How to Minimize Criminal Liability in Government Contract Fraud Lawsuits and Procurement Fraud Investigations
What is the government contract fraud investigation process? By understanding the basic rules of engagement, federal contractors can minimize criminal liability and hefty fines. Let Our Former Procurement Officials and Former DOJ Attorneys Be on Your Team ( Call 1.866.601.5518 – Nationwide Help)
By Theodore Watson, Esq (Federal Contractor Defense Attorney, Former Federal Contracting Official (Veteran) and US Supreme Court Attorney. The procurement fraud investigation process often starts at the contracting officer (CO) level either during the award or performance stages. Under FAR Part 3, if the CO suspects that the contractor violates the required standard of conduct, such as a violation by the contractor of FAR 52.203-16, Preventing Personal Conflicts of Interest, the contracting officer shall contact the designated agency legal counsel for advice and/or recommendations on a course of action.
In addition, under FAR. 3.104-7 violations or possible violations – when the contracting officer receives or obtains information of an actual or possible violation of 41 U.S.C. 2102, 2103, or 2104, he or she must determine if the reported violation or possible violation has any impact on the pending award or selection of the contractor. See FAR 3.104-7(a).
If the contracting officer believes that there is no evidence of procurement fraud or any impact on the procurement, then the contracting officer must forward the information concerning the violation or possible violation, along with his or her documentation supporting a determination, to an individual designated in accordance with agency procedures.
This becomes especially important during litigation of a bid protest or when the facts are so critical that they can impact the public interest to such a degree that a Court may have to issue a Temporary Restraining Order (TRO). Unfortunately, the contracting officer cannot simply turn a blind eye when there is evidence of government contract fraud. He or she must act by referring the matter to the appropriate law enforcement agency.
Government Contract Fraud and Procurement Fraud Investigations: Civil vs. Criminal
A government contract fraud investigation is not one thing. It is two parallel tracks — a civil track and a criminal track — and the mistakes that destroy a company are different on each. Understanding which track you are on, and what people do wrong on each, is the difference between a defensible case and a conviction. Watson & Associates, LLC defends both, and our attorneys have worked on both sides of the line: as federal procurement officials who understand how a contract and a claim are actually assembled, and as federal prosecutors who understand how an indictment is built.
What People Do Wrong During a Civil Government Contract Fraud Investigation
A civil procurement fraud investigation usually opens quietly — a Civil Investigative Demand from DOJ, an HHS-OIG or SBA-OIG subpoena, or a sealed qui tam complaint you do not yet know about. Because the word “civil” appears on the paperwork, companies routinely make these mistakes:
•Treating “civil” as low-stakes and talking to agents or OIG investigators without counsel, producing documents and statements that later become the backbone of a criminal referral.
•Responding to a CID too broadly, handing over documents outside the stated scope, custodians, and date ranges — material that was never at issue and is now in the government’s hands.
•Letting routine auto-delete and retention policies run after the duty to preserve has already attached, creating spoliation exposure under FRCP 37(e).
•Failing to assert attorney-client privilege and work-product protection, and letting compliance or IT staff review documents without counsel.
•Negotiating scope and deadlines directly with DOJ or OIG instead of through counsel, forfeiting the leverage that comes from engaging early.
•Making a “voluntary” self-disclosure without a strategy, converting a defensible position into an admission.
•Ignoring the materiality and scienter defenses — the two elements that decide most civil FCA cases — because no one on the team knows they exist.
What People Do Wrong During a Criminal Government Contract Fraud Investigation
A criminal procurement fraud investigation is different in kind. It usually begins with a target letter, a grand jury subpoena, or a search warrant — and the mistakes are more dangerous because the stakes include prison:
•Speaking to agents without counsel, on the mistaken belief that “I have nothing to hide” will clear them — when in reality those statements are used to build the case.
•Altering, deleting, or “cleaning up” documents and emails once they know an inquiry exists — turning a civil exposure into an obstruction-of-justice charge under 18 U.S.C. § 1519.
•Making false statements to investigators — each lie is a separate 18 U.S.C. § 1001 charge, and false statements cases are often easier for the government to prove than the underlying fraud.
