Responding to a Procurement Fraud Civil Investigative Demand (CID)
So your probably holding this Civil Investigative Demand about procurement fraud and your entire government contracting business is crumbling before your eyes. Maybe a competitor reported you for bid-rigging. Maybe a whistleblower claimed you submitted false certifications. Or maybe your just caught up in there latest crackdown on contractor fraud. Look, we get it. Your ABSOLUTELY PETRIFIED. And you should be! Because False Claims Act violations carry TREBLE DAMAGES plus up to $28,000 per false claim – and that’s before criminal charges!
What Is Procurement Fraud and Why Is DOJ Coming After Me?
Let me explain the government contracting nightmare your facing. Procurement fraud includes ANY deceptive action to manipulate government contracting – and DOJ interprets this so broadly that normal business practices become federal crimes!
Did you certify compliance with Buy American Act but one component came from overseas? FRAUD! Claimed your a small business but your revenue grew slightly over the limit? FRAUD! Said you met delivery deadlines but were a day late on one shipment? FALSE CLAIMS ACT VIOLATION! We’ve seen contractors destroyed for technical violations they didn’t even know existed!
The False Claims Act makes you liable not just for intentional fraud, but for “reckless disregard” and “deliberate ignorance” of falsity. That means even if you thought everything was legitimate, if DOJ says you “should have known better,” your facing millions in penalties!
How Devastating Are Procurement Fraud Penalties?
Sit down before reading this because the numbers will make you physically ill. False Claims Act penalties start at $14,000 to $28,000 PER CLAIM – and every invoice is a separate claim!
But here’s the killer – TREBLE DAMAGES! The government gets THREE TIMES what they paid you! Had a $10 million contract? That’s $30 million in damages! Plus per-claim penalties! Submitted 1,000 invoices? That’s another $28 MILLION in penalties! We’ve seen small contractors face $100 million judgments for contracts worth a fraction of that!
Criminal charges add another nightmare: Wire fraud = 20 years prison, Mail fraud = 20 years prison, Conspiracy = 5 years prison, False statements = 5 years prison! Stack them up and executives face DECADES in federal prison for procurement violations!
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(212) 300-5196What Triggers Procurement Fraud Investigations?
Your probably wondering “Who turned me in?” Let me tell you what destroys government contractors:
Whistleblowers get 15-30% of whatever the government recovers! That disgruntled employee who knows about your contracts? They could make $10 million by reporting you! Competitors routinely file qui tam lawsuits to eliminate competition!
DCAA audits uncover “defective pricing” and cost mischarging. Even honest accounting errors become fraud! Routine contract close-outs trigger reviews that find technical violations from years ago. Mergers and acquisitions due diligence exposes past issues that new owners must disclose. We’ve seen investigations triggered by anonymous hotline tips from jealous subcontractors!
Todd Spodek
Lead Attorney & Founder
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.
What Does a Procurement Fraud CID Demand?
The scope of these CIDs is absolutley overwhelming. DOJ demands EVERYTHING related to your government contracts:
Your government contracting company just received a Civil Investigative Demand from the Department of Justice demanding five years of procurement records, bid proposals, and internal communications related to a federal highway construction contract. A former subcontractor apparently filed a qui tam lawsuit alleging your firm inflated material costs and submitted false certifications under the Buy American Act.
How should I respond to this CID without accidentally waiving privileges or making admissions that could be used against me in a criminal prosecution?
A Civil Investigative Demand under the False Claims Act (31 U.S.C. § 3733) is a powerful investigative tool, but it has strict procedural requirements that your attorney can use to narrow its scope and protect your rights. You should immediately assert all applicable privileges, including attorney-client privilege and work product doctrine, and file objections to any overly broad or unduly burdensome requests within the response deadline — typically 20 days, though extensions are commonly negotiated. It is critical to remember that a CID is a civil tool, but the documents you produce can absolutely be shared with criminal prosecutors, so every production decision must be made with potential parallel criminal exposure in mind. We would work to negotiate the scope of document production, prepare your employees for potential interrogatories or oral testimony, and build a defensive strategy that addresses both the civil False Claims Act liability and any related criminal fraud statutes such as 18 U.S.C. § 1031 (major fraud against the United States).
This is general information only. Contact us for advice specific to your situation.
Every proposal, bid, and quote you’ve ever submitted, all cost and pricing data including spreadsheets and calculations, emails between employees about contracts, communications with subcontractors and teaming partners, quality control records and test results, timekeeping systems and labor charging, accounting records and internal audits!
But here’s what’s really unfair – they demand documents about “compliance” with impossibly vague regulations! How do you prove you complied with every FAR clause ever written? Its designed to be impossible so they can claim you withheld documents or destroyed evidence!
