Criminal Investigations of Government Contractors
Government contractors are businesses in the private sector who offer their services to select departments, often at a federal level. Receiving a government contract can be a serious boon for a company’s prospects, but they need to make sure to follow the laws regarding contracts. These are some of the things to look out for if you’re undergoing investigation as a government contractor.
What Warrants an Investigation?
The history of corruption with government contractors means that law enforcement officers need to keep tabs on those working with the government. Just having a contract isn’t grounds for investigation, but suspicious activity can be sussed out with minimal difficulty by experienced law enforcement officials. A government contract contains information that all parties need to recognize as true in order for it to be valid. If there’s information that you present as truthful when it’s fraudulent, such as forged licensure, you could be facing charges of fraud.
Common Reasons for Government Contractor Investigations
| Type of Violation | Examples | Potential Charges |
|---|---|---|
| Fraudulent Information | Forged licensure, false credentials, misleading claims | Fraud charges |
| Bribery | Bribing government officials to secure contracts | Federal bribery and corruption charges |
| Sanctions Violations | Working with restricted nations, violating U.S. sanctions | Federal sanctions violations |
| False Documents | Presenting forged or altered documents to government | Document fraud, federal fraud charges |
| Misleading Claims | Misrepresenting capabilities, experience, or qualifications | Contract fraud |
How Do Government Contractors Find Themselves Under Investigation?
Government contractors often find themselves under investigation not for what they do while under contract but what they do to gain the contracts. Because of the ruthless competition to gain government contracts, businesses may try shady tactics to weed out their competition or to curry favor with the government officials awarding the contracts. In addition to presenting false documents and making misleading claims, a potential government contractor might try to bribe a government figure to secure a contract. Acceptance of the bribe could result in prosecution for the government figure as well.
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(212) 300-5196Tactics That Trigger Investigations
- Presenting false documents to government agencies
- Making misleading claims about qualifications or capabilities
- Bribing government officials to secure contracts
- Using shady tactics to eliminate competition
- Misrepresenting business credentials or licensure
Working with Restricted Nations
Being a government contractor means being entrusted with certain privileges. You may consider providing your services to other nations, but you need to ensure that you’re not working with any nation that is explicitly restricted from doing business with the United States. This can include nations that are undergoing sanctions from the United States. If you’re unsure about whether it’s legal to do business with a country, consult with any trustworthy government officials.
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Featured on Netflix's "Inventing Anna," Todd Spodek brings decades of high-stakes criminal defense experience. His aggressive approach has secured dismissals and acquittals in cases others deemed unwinnable.
Your defense contracting company just received a federal subpoena requesting five years of billing records, and two of your project managers were contacted by investigators from the DOD Office of Inspector General asking about time and materials charges on a recent contract. You suspect the investigation stems from a disgruntled former employee's complaint about how overhead costs were allocated across multiple government projects.
What should we do immediately to protect the company and our employees from criminal liability during this investigation?
You need to retain experienced federal defense counsel before anyone in your organization speaks further with investigators, as statements made during these early contacts can become the basis for false statement charges under 18 U.S.C. § 1001 even if the underlying billing practices turn out to be lawful. Government contractor fraud investigations typically focus on violations of the False Claims Act (31 U.S.C. § 3729) and wire fraud statutes, and prosecutors will scrutinize every document and communication for evidence of intent to overbill or misrepresent costs. Issue an immediate litigation hold to preserve all relevant documents, emails, and billing records, because any destruction at this stage could lead to obstruction of justice charges that often carry harsher penalties than the original allegations. We can also evaluate whether voluntary disclosure to the contracting agency or cooperation under the DOJ's Voluntary Self-Disclosure Policy might significantly reduce your company's exposure to debarment and criminal penalties.
This is general information only. Contact us for advice specific to your situation.
Understanding Sanctions Violations
| What You Need to Know | Why It Matters |
|---|---|
| Restricted Nations | Cannot do business with nations explicitly restricted by U.S. |
| Sanctions Programs | Some nations are under U.S. sanctions – working with them is illegal |
| Verify Before Acting | Check with OFAC or government officials before doing international business |
| Severe Consequences | Violations can lead to contract suspension and criminal prosecution |
Consequences for Violating a Government Contract
Being found in violation of federal, state or local laws as a government contractor could lead to the indefinite suspension of your business with the government. This could mean a loss of work for those who were hired as part of the project who had no part in the corruption, such as construction workers. You can also face prosecution for misleading the government or any other illegal acts.
