U.S. attorney vows crackdown on contracting fraud

The head of a new anti-fraud task force is promising a strong crackdown on illegal contracting practices and procurement fraud in government contracting.

U.S. Attorney Paul McNulty of the Eastern District of Virginia established the Procurement Fraud Working Group three months ago after his office prosecuted Darleen Druyun, a former senior Air Force procurement official who negotiated with Boeing Co. for a job before she left her government position. Druyun and former Boeing chief financial officer Michael Sears pleaded guilty in the scandal.

"Our goal is to detect and investigate and prosecute criminal fraud by improving our enforcement efforts, and by doing this we hope to prevent procurement fraud in the first place," said McNulty, who spoke Wednesday at a Fairfax, Va., Chamber of Commerce event in McLean, Va.

McNulty said he wants the anti-fraud working group to educate contractors and contracting officers about how to spot fraud. One way to do this is by placing criminal investigators in offices to work alongside contractors to help them detect illegal activities, he said.

McNulty also said the working group is keeping its eye on ethics violations and conflicts of interests by looking at where other previous procurement officials went to work after they left the government.

The Procurement Fraud Working Group wants to strengthen fraud investigations by improving training for agents and auditors who investigate fraud cases, and by using software that will detect patterns of procurement irregularities, McNulty said.

McNulty has recruited to the working group defense-related investigators, federal agency inspectors general, the Coalition Provisional Authority for cases involving procurement fraud in Iraq and the FBI. The working group, which held its first meeting in March, will meet periodically for strategic planning sessions.

The anti-fraud working group probably will disseminate some information on its activities and findings by the end of the summer, McNulty said. He is considering publishing the information in various professional publications geared toward the business community as well as on a Web site, he said.

McNulty, who took office in Virginia's Eastern District three days after the Sept. 11 terrorist attacks, has made the prosecution of terrorism, gang violence, drug trafficking, cybercrime and corporate fraud his main priorities.

His Procurement Fraud Working Group will focus on federal law-enforcement efforts to detect and prevent procurement fraud, given the increased amount of contracting activity in the region. At $20 billion, Virginia was the third-highest recipient of Defense Department prime contract awards in 2003, behind California and Texas, with one-third of that amount going to contractors in Fairfax County, he said. Virginia also has between 18,000 and 19,000 Defense Department contractors, the largest amount of government contractors in the region, he added.

The working group will take aim at various types of procurement fraud, such as product substitution, defective pricing, misuse of classified information, labor mischarging, accounting fraud and foreign military sales, McNulty said. In 2003, his office prosecuted 15 procurement fraud cases, he said.

"Against this backdrop of increased government spending is our recognition that tax dollars are more precious than ever, and they must be spent right and we must do all we can to prevent fraud," McNulty said. "The opportunity exists for contract work, and that's why our vigilance has to expand with it."