•Hiring a local criminal defense lawyer with no federal procurement experience — the “kiss of death,” because the government’s entire case rests on FAR, SBA, and TAA regulations the lawyer has never litigated.
•Cooperating without a proffer agreement, giving the government the roadmap to an indictment without any protection in return.
•Waiting until after indictment to engage counsel, by which point the grand jury has already heard the government’s version of events with no defense presentation.
•Assuming a plea bargain is the only option, without first testing whether the underlying procurement regulation actually supports the charge.
The Federal Indictment Process for Government Contract Fraud
Understanding the sequence removes the panic that leads to bad decisions. It typically unfolds in this order:
1. Target letter. DOJ sends a formal letter stating you are a “target” of a grand jury investigation — the clearest signal that an indictment is being considered, and the moment counsel must be engaged.
2. Grand jury investigation. A federal grand jury hears evidence and witness testimony in secret. You generally have no right to present your side, which is why shaping what the grand jury hears — through counsel — matters so much.
3. Indictment. If the grand jury finds probable cause, it returns an indictment charging specific counts — often conspiracy (18 U.S.C. § 371), false claims (18 U.S.C. § 287), false statements (18 U.S.C. § 1001), and mail or wire fraud (18 U.S.C. §§ 1341, 1343).
4. Arraignment and pretrial. You are arraigned, enter a plea, and the case proceeds through motions and discovery. This is where a procurement-literate defense can move to dismiss counts that rest on a misreading of the underlying regulation.
5. Plea or trial. The overwhelming majority of federal cases resolve by plea, but the quality of the plea — the charges, the sentence, and the collateral consequences — is set by how well the defense tested the government’s case in the earlier stages.
Why Your Attorney Must Understand Both Sides: Federal Procurement and the Criminal Process
This is the single most important hiring decision a contractor or CEO will make. The government’s case in a government contract fraud prosecution is not built on general fraud law — it is built on FAR, DFARS, SBA size regulations, the limitations on subcontracting, the Trade Agreements Act, and the Truth in Negotiations Act.
A criminal defense lawyer who does not understand those rules cannot cross-examine the government’s case, cannot challenge the contracting officer’s referral, and cannot explain to a jury why the alleged “fraud” was actually a good-faith reading of an ambiguous regulation. Conversely, a pure government contracts lawyer who has never been inside a criminal case does not understand grand jury strategy, proffer agreements, or how to negotiate a declination.
You need both in one team — and that is exactly the combination Watson & Associates, LLC provides, with former federal procurement officials and former federal prosecutors working the same matter together.
Call us Today for Immediate Help: 1.866.601.5518. Speak to Mr. Watson
Types of Government Contract Fraud
Procurement fraud is not a single offense but a family of schemes. The most common, and the ones that most often become federal investigations:
•Bid rigging and collusion — bid rotation, bid suppression, complementary bidding, and market division among competitors, violating both fraud statutes and the Sherman Act (15 U.S.C. § 1).
•Defective pricing — submitting cost or pricing data that is not current, accurate, and complete under the Truth in Negotiations Act (10 U.S.C. § 3705), inflating the negotiated price.
•Cost mischarging and cross-charging — billing unallowable, unreasonable, or misallocated costs, or shifting costs from a fixed-price contract to a cost-plus contract.
•Kickbacks and bribery — improper payments to influence subcontract awards or obtain favorable treatment, prohibited by the Anti-Kickback Act (41 U.S.C. §§ 8701–8707).
•False certifications — misrepresenting small business, 8(a), SDVOSB, WOSB, or HUBZone status to win set-aside contracts.
•Product substitution and non-conforming materials — delivering goods that do not meet contract specifications, or substituting unauthorized or counterfeit parts.
•False invoicing and progress payment fraud — billing for work not performed, ghost employees, inflated hours, or duplicate invoices.
•Trade Agreements Act and Buy American Act violations — certifying country-of-origin compliance when the product was not substantially transformed in the U.S. or a designated country.
•Labor mischarging and timecard fraud — charging labor to the wrong contract or billing hours not actually worked.
•Conflicts of interest and procurement integrity violations — the FAR 3.104 and 41 U.S.C. §§ 2102–2104 procurement integrity issues the page already discusses.
