university of pittsburgh procurement fraud brief
TRANSCRIPT
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
Brian Grant
Special Agent
Philadelphia Fraud Resident Agency
(610) 891-3985
UNCLASSIFIED