Procurement Fraud

The Department of Defense (“DOD”) is responsible for almost half of the federal government’s discretionary spending and spends more on contracting than all other federal agencies combined, obligating about $445 billion in fiscal year 2024. Given the renewed focus on fraud detection and prevention across the U.S. government – as highlighted both by the efforts of the Department of Government Efficiency (“DOGE”) and by recent congressional committee hearings focused on reducing waste, fraud, and abuse – the issue of fraud in DOD has become increasingly relevant.

On June 4, 2025, the House Committee on Oversight and Government Reform’s Subcommittee on Government Operations held a hearing titled “Safeguarding Procurement: Examining Fraud Risk Management in the Department of Defense,” during which congressional members examined strategies to combat fraud in DOD – including procurement fraud – and the steps the department is taking to address the problem.Continue Reading Fraud Prevention in Focus: Examining DOD’s Risk Management Strategies

The Coalition for Government Procurement and the National Defense Industrial Association filed an amicus brief in the consolidated Supreme Court cases United States ex rel. Schutte v. SuperValu, Inc. and United States ex rel. Proctor v. Safeway, Inc. The brief urges the Court to hold, consistent with the decisions of multiple federal courts of appeals, that a defendant cannot be liable under the False Claims Act (“FCA”) for “knowingly” submitting a “false” claim if (1) it acted in accordance with an objectively reasonable reading of an ambiguous statute, regulation, or contract provision and (2) there was no authoritative guidance warning it away from that interpretation.  The Amici are represented by Covington & Burling LLP. 

In SuperValu and Safeway, the Court is asked to resolve questions over the role that subjective intent plays in evaluating whether a defendant satisfies the FCA’s “knowledge” requirement.  Petitioners argue that a contractor can be liable under the FCA for submitting a claim that is premised on an objectively reasonable interpretation of an ambiguous legal provision if the contractor recognized that the provision could be interpreted a different way.  However, as the amicus brief explains, such a claim cannot be false for alleged noncompliance with the ambiguous legal provision that has not otherwise been clarified by authoritative guidance.  Nor can such a contractor knowingly submit a false claim just because it was aware that the legal obligation may be interpreted differently.Continue Reading Amici Curiae Submit Brief Urging Supreme Court to Adopt “Objectively Reasonable” FCA Knowledge Standard

On February 1, 2022, the Department of Justice (“DOJ”) released its annual report summarizing False Claims Act (“FCA”) enforcement activity in FY 2021.  The report confirmed what many practitioners already suspected: FY 2021 was another banner year in FCA enforcement.  DOJ’s annual judgments and settlements exceeded $5.6 billion, making FY 2021 the second largest annual recovery ever (and the largest since 2014).  But beyond this top line number, a closer analysis of the figures in DOJ’s report offers additional insight on strategies for preventing and mitigating costly FCA exposure.
Continue Reading DOJ Records Historic False Claims Act Recoveries in FY 2021

On January 25, 2022, the Fourth Circuit joined the growing number of circuits to hold that under the False Claims Act, “a defendant cannot act ‘knowingly’ if it bases its actions on an objectively reasonable interpretation of the relevant statute when it has not be warned away from the interpretation by authoritative guidance” and that “this objective standard precludes inquiry into a defendant’s subjective intent.”  United States ex rel. Sheldon v. Allergan, No. 20-2330, (4th Cir. Jan. 25, 2022) (“Opinion”) at 12.
Continue Reading Fourth Circuit Sheldon Decision Confirms Objective Standard For Scienter Under FCA

On February 18, 2020, Washington Metropolitan Area Transit Authority (“WMATA”) Inspector General Geoffrey Cherrington announced that special agents from WMATA would be partnering with the Department of Justice’s Procurement Collusion Strike Force (“PCSF”) to prevent and detect fraud affecting WMATA.  The announcement portends a growing partnership amongst federal, state, and local entities in the procurement fraud space that could reverberate well beyond the Washington metro area.
Continue Reading A Coalition Grows: What WMATA’s Partnership with the Procurement Collusion Strike Force Means for Government Contractors

The Department of Defense Office of Inspector General (“DoD IG”) appears poised to place new emphasis on the pursuit of fraud cases in certain key enforcement areas, at least according to updated agency guidance recently published online. Earlier this month, the DoD IG quietly revised its “Auditor Fraud Resources” page, intended to serve as guidance for DCAA auditors, by adding new materials addressing fraud scenarios in the context of defective pricing and forward pricing proposal audits. Although the appearance of this new guidance was the cause of little fanfare, the prospect of increased enforcement activity in these areas could significantly impact the defense contracting community.
Continue Reading Updated DoD IG Guidance Signals New Enforcement Emphasis for DCAA Auditors