Subcontractor Representation: How the Government Reaches You Through Flow-Down Clauses
Subcontractors often believe they are insulated because they never contracted directly with the government. That belief is wrong, and it is one of the most common ways a lower-tier company walks into a fraud investigation unprepared.
The mechanism is the flow-down clause. When a prime contractor wins a federal contract, the FAR requires it to insert certain clauses — mandatory flow-downs — into its subcontracts. Under FAR 52.244-6, a prime contractor must flow down a specific list of clauses to subcontracts for commercial products and services, and under FAR 52.212-5(e) the same logic applies to commercial-item contracts. These clauses carry the government’s requirements — including the Trade Agreements Act, the Buy American Act, cost principles, and audit rights — down the entire supply chain, tier by tier.
Two consequences follow. First, a subcontractor who signs a subcontract containing a flow-down clause is now contractually bound to comply with the same federal requirements as the prime — and can be investigated, sued, or prosecuted for violating them.
Second, if the prime contractor fails to flow a required clause down, the prime assumes the risk of the subcontractor’s non-compliance — meaning the prime can be held responsible for a violation the subcontractor committed. Either way, everyone in the chain is exposed. If you are a subcontractor who has received a CID, a subpoena, or even a request for records tied to a prime’s contract, you need your own counsel — because the prime’s counsel represents the prime, not you.
The Trade Agreements Act: Why Everyone in the Purchasing Chain Can Be Liable
The Trade Agreements Act (TAA), 19 U.S.C. § 2501 et seq., requires that products sold to the government be manufactured or “substantially transformed” in the United States or a TAA-designated country. “Substantial transformation” means the product became a new and different article of commerce, with a name, character, or use distinct from its components — not merely assembled or repackaged.
A product whose components are substantially transformed in China, India, or another non-designated country is not TAA compliant, even if final assembly happens in the United States.
The common TAA problems we see in investigations:
•Certifying TAA compliance on a GSA Schedule contract based on a supplier’s word, without independently verifying where the product was substantially transformed.
•Treating simple assembly, labeling, or repackaging as “substantial transformation” when the underlying components were made in a non-designated country.
•Relying on a percentage-of-content test — that is the Buy American Act’s approach, not the TAA’s; the TAA turns on substantial transformation, not cost percentages.
•Failing to flow the TAA clause (FAR 52.225-5) down to subcontractors, so a lower-tier supplier’s non-compliant product becomes the prime’s false certification.
Here is the point that matters most to a purchasing manager or CEO: under the TAA and the flow-down structure, liability can reach everyone who touched the purchase.
The prime who certified compliance, the distributor who sourced the product, and the subcontractor who supplied non-compliant components can each face False Claims Act exposure for the same non-compliant product.
The government does not have to prove who “intended” to violate the TAA — it has to prove the certification was false and that the company knew, or should have known, it was false. If you are anywhere in a purchasing chain that supplies the government, a TAA certification is a liability you carry personally.
The Civil Investigative Demand Process in a Procurement Fraud Investigation
A Civil Investigative Demand (CID) is the tool DOJ uses to open most civil False Claims Act procurement fraud investigations. Issued under 31 U.S.C. § 3733, a CID compels the production of documents, answers to interrogatories, or oral testimony — often before any lawsuit is filed and sometimes before you know a sealed qui tam complaint exists.
•A CID is not a subpoena and not a lawsuit — but it is enforceable, and ignoring it can lead to a court order compelling compliance.
•You generally have a right to a “reasonable period” to produce documents, and at least seven days’ notice before oral testimony — but extensions must be requested in writing, promptly, with a specific rationale.
•You have 20 days from service to petition to modify or set aside a CID under 31 U.S.C. § 3733(j)(2) — a short, hard deadline that most companies miss.
•Material you produce in a “civil” CID can be used in a parallel criminal investigation and can be shared with the qui tam relator who sued you.
The CID is where a procurement fraud investigation is won or lost. Respond too broadly, and you hand over the roadmap; respond too narrowly, and you invite an obstruction finding; miss the 20-day window, and you forfeit your strongest leverage. This is why the CID response must be managed by counsel who understands both the procurement substance and the criminal exposure.
