Government Procurement Fraud

ONE OF THE MOST IMPORTANT elements in the relationship between public officials and those whom they serve is trust. Private citizens must have[Page 370] sufficient confidence in government employees to allow them to allocate resources on their behalf. Perhaps the most substantial form of trust bestowed upon civic representatives is the expenditure of public funds. Tax dollars generated from levies on income, real estate transactions, or sales of various goods and services allow our government to obligate these fiscal resources in areas that serve the common good (for example, national defense, public health, education, police and fire protection).

In order to ensure that the supplies and services obtained by the government are obtained at fair market value, and that there is fair competition among interested vendors, there is a stringent legal process, known as acquisition that must be adhered to by public agencies.

Acquisition is defined as “ordering from established sources of supply and services, using small purchase procedures, and contracting” by Management Concepts Incorporated (MCI). The public official responsible for awarding a contract to the vendor who had submitted the most appropriate project bid is referred to as a procurement officer or purchasing agent. Procurement officers and purchasing agents normally work under the direction of a contracting officer. Contracting officers are agency officials “who have been delegated specific authority to enter into and administer contracts on behalf of the government and make related determinations and findings,” according to MCI.

Contracting and procurement officers, purchasing agents, and other acquisition officials hold important positions of public trust in selecting vendors for government projects and ordering agency supplies. Unfortunately, some employees engage in illegal practices for personal gain. For example, in one such case, a regional motor vehicle fleet administrator for the General Services Administration with procurement authority “worked with an automotive repair inspector in a scheme: The vendor, a car-repair company, submitted inflated claims to the GSA officer who approved them, then took cash for the difference between the inflated claim and true cost … [and they both] took cash sporadically along with free service for their own cars,” explains author Martin L. Gross.

Purchasing agents, contracting officers, and procurement officers are not the only government employees who participate in illegal acquisitions. Senior agency officials may attempt to bypass contracting regulations altogether in exchange for lavish gifts, luxury travel, or high-paying employment for friends or relatives.