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Federal Procurement Fraud


While procurement fraud is a non-violent offense, the federal government still enforces strict penalties upon individuals found guilty of this crime. 

Who Can Commit Contract Fraud?

Government contract fraud cases brought against contractors, subcontractors, and more recently, PPP loan recipients, are frequently referred to as “procurement fraud.” 

What is Government Contract Fraud?

Government contract fraud is any deceitful scheme employed by a company or individual who knowingly attempts to persuade the government to pay money that it should not have within the scope of an agreed-upon contract. You may be charged with this crime for distributing low-quality goods, failing to meet contract criteria, or lying to obtain a government contract in the first place. 

Federal and state governments purchase goods and services under a variety of procurement and government contracting rules and systems. They may invest in anything from IT consulting and office supplies to weapons systems and uniforms. Companies guilty of procurement fraud generally sell goods or provide services to the U.S. government using different schemes and structures. 

Government Contract Fraud Attorney

Procurement fraud is one of the oldest forms of fraud, initially rearing its ugly head during the Civil War. More than 150 years later and it’s still a major issue that the government must contend against, and wrongfully accused defendants must defend themselves against. 

1863 False Claims Act

The original False Claims Act, including a writ of qui tam, was passed in 1863 to combat duplicity in the Civil War by Union Army war suppliers. 

Today, defense contractors and other government suppliers continue to commit federal contract fraud, and it has become a key area of qui tam whistleblower litigation.

Who Can Be Held Liable for Committing Government Contract Fraud?

Contract fraud may be perpetrated by individuals in a variety of settings and industries, including, but not limited to:

  • Defense contractors
  • Infrastructure and public transportation
  • Ongoing general services contracting arrangements
  • Consulting 
  • Information technology companies
  • Hardware manufacturers
  • Software developers
  • Database companies
  • Correctional and detention facilities
  • Subcontractors

Violations of Contract Specifications

Government contractors commit procurement fraud when they knowingly violate government contract specifications without disclosing modifications to the government. Contractors generally do this when they’re unable to fulfill the contractual conditions. However, they may also use “non-conforming materials” to pad their profits. 

Types of Government Contract Fraud

Individuals, companies, and contractors can commit government contract fraud in numerous ways. 

Improper Allocation of Costs AKA Cross-Charging

“Cross-charging” happens when a contractor tells their workers to misrecord which project they worked on if they’ve exceeded their budget. 

This generally occurs when contractors have a “fixed price” contract and a “fee-for-service” or hourly contract. By altering documentation, they are able to get more money than they’re owed on the fixed price contract. 

Improper allocation of costs can also occur when a contractor uses funds for one project on an unapproved project to fraudulently extract money from the government. 

Violations of the Truth in Negotiations Act (TINA)

The Truth in Negotiations Act is a federal law that applies to select military contracts. Some contractors are required under TINA to supply the government with a current, good faith estimate of the cost of providing services or supplying goods. After that, the estimates are used to determine contract rates. Contractors commit fraud when they inflate their final estimates to collect more money from the government.


Bid-rigging (also known as “antitrust” violations) occurs when contractors agree on how much each of them will bid on a project, effectively “rigging” the highest and lowest bids without the government’s knowledge.

Kickbacks and Bribery

Vendors may also give kickbacks to contractors as an incentive to purchase a particular product or service for a government contract, as opposed to the contractor making a merit-based judgment. 

For example, a general contractor might offer to pay a subcontractor a more favorable rate on a government-funded project in exchange for the subcontractor agreeing to work on a private contract at a reduced price.

Falsifying Progress Reports

Falsifying progress reports happen when contractors manipulate statements so it appears as though they’ve made more progress on a project. This way, the contractors can get progress-based disbursements more quickly than the contract allows.

Violations of Wage Discrimination Laws

Government contracts must comply with anti-wage discrimination statutes. This means contractors must pay their employees no less than a minimum wage (called the “prevailing wage”) which is set by the Department of Labor.

Improper Disposal of Hazardous Materials

Contractors must adhere to regulations for the disposal of hazardous materials and contaminants. If a contractor falsely declares that it followed these regulations when it didn’t, it might be held liable under the False Claims Act.

Dallas Federal Contract Fraud Defense Attorney

Contact the law office of John R. Teakell if you’ve been wrongfully accused of contract fraud. With several years of experience successfully defending hundreds of individuals charged with Texas felonies and Federal felonies– John is uniquely equipped to advocate for you in the courtroom.