Contract Disputes Act Claims, Cure Notices, and Small Business Matters
Not every government-contract dispute is fraud — and confusing the administrative process with a fraud investigation is itself a costly mistake.
•Contract Disputes Act claims. Under the Contract Disputes Act (41 U.S.C. § 7101 et seq.), a contractor resolves disputes by submitting a written claim to the contracting officer for a final decision, which can then be appealed to a board of contract appeals or the Court of Federal Claims. A CDA claim is a contract remedy — but if a contractor inflates the claim or certifies false supporting data, the same dispute can become a False Claims Act and criminal fraud matter.
•Cure notices. A cure notice (FAR 49.402-3) is a written notice that the government considers the contractor in danger of default for failure to make progress or perform, giving the contractor — typically 10 days — to cure.
A cure notice is not a fraud allegation, but how a contractor responds to it — and whether it makes false statements about its performance in doing so — can trigger a fraud referral.
•Government contract small business matters. Size status, limitations on subcontracting, and 8(a)/SDVOSB/WOSB/HUBZone eligibility are among the most frequent sources of procurement fraud investigations. Competitor protests and SBA size determinations often become the entry point for a False Claims Act referral, and the same misrepresentation that costs a set-aside can become a criminal charge.
Government Contract Fraud FAQs: What CEOs and Contractors Ask
These are the questions our attorneys hear most often from CEOs, general counsel, and contractors the moment they realize they are under investigation.
How Do I Know If I Am in a Civil or a Criminal Investigation?
Look at the document you received. A Civil Investigative Demand or an OIG subpoena usually signals a civil investigation, though it can run parallel to a criminal one.
A grand jury subpoena, a target letter, or a search warrant signals a criminal investigation. The distinction matters enormously, because the rules, the burden of proof, and the consequences are different — and the wrong response on either track can move a civil case into criminal territory.
What Is the First Thing I Should Do After Learning I Am Under Investigation?
Preserve everything, and engage counsel before you say a word to anyone. Immediately issue a litigation hold suspending auto-delete policies, do not discuss the matter with employees or colleagues beyond what is necessary, and do not respond to any government request — even an informal one — until counsel has reviewed it. The first 24 hours are when the most damaging, irreversible mistakes happen.
Can My Company Be Suspended or Debarred Before the Fraud Case Is Resolved?
Yes. Suspension and debarment are administrative actions that can proceed on the same conduct at issue in a fraud investigation, sometimes before the FCA or criminal matter is resolved. For a contractor whose business depends on federal work, debarment is often more damaging than the monetary penalty itself, and it must be managed alongside the investigation, not after it.
If I Am a Subcontractor, Do I Need My Own Lawyer?
Yes. The prime contractor’s counsel represents the prime, not you, and your interests may diverge — especially if the prime is looking to shift responsibility down the chain. A subcontractor bound by flow-down clauses faces the same federal requirements as the prime and can be investigated, sued, or prosecuted independently. You need counsel who understands your position in the chain.
Why Does My Attorney Need Procurement Experience, Not Just Criminal Experience?
Because the government’s entire case is built on procurement regulations — FAR, DFARS, SBA size rules, the limitations on subcontracting, the TAA, and TINA. A criminal lawyer who cannot explain those rules cannot challenge the contracting officer’s referral, cross-examine the government’s witnesses, or argue that the alleged “fraud” was a good-faith reading of an ambiguous regulation. The best defense combines federal procurement fluency with criminal process experience — which is what our team provides.
What Is the Difference Between a Cure Notice and a Fraud Investigation?
A cure notice is a contract administration tool — a warning that you are in danger of default and have a short period (usually 10 days) to fix the problem. It is not, by itself, a fraud allegation.
But if you respond to a cure notice with false statements about your performance, or if the underlying performance failure reflects a false certification, the same facts can become a fraud investigation. How you handle the cure notice — truthfully and through counsel — determines which path it takes.
Can a Contract Disputes Act Claim Turn Into a Fraud Case?
