​​​The Anatomy of Procurement Fraud

Procurement fraud, or contract fraud, as it is sometimes called, is believed by many professionals to be one of the most common and costly of all white-collar crimes. It has become increasingly elaborate—many times being technology driven—and it saddles the public and private sectors with costs to reputations and balance sheets. Most distressingly, it undermines confidence in the organizational structure and its management. The U.S. federal government alone issues over $500 billion per year in federal contracts, grants, and loans—$500 billion of our tax dollars.

Schemes of the Fraudster
Most people in the private and public sectors want to be treated fairly and in good faith, be part of honest and open competition, and obtain or provide goods and services at a reasonable cost. Unfortunately, there are also those who may take the pathway of dishonesty and target the vulnerabilities in the procurement process.  Become familiar with these schemes, and you can beat the fraudsters at their own game.

The Five Faces of Procurement Fraud, Abuse, and Noncompliance
Procurement fraud, procurement abuse, and/or acts of non-compliance to procurement policy are, by its very nature, a product of human behavior and perform with willful intent.  This article focuses on the personalities of the people that place procurements at risk for fraud, abuse, and/or noncompliance.

Procurement Fraud and Abuse Risk Examination
Five major steps an organization can take to safeguard against procurement fraud and abuse which are sufficient to prevent, detect, ensure prompt reporting, and/or the capability to respond to such threats—and—that management and the workforce understand their responsibilities to ensure procurement integrity.

Commitment to Procurement Integrity - The "Foundation", Not the "Ceiling"
No matter where it begins, the commitment to procurement integrity does not end at the doorway of the procurement executives. Procurement integrity carries throughout the entire workforce.

Procurement Predicament 'Veils of Trust' Hinder Detection (ACFE Jan/Feb 2017 Edition)
Organizations must accept material risk of fraud within their procurement processes. Failing to recognize this risk exposes them to the full range and deceptive actions of fraudsters and the consequences, which could include potential debarment, contract termination, financial losses, public mistrust, reputation degradation, and criminal and civil penalties. Dare to thrust open the veils of (mis)trust to let in cleansing sunlight.

Committing to Procurement Integrity (National Defense Industrial Assoc. Sept 2017)
Who owns the commitment to procurement integrity in a contractor’s organization? Traditionally, research and regulations place the requirements at the doorway of the executives as their tone carries throughout the entire workforce. 

Five Personality Faces of Procurement Fraud Risk (ACFE Nov/Dec 2017 Edition)
Procurement fraud, abuse and non-compliance to procurement policy is no accident. They’re byproducts of the unusual and sometimes deviant human behavior with different motivations and justifications for their actions than you and me. Because every global organization, public or private, faces the risk from each of the five personality risk profiles, you must discover and differentiate the faces to develop mitigation steps and assist management in detecting, deterring and preventing bad behavior.

Contract Fraud and Abuse Risk Examination (Fraud Intelligence Dec 2017 Edition)
An organization that wishes to ensure procurement integrity must have an effective fraud and abuse mitigation strategy.  The strategy must:
- Have a demonstrated commitment to procurement integrity within an ethical culture;
- Be built with sound protections into organizational/company policies, procedures, processes, and instructions that are designed to the organization/company’s unique procurement risk; and

- Have a robust examinations that identifies all internal and external deficiencies.  



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