university of pittsburgh procurement fraud brief

University of Pittsburgh

Procurement Fraud Brief

Resident Agent in Charge Mick Hipsher

Special Agent Brian Grant

U.S. Army CID

Major Procurement Fraud Unit

2For Official Use Only / Law Enforcement Sensitive

MPFU Mission

Conduct global investigations into fraud and

corruption impacting Major Army Acquisition

Programs, Major Construction Projects, Contingency

Contracting, Grants and Cooperative Agreements, to

preserve Combat Readiness and Soldier Safety as well

as to protect the integrity of the Army procurement

process.

MPFU recoveries normally exceed the USACIDC yearly budget

Fraud Field OfficesMPFU Deployed Elements

Kuwait, Afghanistan

Pacific FFOLaguna Niguel FRA

Sacramento FRA

Northwest FRA

Korea FRA

Southwestern FFODallas FRA

Colorado Springs FRA

San Antonio FRA

Phoenix FRA

El Paso FBO

Southeastern FFOHuntsville FRA

Atlanta FRA

Florida FRA

Vicksburg FRA

North Carolina FRA

Mid Atlantic FFOWashington Metro FRA

Philadelphia FRA

Boston FRA

Hartford FRA

Fort Drum FBO

Maryland FRA

North Central FFODetroit FRA

Indianapolis FRA

Columbus FRA

Rock Island FRA

St. Louis FRA

Expeditionary FFOExpeditionary FRA

European FRA

For Official Use Only / Law Enforcement Sensitive

What is Fraud?

•Fraud is a material representation of fact that

is false.

•Procurement Fraud is the intentional

wrongful or criminal deception within the

process of government contracting resulting in

financial or personal gain.

• Fraud is not clearly evident such as a

“general” crime

• Non-compliance doesn’t mean a crime has

occurred – difficulty is proving intent

• Demonstrating damage may be difficult

• Sophisticated / corporate subject(s)

• Often involves unfamiliar processes

Challenges with Fraud

• Identify

• Detection

• Report

• Investigate

• Prevention

Fraud Process

Detect: What are the Indicators of Fraud

• What should I be looking for?

• Indicators that would compel further inquiry

• Mistakes – Criminal Activity

• Poor Management - Negligence

• Red Flags

• General

• Process

• Funding Violations

• Collusion

• Signature Discrepancies

• Possible bid rigging by acceptance of Late RFQ/RFP

• Award to Other Than Low Offeror

• Inferior Product/Services Received

• Poor Contract File Documentation

• Acceptance of Questionable Product

• Officials Approving Beyond Their Authority

• False Statements

• False claims

• Undocumented Payment

• Abuse of Procurement Contracting Official Warrant Authority

• Product substitution

Indicators “Red Flags” Observed

Who commits Procurement Fraud?

UNCLASSIFIED

•Contractors

•Contracting Officers

•Contracting Officer Technical Reps

•Procurement staff

•Source selection committee members

•Others…

10 For Official Use Only / Law Enforcement Sensitive

Sources of Investigations

• Audits/Reviews

• Contracting Officers

• Procurement Fraud Advisors

• DoDIG Hotline Complaints

• Qui Tams

• Referrals from other CID offices

• Referrals from other DCIOs

• Proactive

Sources of Allegations/Complaints

UNCLASSIFIED

INTERNAL (DOD)

DoD Hotline Office

Civilian and Military Personnel

Military Criminal Investigative Organizations

Audit Agencies (DoD-OIG Audit, AAA, DCAA, DCMA)

Proactive Initiatives

EXTERNAL

Contractors and Subcontractors

Contractor Employees

Ex-Spouses/”Significant Others”

Other Law Enforcement Agencies

12 For Official Use Only / Law Enforcement Sensitive

• Make the Army whole (replace non-conforming products;

gain future concessions; and recover all losses)

• Ensure the remedy is severe enough to serve as a deterrent

• Serve as a force multiplier

• Soldier safety, readiness, weapons systems and equipment

Objective

Operational Approach

• AOR Assessments “Walking and Talking”

• Crime Prevention and Fraud Awareness

• Attack significant cases

• Utilize full range of investigative tools & capabilities

• Case direction toward likely outcome

• Often based on AUSA direction

• TDY a must

Deterrence and prevention through increased CID-MPFU presence

combined with increased oversight by the Army Contracting

Community and strict penalties imposed by the Department of

Justice have contributed to a reduction in corruption involving US

government contracting officials.

Successes:

• Partnership – (Contracting/ Legal/ Audit/ CID)

• Stiff penalties by DOJ

• Increase in Education / Awareness (Tailored Fraud Awareness

Briefings – Red Flags )

• Increase in Professional Training by Army Contracting

Command and the Defense Acquisition University

• Continued CID-MPFU deterrence

Observations

Partner Agencies

US Army Criminal Investigation Command (CID)

Defense Criminal Investigative Service (DCIS)

Federal Bureau of Investigation (FBI)

US Agency for International Development (USAID)

US Air Force Office of Special Investigations (AFOSI)

Department of State, Office of Inspector General (DOS/OIG)

US Navy Criminal Investigative Services (NCIS)

Special Inspector General Afghanistan Reconstruction (SIGAR)

Special Inspector General Iraq Reconstruction (SIGIR)

16

Report: Mechanisms in Place

• Anonymous reporting

• Direct reporting to CID Major Procurement Fraud

Unit

• Inspector General

• Procurement Fraud Advisor (PFA)

• Hotline’s

• Preliminary Inquiry

• Request for Records

• US Attorney’s Office

• Multiple Agencies

• Seizure of Evidence

• Grand Jury/Trial

Investigations: What to Expect?

Fraud Remedies

UNCLASSIFIED

• Felony Indictment &

Conviction

• Imprisonment/Jail

• Criminal Fines

• Civil Fines

• Restitution

• Suspension

• Debarment

• Job Termination

Prevention

• Tone at the Top

• Financial Disclosures; Ethics Opinions

• Crime Prevention Surveys

• Audit, IG (Compliance)

• Fraud “Awareness” Training

• Fraud Agents (Deterrent)

Questions

usarmy.belvoir.usacidc.mbx.philadelphia-fra@mail.mil

Brian Grant

Special Agent

Philadelphia Fraud Resident Agency

brian.c.grant.civ@mail.mil

(610) 891-3985

UNCLASSIFIED