Yes. A CDA claim is a legitimate way to recover money you are owed, but the claim must be accurate. If a contractor inflates a claim, certifies false cost or pricing data, or submits false supporting documentation, the government can convert the contract dispute into a False Claims Act case and a criminal fraud referral. The line between an aggressive claim and a false claim is drawn by the accuracy of what you certify.
What Are the Most Common Procurement Fraud Triggers I Should Worry About?
The triggers that most often become federal investigations are: defective pricing and cost mischarging; TAA and Buy American Act country-of-origin certifications; small business and SDVOSB status misrepresentations; bid rigging and kickbacks; product substitution; and false invoicing.
If any of these touch your contract, the time to review your exposure is now — before the government does.
Call Our Government Contract Fraud Defense Attorneys Now
A government contract fraud or procurement fraud investigation is a race against a government that has unlimited resources and a head start. Watson & Associates, LLC represents prime contractors, subcontractors, and companies nationwide in civil and criminal procurement fraud investigations — with attorneys who have worked inside federal procurement agencies and inside the DOJ, on both sides of these exact cases.
If you have received a Civil Investigative Demand, a subpoena, a target letter, a cure notice, or any indication that your contract or your small business status is under scrutiny, call our government contract fraud defense team today at 1.866.601.5518 for a free, confidential consultation, or complete the online case review form to have an attorney call you back.
How does the FAR 3.104 Requirement Impact Contractor Procurement Fraud Investigations?
Many federal contractors, due to the subjective nature of the CO’s “conclusion” may now become subject to a government investigation for procurement fraud. A question may arise as to whether the CO has abused his or her authority by injecting a biased opinion knowing that the contractor’s company could face criminal liability. Has the contracting officer retaliated against the contractor? These are all questions raised at the beginning. However, issues can be further reviewed during an agency investigation.
Although bad faith cases are difficult to prove in the federal procurement process, there could be specific facts to support a case that the contracting officer acted against the public interest because there was no credible evidence in the record to support a federal government contract investigation, to begin with. This FAR requirement can seriously impact a small business or large DOD contractor that is subject to a procurement fraud investigation.
More on the contracting officer’s “discretion”
One important point is that the criminal case against your company could very well be triggered by the contracting officer’s initial conclusion. For example, during a bid protest litigation, the FAR allows for some checks and balances. For example, the contracting officer must initiate some level of documentation and present it to another level for concurrence of non-concurrence. See FAR 3.104-7(a). Yet when there is a criminal trial, very little emphasis is placed on the contracting officer.
The bottom line is that when the contracting officer believes that there is evidence of government contract fraud, conflict of interest, or procurement integrity issues, he or she should refer the case to the respective law enforcement agency to prosecute or commence a federal OIG investigation. This can become the contractor’s worst nightmare.
Fact-specific situations in construction fraud investigations
When a company is part of a federal construction fraud investigation, the case becomes very complex. The industry practices, FAR requirements and allegations by federal law enforcement can create problematic situations. B
esides being innocent until proven guilty, the reality is that the construction firm is actually on the defense at the beginning of the investigation. Having a construction investigation lawyer that understands procurement regulations can be beneficial to the company. See important information about cooperating and proffer agreements.
The procurement & government contract investigation process
Every government contract investigation for procurement fraud starts with the initial evidence and allegations. The investigation at some point almost always leads to allegations of violating the Federal False Claims Act. The agency initially gathers basic information, then develops a process that may take months or even years to complete.
Federal Investigators talk to many people, including contractor employees, agency contracting personnel and even family members. It is questionable sometimes whether federal investigators truly understand the underlying substantive regulations. For example, some procurement fraud investigations related to service-disabled veteran-owned small business fraud investigations (SDVOSB fraud) begin on the premise that the veteran’s SDVOSB’s status is based upon fraudulent claims or representations to the government.
Circumstantial evidence is usually the government’s case. However, courts should also look at the fact that the SDVOSB member has to go through rigorous tests and examinations to reach the percentage of disability.
On the other hand, procurement investigations based on small business fraud stem from violations of the limitations on subcontracting rules under 48 CFR 19.1407 – Limitations on subcontracting and nonmanufacturer rule and 13 CFR 125.6.
