Justice sets up fraud task force

The Justice Department’s newly announced federal procurement fraud task force is expected to become a permanent entity that will seek out corruption by public officials and false claims by contractors, a Justice official said Oct. 13.

“What we’re trying to do is create some long-lasting changes and institutionalize some goals and objectives with respect to [fraud prosecution] training and legislative fixes,” the official said, speaking on background.

Deputy Attorney General Paul McNulty unveiled the task force last week. Assistant Attorney General Alice Fisher of the Criminal Division will be chairwoman of the task force, and prosecutor Steve Linick will direct it, he said.

“The creation of the procurement fraud task force will coordinate the efforts of the Department of Justice with several other agencies and the inspector general community to find and prosecute procurement fraud where it exists. It is a big step in holding accountable those who would seek to take advantage of both the procurement process and the honest contractors who participate in it,” Linick said.

The task force will consist of agency inspectors general, their deputies and other agency executives, who will serve on various subcommittees. The group also hopes to establish procurement fraud working groups at the department’s regional offices, the official said.

The task force was announced at the same time that the department reported its settlement with Oracle, which agreed to pay a $98.5 million fine for false pricing information that PeopleSoft provided the General Services Administration. Oracle now owns PeopleSoft.

The official said the rationale for the task force was not the Oracle case but the increase in contracting related to defense and homeland security. He said the task force “is an attempt to jump-start the law enforcement community on focusing on procurement fraud and to concentrate law enforcement resources.”

However, industry insiders have different reactions to the Justice initiative, ranging from necessary to overkill.

Chris Jahn, president of the Contract Services Association, said the task force is an extension of the work McNulty did when he was a U.S. attorney. “The majority of fraud prosecutions by his office at that time were actually focused on government employees rather than contractors,” Jahn said. “I think that’s important to point out.”

Dave Nadler, a partner at the law firm Dickstein Shapiro, said the task force’s creation is a sign of the times, given the procurement problems that have come to light. “The Justice Department doesn’t just wake up one morning and decide to put together a task force,” he said. “The events over the last two years have driven them to take this initiative.”

Paul Brubaker, chief executive officer of the government consulting firm Procentrix, described the move as largely political and questioned its long-term value.