A well-structured procurement process is intended to obtain the best goods and services and to promote fair dealing in awarding certain types of 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.
Schneider Wallace Cottrell Konecky LLP is exclusively a litigation law firm founded 25 years ago with a nationwide presence. Our lawyers seek to litigate complex claims involving procurement fraud in corporate and government contracts for goods and services. We are a team of aggressive trial attorneys who fight for our clients’ best possible recovery.
Government or Corporate Procurement Process
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.
Change Orders that Increase Costs and Fees
Price may not be the only factor in choosing a vendor, but it is almost always considered. One would expect the price to increase above the initial bid if unavoidable situations arise; however, the vendor should be able to explain the price differential. Change order fraud occurs when the contractor submits a lower bid in order to win a contract while intending to submit a change order that substantially increases the price of the project once approved.
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.
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.
Learn More About Procurement Schemes and Rights to Recovery
Schneider Wallace represents companies and vendors that have been defrauded by a procurement scheme. Schedule a consult with our litigation lawyers in California, Texas, North Carolina or Puerto Rico for representation in jurisdictions throughout the United States.