When defending a case involving procurement fraud allegations and government contracting violations, defense lawyers and courts should also look into what initial facts were present; whether the investigator drew reasonable conclusions and whether the federal prosecutors actually balanced their decisions to move forward with an indictment or criminal charge on the underlying application of controlling regulations. See How to Defend a Qui Tam Lawsuit Involving Government Contracts?
Impact on Government Contractors
When small businesses and federal contractors as a whole face criminal liability for fraud allegations and government contracting violations, the charge is often based on presumed neglect by a federal investigator of the fundamental rule that the investigator must also know the rules and learn the elements of proof for the suspected offenses and the elements of proof for each of the suspected offenses.
A federal investigator should know at every stage of a criminal or civil case what evidence he needs to obtain to prove an offense. Yet, individuals and companies face the grim result that their life, liberty and property and other constitutional rights are up for grabs. See What Happens After Government Contractors Receive a Grand Jury Indictment.
Why do federal law enforcement agencies insist on conducting government investigations?
Federal government investigations are conducted to protect the public interest and taxpayer dollars. Press releases often emphasize these points. However, there is arguably less emphasis placed on the constitutional rights of individuals and contractor firms.
Looking at the number of government contract investigations that are terminated for lack of evidence can raise questions. It appears that once a federal investigation starts, there are very few cases that are thrown out. Federal attorneys will usually take the case to trial or attempt to offer a plea to the defendant.
Contractors and individuals must test the underlying procurement statutes that form the basis of criminal liability to see whether there is true merit to the prosecutor’s claim.
There are many rules that regulate federal procurement programs and the contracting process. However, there have not been many efforts to align those statutes with the criminal process. Yet, many federal prosecutors cite those regulations as part of indictments and bring cases against contractor defendants.
When should you know that you may be under government investigation?
. They include:
• Employees asking unusual questions about an ongoing contract.
• The contracting officer has sent a letter inquiring about specific regulations
• A federal investigator leaves a business card asking you to call them
• A complete stranger approaches you in a public place and strikes up a conversation that leads to one about government contracts.
Mistakes that companies make when being investigated for procurement fraud
Avoiding costly mistakes is the primary focus for any individual or government contractor that is subjected to a procurement fraud investigation.
The first mistake is speaking openly to federal agents without an attorney. The problem is that although you may firmly believe that you have done nothing wrong, the reality is that you can inadvertently mention a fact that can later come back to haunt you.
The second mistake made is that contractors wait until the process has gone on for months before contacting a government contract fraud attorney or procurement lawyer who understands the rules.
Another concern is that some companies or individuals do not assess the strength of the government’s case (regardless of actual guilt or innocence). Instead, the defense lawyer may simply look at one side of the case – yours.
How can courts help in the criminal litigation process for federal procurement fraud?
As discussed before, when it comes to cases involving substantive application of government procurement regulations, the criminal process and procedural rules do not integrate the application of law that governs SBA small business programs, SDVOSB regulations and FAR regulations.
The federal prosecutor will make allegations in the case pleadings. However, during trial or indictments, there are no proffers as to what the underlying regulations really mean. Therefore, the courts and juries sometimes make decisions on what the prosecutor generally says.
For example, where government investigations are based on limitations in subcontracting violations, SBA small business size limitations of SDVOSB status, the defendant does not get the benefit of citing OHA cases or any other court decisions that decide these very issues every day.
When companies hire a government contract fraud attorney, they should make sure that the defendant’s case analysis includes a detailed computation of the very law that the federal prosecutor is basing his or her case on. See information about three defenses for criminal liability for government contractors.
- Courts should place the burden on federal lawyers to explain in detail how the procurement rules really work since it is the prosecutor that filed the case.
- Courts should also allow the individual or government contractor defendant to challenge the government’s witnesses to extract evidence of statements that can disprove the government’s case.
- Since the defendant faces deprivation of life, liberty or property, defendants should be allowed to conduct proper discovery that probes into either (1) the contracting officer’s decision to refer the case for investigation; (2) the SBA’s assessment of any alleged violations of small business size regulations or regulations governing the 8(a) BD Program or HUBZone Program (3) The VA’s contribution to facts supporting the government’s case.
- Courts should focus more on the defendant’s constitutional rights to participate in the government contracting programs and any statements that now can stand to incarcerate contractors or their executives.
