Types of Government Contract Fraud: How to Spot and Report It

When you see government contract fraud—false billing, misrepresentations, budget shifting, and bid-rigging—it’s essential to speak up to protect vital programs. That is, if you know what to look for and how to report it.

Contract fraud schemes affect taxpayers, public safety, and assistance programs. If you’ve noticed suspicious activity and aren’t sure whether it qualifies as illegal or who to alert, our North Carolina government contracts fraud lawyers can help.

When a company intentionally deceives the government to receive payment or secure a financial benefit they are not entitled to, it may be addressed as fraud under the False Claims Act (FCA). These schemes generally work through intentional misrepresentation, which can include:

• Overbilling for goods or services
• Charging for work that was never performed
• Inflated qualifications or compliance

Due to the government’s high-value, frequent purchases, any scheme can lead to significant financial losses. According to the U.S. Government Accountability Office (GAO), the government loses an estimated $233 to $521 billion annually to fraud (based on fraud data from 2018 – 2022). Detection efforts, waste, and losses burden taxpayers and citizens who depend on the affected programs.

Improper billing, providing non-compliant products or services, funding misallocation, and bid-rigging are a few government fraud schemes that occur more frequently than most people think.

Some of most common fraudulent activities involves improper billing practices, such as:

• Charging for work that was never completed
• Inflating labor hours or material costs
• Billing for unnecessary services

In these schemes, contractors may cut corners while still billing the government for certain high-cost products or services. These practices are among the most dangerous types of government contract fraud because supplying non-compliant defense or infrastructure projects can compromise public safety.

This refers to companies improperly shifting costs from private contracts to government contracts, where reimbursement rules may be more favorable. These schemes allow contractors to maximize profits while passing the expense onto taxpayers.

The government has strict requirements for its suppliers, contractors, and assistance programs. Contractors may falsely certify that they meet standards to win or maintain work, funding, or benefits. These misrepresentations are fraudulent and might involve:

• Wage compliance and labor standards rules
• Eligibility for small or disadvantaged business programs
• Supply chain for goods, claiming ‘Made in America’ or purchasing from prohibited countries
• Regulatory or safety compliance (e.g., cybersecurity or data practices)

Early detection by employees, subcontractors, or partners requires understanding which red flags and warning signs you shouldn’t ignore.

Encountering any of these issues may be warning signs that a larger scheme is in play:

• Unusual or inconsistent billing patterns
• Charges that do not match the work performed
• Duplicate invoices or vague service descriptions

These practices often attempt to redirect public funds for private gain. Look for:

• Limited competition in bidding
• Frequent contract modifications without justifications
• Contracts awarded despite poor past performance

Unusual practices can also be found in company communications and workplace interactions that:

• Pressure employees to ignore compliance concerns
• Encourage recordkeepers to alter or delete company files
• Discourage questions about expense allocation, bids, or compliance

Any person, company, or entity that knowingly submits or instigates the submission of a false claim to the government may be considered a fraudster. These acts can extend beyond the primary company to any individual, such as a contractor, subcontractor, or grant recipient, or to management, including stakeholders, executives, and consultants.

Schemes may be reported to federal agencies, and many maintain dedicated hotlines for reporting waste, fraud, and abuse; contact the Office of Inspector General for the specific federal agency involved, if you’re unsure.

When you come forward, be prepared to supply this information:

• Who was involved: The names of individuals, companies, and government officials
• What occurred: Provide specific details of double-billing, bid-rigging, or non-compliance, for example.
• Contract details: Any identifying numbers or codes and total dollar amount, if known.
• Evidence: Relevant documents, emails, or witness statements.

Another method for reporting government contract fraud is through a whistleblower lawsuit filed on behalf of the government. In certain cases, a whistleblower may receive a portion of the recovered funds.

If you uncover a fraud scheme and report it appropriately, you’ll receive set legal protections under federal and state laws. If you’re retaliated against for speaking up, you may also be eligible to sue for reinstatement, back pay, and special damages.

Those who participated in the activity and later report aren’t automatically immune from legal trouble or granted protections. Coming forward may reduce your exposure.

These legal actions are filed on behalf of the government, and federal courts require whistleblowers to have official representation. Our North Carolina government contracts fraud lawyers can also help you take early action, which makes a difference in these ways:

• Evaluate the strength of your claim early to meet first-to-file rules (original reports may claim certain rewards)
• Help you navigate anonymity and any whistleblower protections against retaliation
• Guide you through the strict procedural rules of the False Claims Act
• Present evidence to the Department of Justice and help maximize a potential financial recovery

Our attorneys are here to help you determine the best approach to bring fraudulent activity to light, without jeopardizing your well-being. Contact the whistleblower attorneys at Miller Law Group today to discuss reporting government contract fraud.