Analysis: Little 'outright fraud' in government contracting

Thursday - 10/13/2011, 9:41am EDT

Steve Ryan, McDermott, Will and Emery

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By Jack Moore
Federal News Radio

It only takes a quick scan of some recent headlines to see why government contractors have seen their reputations sullied:

But Washington litigator Steve Ryan says those incidents are exceptions. Ryan, who heads the government practice at McDermott, Will and Emery says U.S. federal contracting is — for the most part — an honest business.

Ryan joined the Federal Drive with Tom Temin and Amy Morris and said government tends to stay on on top of wrongdoing by errant contractors.

Ryan said the government is fairly effective at rooting out outright fraud, noting the role played by agency inspectors general.

"I actually think the outright fraud issue is not a large issue numerically in government contracting," he said. "There are significant controls with the government. So when you commit a criminal act, it has to be very well thought-out in order to escape eventual detection."

The problem, Ryan suggested, is one of perception.

Discussions of waste, fraud and abuse, encompass everything from contractual disputes, such as overcharging to extreme cases of outright fraud, such as contractors or agency officials receiving kickbacks.

But the allegation that a contractor overcharged the government can carry a "taint that is damaging in the marketplace," and makes a them more likely to settle if a false claims suit is brought, as software giant Oracle did last week in a decade-old case stemming from allegations it overcharged the General Services Administration.

Ryan said agency inspectors general should first focus on genuine fraud in government contracting. "And, second, look at these other cases — that are, essentially, contract disputes — in a different light," he added.

He also prescribed agency contracting officials who act consistently across the government and geographic areas. And he said the rhetoric about waste, fraud and abuse in government contracting should be "correct"

"I'm concerned ... that the way people label or mis-label government-contract fraud would lead the public to believe that there's more fraud than there actually is," he said.

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