicates liability under the Federal False Claims Act.
The Federal False Claims Act is broadly written to bring large prime contractors and their subcontractors within the orbit of the law. Even a tiny subcontractor violates the False Claims Act when it cheats a prime contractor performing services or producing a product under a DOD contract.
The following conduct may raise red flags:
- Over-billing the government in any number of ways including: a) billing for services or products that were not provided, b) shifting the costs of a fixed price contract to the costs of a cost-plus contract that the contractor may also maintain with the DOD or a DOD prime contractor, or c) in any other way inflating — absent justification — the costs of cost-plus contracts.
- Providing defective parts or parts not manufactured in accordance with specification.
- Failing to disclose product defects.
- Providing services or products that were not provided or manufactured in accordance with procurement regulations including those governing: a) environmental compliance, b) labor standards, c) Buy American Act requirements, d) worker health and safety protections, and e) bidding.
- Failing to engage in the proper inspection required by contract where a product is being provided.