It’s a big week in government contracting, with the announcement by the Department of Defense that it will no longer pursue the $10 billion JEDI contract, but will pursue a multi-vendor cloud solution. In other news, the FBI released a report in May about cracking down on government procurement fraud. It notes up to 20% of the government contract procurement spending could be lost due to schemes like bid rigging – where federal contractors collude to allow one vendor to take the bid by skewing the bid figures and amounts.
The FBI report was covered in more depth by Federal News Radio, who noted the FBI’s new emphasis on ‘contractor to contractor collusion.’
FBI Forms Procurement Collusion Strike Force
The FBI is applying big data analysis to detect crimes involving federal money and government contractors. The effort spans the globe and consists of both domestic and overseas procurement and contracts. The Procurement Collusion Strike Force was formed in 2019 and consists of a number of U.S. Attorneys and law enforcement agencies. The effort has resulted in more than two dozen grand jury investigations in the past year. The FBI says they expect the figures to grow as more people learn about the fraud detection effort and the agency trains more analysts and gathers more intel.
Federal contract fraud and collusion focus on a few areas, including bid rigging or price fixing. When contractors rig bids, they coordinate on who will overbid, and who will present the ‘winning’ bid – typically with a tit-for-tat agreement on who will win the bid on the next round.
The Strike Force is focused on a few areas to continue its crack down on contractor fraud, including educating federal procurement managers on how to identify contract fraud. In addition to prevention, they’re hiring more data analysts to dig into proposals and contracts and identify anomalies or issues.
For federal contractors who get caught, the penalties are severe – including jail time, fines, and most significantly, bans on bidding on government work in the future.