The government relies on private companies to provide goods and services in every sector of the economy and every part of the country. Although nearly every part of the government engages in contracting with private companies, many of the largest government contracts involve the Department of Defense (“DOD”), Department of Energy (“DOE”), General Services Administration (“GSA”), Department of Veterans Affairs (“VA”), Department of Health & Human Services (“HHS”), Department of Homeland Security (“DHS”), and National Aeronautics & Space Administration (“NASA”).
Types of Government Contracting Fraud
U.S. Supreme Court Justice Oliver Wendell Holmes put it best when he wrote: “Men must turn square corners when they deal with the Government.” The government expects its contractors to provide accurate pricing data, to furnish goods and services that meet required specifications, and to comply with any restrictions on the use of government funds. Contractors who fail to abide by the strict requirements imposed by government contracts are potentially subject to liability under the False Claims Act.
Although government contracting fraud comes in many forms, common schemes include:
- Bid rigging and price fixing, in which a group of contractors collude to raise prices, eliminate discounts, or set a minimum price they will not sell below.
- Providing defective or substandard products.
- Misappropriating funds, such as Paycheck Protection Program (“PPP”) grants and loans, that are intended to be used only for certain purposes.
- Retaining overpayments to which the contractor is not entitled.
- Misrepresenting eligibility for Small Business Administration (“SBA”) contracting programs, including the HUBZone program, the 8(a) program, and programs for women-owned small businesses (“WOSBs”) and service-disabled veteran owned small businesses (“SDVOSBs”).
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Customs Fraud
To support domestic manufacturers, the government imposes import duties and tariffs on foreign-made goods. However, the government does not have enough resources to properly examine the millions of containers that enter the country every day. Unscrupulous businesses take advantage of the lack of oversight to avoid paying their fair share—and ultimately depriving taxpayers of the money to which they are entitled.
Customs fraud most commonly falls into three categories:
- Misclassification of imported goods, in which a company claims it is importing one type of goods when it is really importing another.
- Misrepresenting country of origin, in which a company lies about where it is importing goods from.
- Trans-shipping and re-labeling, in which a company ships goods to the United States via other countries to conceal their true country of origin.
Detecting Government Contracting & Customs Fraud
Whistleblowers are essential in identifying, reporting, and stopping fraud involving government contracts and customs. When contractors engage in bid rigging or price fixing, misappropriate funds, or retain overpayments, whistleblowers can identify fraudulent behavior that may seem innocent to an outside observer. Whistleblowers can also identify defects in products that may go unnoticed to the untrained eye. When it comes to customs fraud, whistleblowers can help unravel the often complex schemes that companies use to disguise the nature of their goods or their country of origin. While many whistleblowers are employees (or former employees) of government contractors or importers, with inside information about fraud being committed, even non-employee “outsiders” often are able to use their specialized knowledge to identify and report fraud.
A whistleblower who files a successful complaint under the False Claims Act is entitled to between 15% and 30% of the amount the government recovers.
Our Team
With more than 50 years of experience, the attorneys on Baron & Budd’s whistleblower representation team have represented dozens of clients in government fraud cases returning over $6 billion to federal and state agencies, with whistleblower recovery shares as high as 50%. They are ready to help if you have evidence of fraud involving government contracts or customs.
Please call (866) 845-2164 or complete our contact form if you would like more information. For more information, see What You Need to Know About Becoming a Whistleblower. Please understand that contacting us does not mean that you have established an attorney-client relationship with Baron & Budd, P.C.
