Lying About the Goods or Services Provided

One common way contractors can cheat the government is by lying about the goods or services they are providing. That can take a few different forms. 

First, they may misrepresent the goods or services provided or falsely claim that they meet important contractual or quality assurance and testing requirements. A classic example is selling the government guns that don’t shoot.

Second, they may misrepresent that their goods or services comply with state and federal regulatory regimes including:

• Cybersecurity requirements imposed by state and federal governments;

• The Buy American Act, trade agreements, and other expert control laws;

• The Davis-Bacon Act and other prevailing wage requirements.

Third, they may inflate their payments from the government by lying about the costs necessary to provide the goods or services, such as:

• Artificially inflating costs that are passed through to the government;

• Cross charging or shifting costs between government contracts;

• Misallocating costs from private contracts to government payors.

Fourth, contractors may illegally overstate the prices the government should pay for the goods or services by violating rules that mandate specific discounts for government payors, such as:

• “Most favored customer” or “best pricing” requirements;

• Price reduction clauses;

• Truth in Negotiation Act requirements.

Lying to Get or Keep a Government Contract

The second type of common government contracting fraud involves lying or cheating to get a contract. This type of fraud can include all manner of misrepresentations, but it often falls into one of a few categories, including:

• Misrepresentations about a contractor’s or subcontractor’s ability to perform on a contract;

• Misrepresentations regarding a contractor’s or subcontractor’s disadvantaged business status, such as false claims of being a small business or minority-, woman-, or service-disabled veteran-owned business;

• Bid-rigging or bribery schemes.