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Dirty contracts

Detecting contract and procurement fraud schemes



Contract and procurement fraud, collusion and corruption can rob profits from victims. Bid riggers conspire to eliminate fair and open competition and allow some to monopolize industries. Here’s some help in detecting common contract and procurement fraud schemes, and improving the integrity of the contract-award process.

I once reviewed a U.S. federal contract file that showed the Department of Defense (DoD) had awarded a contract to a small business that I’ll call Company A. This was the first federal contract that Company A had ever received. In fact, the file included printed emails that indicated the government contracting officer had helped the company owner become a federal contractor and taught him how to submit its bid proposal.

But other witnesses told me that after the contract was awarded, Company A didn’t actually perform any of the work on the contract. Instead, the company subcontracted out 100 percent of the job to another company that wasn’t an approved government contractor.

While reviewing the file, I learned that prior to the contract’s award, the contracting officer’s supervisor requested that the Small Business Administration (SBA) issue a required Certificate of Competency (CoC) on Company A so that the DoD contracting office could justify awarding the contract to this new “small business.” The DoD subsequently awarded the contract to Company A; however, the contract file didn’t contain a copy of the CoC. I also noticed that the contract didn’t include the required limitations on the subcontracting clause. (See U.S. Code of Federal Regulations FAR 52.219-14.)

So, I visited the local SBA office and asked if it had issued a CoC on Company A for that contract. The SBA said they did issue the CoC, but the date of the CoC approval was  several months after the DoD had awarded the contract. The DoD hadn’t told the SBA it had already awarded the contract before issuing the CoC.

Armed with this information, I went back to the DoD contracting office to interview the contracting officer’s supervisor: 


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By Mandy Moody
Great piece!