Procurement Fraud and Investigation

What does procurement fraud entail, and which laws and rules apply?

Procurement fraud refers to deceptive practices that occur during the procurement process. In Florida, procurement fraud can involve bid-rigging, kickbacks, false invoicing, collusion, or other corrupt activities that undermine the integrity of the government procurement and bid protest legal services.

Florida’s procurement laws are within Chapter 287 of the Florida Statutes. The Florida Administrative Code further regulates procurement activities for state agencies, while the Florida Statutes Section 838.22 addresses bid tampering and fraud. Federal procurement laws, such as the False Claims Act, also apply to procurement activities that involve federal funding.

For example, procurement fraud can occur when a contractor intentionally submits false or inflated bids to win a government contract. In that instance, the contractor may face penalties under Florida law and potential litigation under the federal False Claims Act.

Need help regarding government procurement, including bid and contract protests? Schedule your consultation today with a top government procurement attorney.

What issues regarding procurement fraud commonly lead to litigation?

The following issues commonly lead to litigation:

• Bid-rigging: This occurs when competitors conspire to manipulate the bidding process by pre-determining the winning bid or refraining from submitting bids to ensure that a specific company wins the contract.
• Kickbacks: A kickback is an illegal payment or bribe provided to a procurement official in exchange for favorable treatment during the procurement process, such as awarding a contract to a specific bidder.
• False invoicing: Contractors may sometimes submit inflated invoices for undelivered goods or services or charge for more expensive items than those provided, causing the government to overpay for the procurement.
• Collusion: Bidders or procurement officials may engage in secret agreements to influence the outcome of the procurement process, such as sharing sensitive information, manipulating evaluations, or agreeing to divide contracts among participants.
• Conflict of interest: A procurement official may have a financial or personal interest in a bidding company, leading to biased decision-making or the provision of an unfair advantage during the procurement process.
• Misrepresentation: To win a contract, contractors may intentionally provide false or misleading information during the bidding process, such as falsifying qualifications or experience.

When a set of facts is appropriate for litigation, there are many paths a claimant may take. We are value-based attorneys at Jimerson Birr, which means we look at each action with our clients from the point of view of costs and benefits while reducing liability. Then, based on our client’s objectives, we chart a path to seek appropriate remedies.

To determine whether your unique situation may necessitate litigation, please contact our office to set up your initial consultation.

What are effective measures to minimize the litigation risks for procurement fraud?

Consider these measures to reduce the risk of litigation:

• Implement robust internal controls: Organizations should establish strong internal controls, including segregation of duties, to prevent fraudulent activities and mitigate the risk of procurement fraud.
• Regularly review procurement processes: Organizations should periodically evaluate their procurement processes, identify weaknesses, and implement improvements to reduce opportunities for fraud.
• Conduct due diligence on vendors: Before entering into contracts, organizations should thoroughly vet potential vendors, checking for any history of fraud, litigation, or unethical business practices.
• Provide training and education: Employees involved in the procurement process should receive regular training on procurement laws, regulations, and best practices to minimize the likelihood of fraud.
• Establish a whistleblower program: Encourage employees to report suspected fraud by implementing a confidential and anonymous reporting mechanism, such as a hotline or online reporting system.
• Conduct external audits: Regular external audits can help organizations identify potential issues and maintain compliance with procurement laws and regulations.

Please contact our office to set up your initial consultation to see what actions or defenses may be available for your unique situation.

Frequently Asked Questions

1. Can a company be held liable for the fraudulent actions of its employees in the procurement process?

Yes, a company can be liable for the actions of its employees if there is evidence that the company knew or should have known about the fraudulent activities and failed to take appropriate action to prevent or address them.

2. What are the penalties for procurement fraud in Florida?

Penalties for procurement fraud in Florida may include fines, imprisonment, and debarment from participating in future government contracts. In addition, penalties can be imposed under state laws such as the Florida Statutes Section 838.22 or federal laws like the False Claims Act.

3. How can a company detect procurement fraud?

Companies can detect procurement fraud by implementing strong internal controls, regularly reviewing procurement processes, conducting due diligence on vendors, providing employee training, and establishing a whistleblower program. Regular audits can also help identify potential issues and ensure compliance with procurement laws and regulations.

4. What is bid tampering?

Bid tampering is a form of procurement fraud that involves altering, falsifying, or otherwise manipulating bids submitted by other vendors to gain an unfair advantage in the bidding process.

5. Can procurement fraud occur in the private sector as well as the public sector?

Yes, procurement fraud can occur in both the public and private sectors. While the consequences of procurement fraud in the public sector may be more severe due to government regulations and penalties, private sector organizations can also suffer significant financial losses and reputational damage due to procurement fraud.

Have more questions about a government procurement-related situation?

Crucially, this overview of procurement fraud does not begin to cover all the laws implicated by this issue or the factors that may compel the application of such laws. Every case is unique, and the laws can produce different outcomes depending on the individual circumstances.

Jimerson Birr attorneys guide our clients to help make informed decisions while ensuring their rights are respected and protected. Our lawyers are highly trained and experienced in the nuances of the law, so they can accurately interpret statutes and case law and holistically prepare individuals or companies for their legal endeavors. Through this intense personal investment and advocacy, our lawyers will help resolve the issue’s complicated legal problems efficiently and effectively.

Having a Jimerson Birr attorney on your side means securing a team of seasoned, multi-dimensional, cross-functional legal professionals. Whether it is a transaction, an operational issue, a regulatory challenge, or a contested legal predicament that may require court intervention, we remain tireless advocates at every step. Being a value-added law firm means putting the client at the forefront of everything we do. We use our experience to help our clients navigate even the most complex problems and come out the other side triumphant.

If you want to understand your case, the merits of your claim or defense, potential monetary awards, or the amount of exposure you face, you should speak with a qualified Jimerson Birr lawyer. Our experienced team of attorneys is here to help. Call Jimerson Birr at (904) 389-0050 or use the contact form to schedule a consultation.