Justice forms procurement fraud task force

In wake of scandal at Defense Department, new working group aims to combat abuses in acquisition system.

McNulty says the new initiative will be led by his office and will have representatives from the Federal Bureau of Investigation, the Defense Criminal Investigation Service, the Naval Criminal Investigative Service, and inspector general offices at the National Reconnaissance Office and the Homeland Security, State, and Transportation departments.

In the aftermath of the Defense Department procurement scandal, the Justice Department has created a special task force aimed at combating fraud among defense and homeland security contractors.

"The sheer size and complexity of procurement operations may embolden some criminals. It is imperative that we take action to prevent, deter and prosecute those unscrupulous contractors whose theft of critically needed resources threatens America's safety and defense," said U.S. District Attorney Paul McNulty, who oversees the Eastern District of Virginia, in announcing its creation last week.

The Procurement Fraud Working Group was formed on the same day that former Boeing Chief Financial Officer Michael Sears was sentenced to four months in prison for illegally negotiating a job at Boeing for former Air Force acquisition chief Darleen Druyun while she was still overseeing Air Force contracts at the Pentagon. Druyun is serving nine months in federal prison for favoring Boeing in contract talks in exchange for a job for herself, her daughter, and son in law.

McNulty highlighted several goals for the new working group, among them:

  • Improving training of special agents and auditors for procurement fraud, bribery and conflict-of-interest investigations.
  • Increasing education efforts among federal agents, contractors and agency personnel to prevent such abuses.
  • Placing agency investigators within major procurement offices to work with employees involved with contract negotiations.
  • Using computer data-mining software and other technology to uncover possible fraud.
  • Stepping up efforts to detect conflict-of-interest violations by current and former agency managers.

Ron Sugar, chief executive of Northrop Grumman, recently addressed the issue of increased government oversight of contractors with Government Executive, saying, "No system can prevent an individual from making a bad decision. You just want to make sure there are enough checks and balances to make sure it doesn't become an egregious problem. We have to guard against a pendulum swing so far that we stifle the ability of government and industry to have some cooperation."

John Douglass, head of the Aerospace Industries Association of America, called the initiative a good idea as long as it focuses on preventing fraud and contracting abuses. He added, however, that he was concerned that the task force could lead to more conflict-of-interest rules for defense and aerospace workers that would prevent them from ever wanting to work for the federal government.

The task force must strike a balance between acting as an enforcer of rules and becoming "bounty hunters," said Stan Soloway, president of the Professional Services Council. "If there's a sense that this is 'The Untouchables' out there battling the forces of evil, then that could have a chilling effect."

Both Soloway and Douglass said the Druyun case was an isolated incident and that they do not expect the new task force to uncover widespread procurement fraud.

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