FAC Fraud Detection & Prevention 2 — Questions and Answers
Question 1: Which federal statute is the primary law used to prosecute contractors who submit false claims to the U.S. government?
- Anti-Kickback Act
- False Claims Act (Correct answer)
- Federal Acquisition Streamlining Act
- Procurement Integrity Act
Correct answer: False Claims Act
The False Claims Act (31 U.S.C. § 3729) imposes liability on individuals and companies who defraud the federal government by submitting false claims for payment.
Question 2: A contractor bills the government for 1,000 units of a product but only delivered 800. This is best described as:
- Defective pricing
- Overbilling fraud (Correct answer)
- Bid rigging
- Cost mischarging
Correct answer: Overbilling fraud
Overbilling fraud occurs when a contractor charges for goods or services not actually delivered or performed.
Question 3: Under the Procurement Integrity Act, for how long after a procurement are former officials prohibited from receiving compensation from the winning contractor?
- 6 months
- 1 year (Correct answer)
- 2 years
- 5 years
Correct answer: 1 year
The Procurement Integrity Act prohibits former officials from accepting compensation from award recipients for one year after the procurement.
Question 4: Which of the following best describes 'labor mischarging' in a government contract?
- Paying employees above prevailing wage rates
- Charging labor costs from one contract to another contract (Correct answer)
- Hiring subcontractors without approval
- Failing to pay employees overtime
Correct answer: Charging labor costs from one contract to another contract
Labor mischarging involves allocating labor hours or costs to a government contract that were actually worked on a different contract or project.
Question 5: An agency's Inspector General (IG) is primarily responsible for:
- Approving contract awards
- Investigating fraud, waste, and abuse within the agency (Correct answer)
- Setting procurement policy
- Negotiating contract prices
Correct answer: Investigating fraud, waste, and abuse within the agency
Inspectors General are independent watchdogs who conduct audits and investigations to detect and prevent fraud, waste, and abuse within federal agencies.
Question 6: What is 'bid suppression' in the context of procurement fraud?
- Submitting a bid below cost to win a contract
- Colluding to prevent competitors from submitting bids (Correct answer)
- Withdrawing a bid after award
- Failing to meet the bid deadline
Correct answer: Colluding to prevent competitors from submitting bids
Bid suppression is a form of bid rigging where one or more competitors agree to refrain from bidding so a designated firm can win.
Question 7: A contracting officer suspects a contractor is using a shell company to inflate subcontract costs. Which action is most appropriate first?
- Immediately terminate the contract
- Refer the matter to the agency IG or debarment official
- Reduce the contractor's next payment by the suspected amount
- Request an audit from DCAA (Correct answer)
Correct answer: Request an audit from DCAA
The Defense Contract Audit Agency (DCAA) or cognizant audit agency can review contractor financial records to identify shell company schemes and cost inflation.
FAC Fraud Detection & Prevention 2
Which federal statute is the primary law used to prosecute contractors who submit false claims to the U.S. government?