Contractors Must Disclose 'Credible Evidence' Of Fraud, Abuse

Dear contractors, please accept this item as a helpful reminder.

Starting today, all federal contractors on deals lasting four months or more and worth $5 million or more (including those outside the U.S. and those providing commercial items) must blow the whistle on criminal violations or overcharging.

Such contractors also will have to "establish and maintain specific internal controls to detect and prevent improper conduct," according to the rules spelled out in the Federal Register.

The possible consequences of not blowing the whistle? Debarment and suspensions.

Yes, it's quite a change. Even the government acknowledges it represents a a "major depature" from the past. Naturally, Government Inc., in contemplating the importance of getting the most out of taxpayer money, applauds tight oversight and clean contracting.

The contracting abuses in recent years are well documented. No one knows the true extent of fraud and abuse in the $450 billion procurement universe these days. Consider some of the Justice Department's recent False Claims cases. This rule could give prosecutors another sharp edge to apply to their cases.


It's important to examine the impact here. Will the government be able to enforce this sweeping new mandate in a fair and equitable way? Does it have the resources? Good policy can't just be a paper thing, as you all well know.

Fred Levy and Michael Scheininger, procurement and white collar fraud specialists at the McKenna, Long & Aldridge law firm, reached out with a few thoughts that Government Inc. found interesting. The bottom line: Contractors are worried.

"Contractors are concerned about the difficulty and expense that will be entailed in determining whether events are reportable as fraud--particularly civil fraud--which as a legal matter is an elastic concept, and the consequences of the latter being second guessed," they said in a email note. "Contractors also worry that reported events will introduce prolonged uncertainty about liability as IGs and DoJ take months and years to resolve matters that are reported."

On the other, the government defends its new push vigorously, saying contractors have done a dismal job of self-regulation. From the Federal Register:

"There is no doubt that mandatory disclosure is a ''sea change'' and ''major departure'' from voluntary disclosure, but DoJ and the OIGs point out that the policy of voluntary disclosure has been largely ignored by contractors for the past 10 years."

And you?

By Robert O'Harrow |  December 12, 2008; 10:05 AM ET Procurement Debate
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Bank of America and Mr. Higgins missing $millions, It can happen to you, my fellow Americans

More info:

Posted by: srmaxhiggins | December 13, 2008 3:32 PM

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Posted by: LindaJoyAdams | December 15, 2008 12:07 PM

Clean Them Out! Thatas Why We Are Suffering. I Cant Believe That These People Can Even Be In The Positions They Are.Theres Alot Of Good People That Are Honast And Would Work For A Whole Lot Less, Thats For Sure!. Take All These Criminals, And Put Them In Jail. Why Do We Have To Suffer For The Things They Did. We Went To Jail. We Go To Jail. This Kind Of Crime. Id Like To See These Spoiled Selfish Brats Go Through What We Have And Still Do. Even Worse. They Are Criminals. Period. They Have To Make Prisons Bigger. TOUGH! I See Criminals Telling They Stold Money From A System,(I Know), And Replaced It, And When They Stold It, They Were Helping The Police Throw People Into Prisons and Jail, And At That Time, They Committed Crimes. They Need To Be Convicted, As We Would Have Been. Nothing Makes that Right. Embezzlement And Majo Fraud Is A Serious Crime, And They Dont Deserve To Walk Either. We Want Justice!!! Brenda Dickey UCC1-207.9 (Without Predjudice) 1-951-224-2788.MERRY CHRISTMAS TO EVERYONE!

Posted by: sbrendasara48 | December 18, 2008 10:02 PM

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