Contract fraud is a big problem for the federal government and quite possibly for the U.S. Postal Service, which currently manages over 20,000 contracts worth $29 billion. Conservative business estimates project up to 5 percent of contracted dollars are lost to fraud, meaning $1.45 billion of Postal Service funds are potentially at risk.
Detecting, stopping, and preventing fraud is a core mission of the Office of Inspector General (OIG) and we need your help. We’ll be using this blog to introduce some common fraud schemes and their warning signs. You don’t need special skills or a badge to fight contract fraud — just know the warning signs and alert the OIG when you see them.
Scheme of the Week: False Claims or False Statements
With false claims or false statements, a contractor knowingly submits a fraudulent invoice for payment or approval. This includes over-billing, certifying that a product or service meets specifications when it does not, and providing fraudulent documentation, as well as situations where a Postal Service employee knows a claim is false but processes or authorizes it anyway.
In one case, an OIG investigation uncovered a phantom cleaning business used in a scheme to fraudulently bill the Postal Service for cleaning services never rendered. In another, a Highway Contract Route contractor submitted more than 337 false or fraudulent fuel use certifications, trying to get paid for unused fuel. The Postal Service recovered $970,000 through a settlement with the contractor and refused to pay an additional $284,000 in improper claims.
What to watch for:
Documents supporting supplier invoices are inadequate or obviously altered
Invoiced quantities and prices differ from contract terms
Delivered goods and services do not match invoices
Quality of goods or services is poor
Test or inspection documentation isn’t provided or is determined not to exist when requested
Discrepancies exist between test results and inspection results
Supplier repeatedly acknowledges errors when questioned about discrepancies in contract documentation
Supplier provides a product or service that doesn’t conform to contract specifications with no variance or requested/approved change
When to contact the OIG
While the warning signs above don’t necessarily mean fraud is occurring, they do warrant further investigation. If you notice these signs, please contact the OIG Hotline, which accepts confidential and anonymous complaints.
Do you have any thoughts on preventing and identifying contract fraud, or getting our message out? Let us know in the comment section below!
This is the beginning of a series of contract fraud topics hosted by the OIG’s Major Fraud Investigations Division.