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Defense Contractor

Defense Contractor Procurement Fraud

If you are facing charges of defense contractor procurement fraud, you will need a lawyer with experience in this area of the law. David M. Dudley is a state and federal criminal defense attorney with nearly 30 years of experience in the profession. He has earned a nationwide reputation for helping clients across the country defend themselves against defense contractor procurement fraud. To find out how Mr. Dudley can help you, contact our law office today.

Procurement Fraud

“Procurement fraud includes, but is not limited to, cost/labor mischarging, defective pricing, defective parts, price-fixing and bid-rigging, and product substitution,” according to the Naval Inspector General discussing Procurement and Fraud remedies.

A general definition of defense contractor procurement fraud is the procurement of defense materials for our armed forces by fraudulent means. More specifically, procurement fraud can be:

  • Inflating the cost of equipment or labor.
  • Spare parts overpricing.
  • Defective pricing, when a contractor does not disclose to the government accurate, complete or current information on costs before a pricing agreement is reached.
  • Selling defective parts that have defects in the design, specification, material, manufacturing or workmanship of products sold to the government that could cause death, injury, or “severe occupational illness;” would cause the government buyer to lose major or minor capabilities; or would result in stopping the production line.
  • Market division, in which competitive bidders divide markets among themselves. The markets, for example, may get defined geographically or according to certain types of customers.
  • Product substitution, which occurs when a counterfeit product or one made from poor materials is sold to the government. This is an area that is receiving increased attention and being more closely investigated, especially when it comes to military readiness.
  • Price fixing and bid rigging, any attempt to suppress and eliminate competition on contracts that are funded by the U.S. that reasonably restrict trade and business violating Section 1 of the Sherman Act, 15 U.S.C. §1. As the Naval Inspector General maintains, bidding works only when competitors charge honest prices and do so independent of each other. If competitors collude in fixing prices, the prices rise and the customer is swindled. It is the public that winds up paying for the increased costs.

Price fixing and bid-rigging usually can be defined as one of the following — bid suppression, complementary bidding (or cover bidding), bid rotation, or subcontracting meaning collusion among competitors either not to bid or to submit a losing bid. In doing this, the competing contractors receive subcontracts from the low bidder who successfully won the job.

What Defines Procurement Fraud?

Additional rules, regulations, and activities that may fall within the realm of procurement fraud include:

Contact a Defense Attorney with Experience

Mr. Dudley has helped clients charged with all types of defense contract procurement fraud and other white-collar crimes listed above. If you are facing these kinds of charges, you should schedule an evaluation of your case. Mr. Dudley will fight to get your charges reduced if not dropped completely. For more than 25 years, Mr. Dudley’s law practice has taken him across the country, representing individuals facing major criminal allegations in 36 different states. He’s admitted to the United States Supreme Court and seven federal circuit courts of appeal.

Defense Contract Procurement Fraud: Selected Case Results

  • U.S. v. D.M.: Accused of federal defense contract procurement fraud, the defendant was convicted at trial of all counts. Retained for the purpose of sentencing and appeal, Attorney Dudley argued that the loss figures reached by the government and the PSR were speculative. The district court disagreed and sentenced the defendant to over five years in prison. The court of appeals accepted the defense argument and REVERSED the trial court’s sentencing decision. As a result of that reversal, the government and the defense reached an agreement that reduced the defendant’s sentence by almost two years.