As I've covered
extensively on this blog, the U.S. government is conducting a
wide-spread and on-going crackdown on contracting fraud.
Under the Civil False Claims Act alone, the government clawed
back $3.5 billion in 2015. And 2016 is poised
to be another banner year.
Recently in the news is the latest example of
a contractor paying hefty penalties in connection with a small
business contracting scam. This time, the government revealed
that a small business and a large business colluded to obtain over
$70 million in small business set-aside contracts, but (illegally)
have the large business perform all of the work on the
All federal contractors need to be aware of the uptick in fraud
investigations – but they should not be lulled to sleep by
this latest example. This case was an easy one for the
government – what I like to refer to as "old
school fraud." The guilty parties acted
intentionally with the hope of beating the system and making
an easy dollar for as long as possible.
Fortunately (or unfortunately), these kinds of cases are the
exception, not the rule. My experience shows that
most contractors investigated for fraud are far less culpable than
this extreme example. In fact, I've seen plenty
of fraud cases based on a failure to know the rules – which
is particularly troubling given how fast those rules are changing
today's environment. Contractors are also facing fraud
investigations based mistakes made by lower level employees –
not the top brass.
So how do you avoid getting caught up in the IG's net?
There are a few simple steps your business should be following
right now to create
what I call a Culture of Compliance:
Implement a Contractor Code of Business Ethics and
Conduct (even if you are not technically required
to have one under FAR 52.203-13)
Establish a Business Ethics Awareness and Compliance
Program (including regular employee trainings and
Establish an Internal Control System (to
monitor for and catch issues before they arise); and
Inform the IG Office of "Credible Evidence"
of any Violation (and know what "credible
evidence" really means before you do).
By taking these steps, your employees will be much less likely
to commit mistakes rising to the level of fraud – and will be
in a much better position to interface with the government in the
event an investigation takes place.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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The Committee on Foreign Investment in the United States (CFIUS, commonly pronounced "syphius") reviews M&A transactions that may pose a risk to national security through foreign control of a US business.
On February 24, 2017, US President Donald Trump issued an executive order on regulatory reform, directing federal agencies to take steps to strengthen their implementation of various executive orders...
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