Practice Areas

Procurement Fraud Attorney

The procurement process is intended to obtain the best goods and services and promote fair dealing in awarding contracts. Ideally, the buyer gets what it paid for, while the vendors are treated fairly. Unfortunately, the system is rife with the potential for fraud.

Procurement fraud is the unlawful manipulation of a procurement process to acquire contracts, good or services at an unfair advantage. An analysis of EU member countries found that, on average, procurement fraud cost them 3.5% loss, while England estimated a loss rate of 4.76% [1]. For companies or countries, 3-5% loss from procurement fraud is a staggering cost.

Schneider Wallace Cottrell Konecky LLP is exclusively a litigation law firm with decades of experience handling complex claims involving procurement fraud, in both corporate and government purchasing. To speak with a procurement fraud attorney, contact us at 1-800-689-0024 or

For more questions and answers on procurement fraud lawsuits, visit our FAQ: Procurement Fraud FAQ.

Procurement Fraud Schemes

Corporations and government agencies rely on a procurement process to make multiple purchases of goods and services. A procurement process generally governs purchase of office supplies, food vendors, delivery carriers, driving services, building construction and basically anything else a large corporation or government needs on either a one-time or ongoing basis. Procurement generally involves the cycle of determining requisites, accepting bids from vendors, choosing the vendor, processing the purchase, receiving the goods and invoicing and paying for the products. During the procurement process, bids are typically vetted for price, quality, quantity, timeliness, appropriateness and other factors relevant to the particular project.

A government agency must also maintain standards for fair dealing and transparency. Strict federal, state and local laws govern the government contract bidding process.

Fraudulent action by a vendor may result in the buyer not receiving the product or service as intended or at the prescribed price. When a government contract is at issue, fraud also may preclude fairness of the process to other vendors. Perpetrators of fraud may include the vendor, an employee within the company, or a group of vendors and employees working together. Procurement fraud can occur both before the awarding of a contract, or after.

Types of Pre-Contract Procurement Fraud Schemes:

  • Price Fixing
    • Example: Agreement within contractors to raise prices or eliminate discounts
  • Bid Rigging
    • Example: Winning contractor subcontracts to higher bids
  • Defective Pricing
    • Example: Failing to update lower costs for goods in pricing data
  • Fraud in Needs Determination for Goods or Services
    • Example: Need determination tailored to target specific contractor
  • Fraud in Development of Work and Specifications
    • Example: Statement of work written by or with coordination with a preferred contractor
  • Fraud During Pre-Solicitation Phase
    • Example: Statement justifying sole source is falsified
  • Fraud During Solicitation
    • Example: Process excludes some qualified contractors
  • Fraud During Bidding
    • Example: Withdrawal of one bidder, who becomes a subcontractor to a higher bidder
  • Fraud During Bid Evaluation
    • Example: Selecting evaluation factors designed to favor a preferred contractor
  • Fraud During Contract Negotiation
    • Example: Misrepresentation of costs by contractor during negotiations
  • Fraud in Award of the Contract
    • Example: False emergency contract awarding of a no competition contract

Types of Post-Contract Procurement Fraud Schemes:

  • False Invoices
  • Change Order Fraud
    • Replacing unrealistic low price with change order after contract
  • Cost Mischarging
    • Hiding costs
    • Charging for unallowed costs
    • Mischarging for material
    • Mischarging for labor
  • Accounting Fraud
  • Manufacturing Fraud
    • Defective material (nonconforming material)
    • Missing volumes of material
    • Transfer of materials
  • Certification fraud
  • Product Substitution
  • Witness Tampering
  • Bribery or Kickbacks
    • Contactor kickbacks
    • Sub-contractor kickbacks
    • Vendor kickbacks
    • Kickback to purchaser or government employee

To read more examples of procurement fraud, visit our page with Examples of Procurement Fraud.

Employee fraud also occurs. An employee who is placed in charge of purchases may engage in fraud by using the position to obtain products for personal use or to sell at a higher price. This scheme can grow costly when high-end purchases such as computers, tools and automobiles are at issue. An employee also may favor a family business or partner with an outside vendor in a purchasing scheme for kickbacks and bribes.

Procurement Fraud Whistleblower

Procurement fraud against the government is illegal and covered by federal and state False Claims Acts. The federal government regulates procurement processes with Federal Acquisition Regulation (“FAR”). The combination of these regulations and laws create a tight set of controls for a fair process for contractors, and to ensure government dollars are not wasted.

A procurement fraud whistleblower is a person who discloses information that they believe reasonably is evidence of waste, fraud, illegal activity, mismanagement or abuse of power. They are empowered and protected by laws such as the False Claims Act.

For more on federal procurement fraud awards, visit our page: Federal Procurement Fraud Reward.

False Claims Act: A False Claims Act is law that makes it illegal for any person or company to knowingly present false records or make a false claim to a government agency or purchaser. Federal and state governments use False Claims Acts to recover funds after instances of procurement fraud, product substitution fraud, or other illegal activity. The False Claims Act does not just cover procurement; it also covers services provided to government sectors such as Medicare, Medicaid, Veteran Affairs, and even research grant departments.

If a contractor or employee engages in illegal activity at the taxpayers’ expense, the False Claims Act provides governments with the means to pursue compensation. In addition to the federal False Claims Act, twenty-nine states have passed state False Claims Acts for state procurement:

  • Alaska
  • California
  • Colorado
  • Connecticut
  • Delaware
  • Florida
  • Georgia
  • Hawaii
  • Illinois
  • Indiana
  • Iowa
  • Maryland
  • Massachusetts
  • Michigan
  • Minnesota
  • Montana
  • Nevada
  • New Hampshire
  • New Jersey
  • New Mexico
  • New York
  • North Carolina
  • Oklahoma
  • Rhode Island
  • Tennessee
  • Texas
  • Vermont
  • Virginia
  • Washington

Additionally, several counties, cities and special districts have passed False Claims Acts:

  • Broward County, Florida
  • Chicago
  • District of Columbia (D.C.)
  • Miami-Dade County
  • New York City
  • Philadelphia

To read more on state and local false claim act laws, visit our page: State Procurement Fraud Laws.

Qui Tam Laws: Qui Tam laws exist to protect whistleblowers and establish rewards for their actions. Awarding a whistleblower with a financial reward encourages witnesses to step forward, and their actions help preserve government and taxpayer funds. When a case leads to a penalty for procurement fraud or other types of fraud, the whistleblower can receive part of the settlement as compensation for their efforts.

A whistleblower can receive up to 30% of the recovery. This system ensures those with knowledge of contractor or government malfeasance step forward, and their work in reducing corruption is rewarded.

To read more about Qui Tam litigation, read more at our in-depth explainer page: Qui Tam Laws.

Product Substitution Fraud Definition

What is Product Substitution?

Product Substitution is when a contractor supplies nonconforming material to contract requirements. The product could be used, outdated, not properly manufactured to specifications, or uninspected or untested per contract requirements.

The quality of the product is essential when choosing vendors. After winning the contract, the vendor must provide the level of quality it offered in its bid. Product substitution may include using inferior materials or supplying counterfeit or defective parts to increase profitability to the vendor.

To read more about product substitution, visit our page: Product Substitution Fraud.

Product Substitution Lawyer

Schneider Wallace represents companies and vendors that have been defrauded by a procurement scheme. Schedule a consult with our product substitution law firm for representation in jurisdictions throughout the United States. We also have offices in in California, Texas and Puerto Rico.

To speak with a product substitution lawyer with years of experience handling both government whistleblower and contractor fraud cases, contact us at 1-800-689-0024 or


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