Department of Justice Establishes New Task Force to Combat Fraud In Government Contracting

October 13, 2006

Earlier this week, the United States Department of Justice announced the formation of a new National Procurement Fraud Task Force intended to increase detection and prosecution of fraud in government contracting.  Led by the Criminal Division of the Department of Justice, the task force will create a partnership with the U.S. Attorneys’ Offices, the Civil Division of the Department of Justice, and more than 20 federal agencies, including the FBI, CIA, Department of Homeland Security, Special Inspector General for Iraq Reconstruction, General Services Administration, Small Business Administration, and every defense-related investigative command.  With the objective of increased criminal enforcement, the task force will concentrate on the following areas of procurement fraud:

  • Defective pricing and other irregularities in the pricing and formation of contracts;
  • Product substitution;
  • Misuse use of classified and procurement sensitive information;
  • False claims;
  • Grant fraud;
  • Labor mischarging;
  • Accounting fraud;
  • Fraud involving foreign military sales;
  • Ethics and conflict of interest violations; and
  • Public corruption associated with procurement fraud.

Announced by Deputy Attorney General Paul McNulty, the National Procurement Fraud Task Force will be chaired by Assistant Attorney General Alice Fisher of the Criminal Division, who also heads the Hurricane Katrina Fraud Task Force.  The National Procurement Fraud Task Force is modeled after the Procurement Fraud Working Group, a similar initiative led by Deputy Attorney General McNulty when he was the U.S. Attorney for the Eastern District of Virginia.


The task force will work to identify procurement fraud through coordination with U.S. Attorneys’ Offices and the field offices of the Offices of Inspectors General (OIGs).  It will also increase training for OIG agents and auditors; ensure that red flags and badges of fraud are promptly reported to and examined by criminal investigators; coordinate targeted civil, regulatory, and criminal enforcement actions; and facilitate coordination between agencies in joint cases.  One major task force goal is to encourage agencies to refer more cases for civil and criminal prosecution.  Finally, the task force will examine whether existing anti-fraud laws and policies are adequate and, if necessary, recommend ways in which they can be changed or strengthened.

The formation of the National Procurement Fraud Task Force signifies the Department of Justice’s commitment to prosecuting cases of fraud and misconduct in government contracting.  The Corporate Fraud Task Force, established by President Bush in 2002, may serve as an indication of what lies ahead for the government contracting community.  As of May 2004, the last year for which a report was issued, the Corporate Fraud Task Force obtained 500 corporate fraud convictions or guilty pleas and charged more than 900 defendants and more than 60 corporate CEOs and presidents in connection with more than 400 filed cases.  Similarly, as of September 2006, the Katrina Fraud Task Force has charged more than 400 people across 30 federal districts with hurricane-related fraud.

Gibson, Dunn & Crutcher’s Business Crimes and Investigations and Government and Commercial Contracts practice groups are available to assist with any questions you may have regarding these issues. For further information, please contact the Gibson Dunn attorney with whom you work or F. Joseph Warin (202-887-3609), [email protected]; Joseph D. West (202-955-8658) [email protected]; Karen Manos (202-955-8536) [email protected] or Andrew S. Boutros (202-887-3727), [email protected] in the firm’s Washington, D.C. office. 

© 2006 Gibson, Dunn & Crutcher LLP

The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.