What Counts as Procurement Fraud?

• Overbilling and double billing: charging for labor hours not worked, billing the same cost to two contracts, and billing commercial work to a government contract.
• Cost mischarging: shifting costs from a fixed-price contract to a cost-plus contract, charging unallowable costs, and inflating indirect rates.
• Defective pricing: failing to disclose accurate cost or pricing data when negotiating a contract.
• Product substitution: delivering parts that do not meet specifications, using non-conforming or counterfeit components, or skipping required testing and certifying that it was done.
• Cybersecurity compliance fraud: certifying compliance with NIST SP 800-171 or other contract cybersecurity requirements, or submitting a false score to the Supplier Performance Risk System, when the contractor does not meet them. The Department of Justice has pursued these cases since 2021 under its Civil Cyber-Fraud Initiative.
• Small business and set-aside fraud: a large company using a small, veteran-owned, woman-owned or disadvantaged business as a front to win contracts reserved for those businesses.
• Buy American and Trade Agreements Act fraud: certifying that products were made in the United States or a designated country when they were not.
• Grant fraud: misusing federal research or program grant funds and falsifying progress reports.
• Bid rigging and bribery in the award of government contracts.

How a False Claims Act Case Works

The False Claims Act lets a private person, called a relator, file a lawsuit in the government’s name against anyone who knowingly submits a false claim for federal money or knowingly avoids an obligation to pay the government. The complaint is filed under seal in federal court and served on the Department of Justice, not on the defendant. The government investigates while the seal is in place, which usually takes a year or more, and then decides whether to take over the case. If the government joins, the relator generally receives 15 to 25 percent of what is recovered. If the government declines and the relator goes forward alone, the share is 25 to 30 percent. A defendant that loses pays three times the government’s damages plus a civil penalty for each false claim, which the government adjusts for inflation each year and which now runs from more than $14,000 to more than $28,000 per claim. The person who files first with the information controls the case; a later relator with the same facts is barred.

Who Brings These Cases?

Contract administrators, program and project managers, engineers and quality inspectors, cost accountants and pricing analysts, IT and information security staff, subcontractor employees, and former executives. Competitors who lost a bid to a fraudulent small-business front have also brought successful cases.

What Our Firm Does

• Review the contract, the certifications and what you saw, and decide whether the conduct made claims false.
• Prepare the complaint and the disclosure to the Department of Justice and the agency’s inspector general.
• File under seal and work with the government through its investigation.
• Litigate if the government declines.
• Protect you from retaliation and pursue your relator’s share.

Before You Report

• Do not confront the people involved or announce what you intend to do.
• Do not use a work computer, work phone or work email to contact a lawyer.
• Do not take documents you do not already have a right to see. Ask us first what you may keep.
• Write down what you know: who, what, when and how you know it.
• Do not wait. The first person to report is in the strongest position, and a later report with the same information may receive nothing.

Frequently Asked Questions

The government inspected and accepted the product. Is there still a case?

Often, yes. Acceptance based on a false certification or concealed test results does not cure the fraud. What the government knew and when is a question we work through with you.

I work for a subcontractor. Does the False Claims Act reach my employer?

Yes. A subcontractor that causes the prime contractor to submit a false claim is liable, and so is a prime that passes along a subcontractor’s false certification without checking it.

Is a cybersecurity shortfall really fraud?

It is when the contractor certified compliance it did not have, or reported a self-assessment score it knew was wrong, to win or keep a contract. The Department of Justice has settled these cases for millions of dollars.

How long do I have?

Six years from the violation, or three years from when the government knew or should have known, but no more than ten years. The first to file controls the case.

What does it cost?

The first conversation is free and confidential. If we take your matter, the fee terms are put in writing before any work begins.

Talk to Us Before You Report

Email msiddons@siddonslaw.com from a personal account with a general description of what you know. Do not send documents. We will reply and tell you what to do next. Attorney Michael A. Siddons represents whistleblowers in Pennsylvania, New Jersey, New York, Maryland and Washington, D.C.