Overlooked crime of government procurement fraud

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"I am procurement fraud, and I won't be ignored." Learn more about the "black sheep" of fraud at the ACT-IAC Fraud & Abuse Forum. Image by Flickr user Pascal Volk

Procurement fraud, often a form of internal fraud, is common fraud’s black sheep of the family...whispered about at gatherings or ignored in hopes that it will simply go away. No one wants to shine a questioning light onto trusted employees or imply wrongdoing within our purchasing departments, but the fact remains that many procurement schemes can involve internal agency employees in collusion with fraudsters.

The US Federal Government, one of the largest spending entities in the world, has more at stake when it comes to procurement fraud.  Although the Feds don’t have a bottom line or board of directors to answer to, they are the fiscal stewards of our collective taxpayer funds.  Transparency and tighter controls have become more prevalent across government, bolstering the importance of safeguards on such massive budgetary spend.

This week, one organization is focusing on helping public servants better navigate these tumultuous waters and bring clarity, best practices and collaboration to the Fraud Reduction and Data Analytics Act of 2015. The American Council for Technology-Industry Advisory Council (ACT-IAC) is convening leaders from industry and government to connect on these topics at the 2017 Fraud and Abuse Forum on July 20 in Washington DC.  The forum is focused on the implications of this Act and its intended purpose to implement controls to detect, prevent and report fraud and abuse within every agency. Procurement fraud is an area that poses risk to each and every organization.

Federal agencies have even more to lose than the funding necessary to run our government programs and protect our nation. These agencies also are at risk of losing credibility with citizens and politicians, which can lead to formal budget reductions, diminishing responsibilities or additional oversight.  Worse, programs that provide critical services to the citizens of the United States are put at risk. But not all losses within procurement are attributed to malicious or intentional fraud. Paymentaccuracy.gov estimates improper payments across high priority programs average about 4%. Coupled with persistent intentional fraud within our supplier and vendor communities, we could face financial losses that make our current deficit look like a petty cash fund.

To keep pace with sophisticated criminal enterprises, agencies must make data analytics a cornerstone of fraud prevention efforts. Agencies that invest in fraud detection software can prevent the improper payments and contract fraud that we’d rather not talk about. Many SAS customers who moved from a pay-and-chase or audit-finding approach to a proactive and preventative safeguard approach, find that the system pays for itself in short order. Agencies ultimately make money rather than suffer the ‘invisible losses’ they once incurred.

While the thought of being audited makes anyone cringe, as an anti-fraud professional and an investigative analyst, I know that audit departments and fraud investigators are actually our allies. They keep our organizations operational and solvent, keep us employed and on the right side of the law, all while helping us maintain integrity in everything we do. I’m sure many former Enron employees would agree.

It may not be easy to take a look at internal processes and people, but it is necessary. Not just because of an Act, a forum, or a government website with facts and figures, but because public service has become more transparent, agencies are scrutinized more closely by political committees, and we all depend on the safeguards and services they provide.

I look forward to participating in the ACT-IAC’s 2017 Fraud and Abuse Forum for these very reasons, because our integrity and effectiveness of our government agencies demand it. Stop by SAS’ table in the sponsorship area, see how we are preventing fraud within procurement departments, and share with us your thoughts on integrity and fraud prevention.

 

 

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About Author

Jen Dunham

Principal Solutions Architect

As a Solution Specialist within the Security Intelligence Global Practice, Jen is focused on providing subject matter expertise and assistance to Government teams addressing various security risks such as Cyber Security, Insider Threat, Targeting/Lead Generation, and other Intelligence-specific applications of the SAS Security Intelligence Foundation. Having served as an all-source intelligence analyst in the United States Army, and having since worked closely with numerous law enforcement, defense, and intelligence organizations around the world, Jen has a unique and comprehensive view within these areas and how their tradecraft and missions vary. Jen has worked in mission areas to include; counterterrorism, counterespionage, counternarcotic, peacekeeping missions, priority intelligence requirements, and the Balkans (Bosnia-Herzegovina).

Over the last 22 years, Jen has held a security clearance with numerous agencies supporting organizations such as FBI, DEA, NSA, CIA, NCTC, State Department, Department of Energy, and also State and Local Law Enforcement. Jen also has in-depth knowledge (through previous employment) of technology and information companies such as i2, Dun & Bradstreet, Choicepoint and Thompson Reuters.

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