How can small businesses minimize criminal liability during government contract fraud and procurement investigations?
1. Conduct internal investigations and audits to make sure that they are in compliance with small business size regulations
2. Develop internal policies and controls to ensure compliance with limitations on subcontracting regulations
3. Develop mandatory disclosure policies for incidents as you discover them
Tips to Avoiding criminal liability in federal procurement investigations
1. Tell the truth
When you decide to respond to federal subpoenas or be interviewed by federal agents or lawyers, you cannot lie. This can cause additional criminal liability for each lie you tell. Assuming that you have a defense attorney present (strongly suggested), you can certainly say that you do not recall a specific fact or do not know the answer to a question. However, those answers must be truthful.
2. Hire a procurement fraud investigation attorney who understands government contract law
Unfortunately, many government contractor defendants hire local criminal defense attorneys that are not familiar with federal procurement regulations. T
his can be the ‘kiss of death’ since the government’s entire case is built on a foundation of fraud allegations and government contracting violations (this includes mail and wire fraud.) When you retain a procurement fraud investigation defense attorney, ensure that this person has some experience with the underlying substantive law and dealing with high profile cases.
3. Evaluate your response to government subpoenas
Make sure that the documents you provide to the federal government do not contain self-incriminating statements. Almost any procurement investigation process includes the government’s subpoena and request for documents. You must diligently comply with these requests. However, when looking at most government fraud cases, it is true that documents, emails or other communication submitted to the government can include incriminating statements. Your government contract fraud defense attorney should be allowed to review these documents to protect your constitutional rights.
4. Always assume that federal prosecutors already have the information that they ask you for
This goes without saying. When the government issues a subpoena during a contract and procurement fraud investigation, you must answer honestly and truthfully. Government lawyers are well aware of the theory of not asking a question that they don’t already know the answer to.
During government contract fraud cases, federal attorneys have virtually unlimited resources. Chances are they already have search warrants with the information sought, have already interviewed other witnesses, or have obtained copies of emails from other witnesses. Therefore, you cannot hide documents or pick and choose what documents you want to provide to the government.
5. Understand that you have constitutional rights when being investigated for government contract fraud
This is the bedrock of the procurement investigation process. Although federal law enforcement agencies have wide latitude during the ‘investigation’ stage, a criminal defendant still has constitutional rights.
As a potential target or defendant in government contract fraud cases, you must know what those rights are. Although you may not have a constitutional right to an attorney until formal charges are brought, you certainly have rights against self-incrimination during the investigative process ( this is where Miranda rights are given)
Should you admit guilt to federal prosecutors?
The straightforward answer is no. As mentioned above, you have a right to be protected against self-incrimination. However, if you sign a plea with the prosecutor in a high profile government contract fraud case, then you may have an obligation to tell all (depending on the contents of your plea agreement.)
How does a plea bargain impact your future as a government contractor?
When you sign a plea agreement with federal prosecutors in a procurement fraud investigation or a case involving criminal liability for a government contractor, chances are that the government will also initiate suspension and debarment proceedings against you or your company. This will have a grave impact on your ability to conduct business with the government in the future.
The plea bargain for a government contractor essentially requires you to admit to criminal wrongdoing such as theft of government funds, conspiracy to defraud the government, or some other form of fraud allegations and government contracting violations. You do not get to have a trial on the merits.
Common reasons why government contractors and individuals are charged with criminal liability during the procurement investigation process
There are several situations showing why government contractors are charged with criminal liability during the procurement investigation process. A common reason includes government employees, military personnel or contractor personnel pleading to criminal conflict of interest charges.
- Hiding documents and destroying information on computers
- Making incriminating statements to colleagues ( who are actually working for the federal government via plea etc)
- Not being truthful during interviews
- Hiring legal counsel not familiar with the relevant procurement regulations.
Call our government contract fraud attorneys for immediate help
If you are a government contractor seeking legal advice or representation in a construction contract investigation or service contract investigation, to defend against procurement fraud allegations and government contract fraud false claims, call our government investigation lawyers at 1-866-601-5518 – ask to speak directly to Mr. Watson or contact us online.