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.
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.
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.
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.
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