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White-Collar Crime - Government Fraud

contracts companies private procurement

Defrauding U.S. government agencies has long been a popular white-collar crime of both companies and individuals. Not only is Medicare a prime target, but much of government spending is susceptible to fraud because of the number of individuals and large sums involved. The federal government spends the nation's tax dollars in procurement (buying supplies), by awarding contracts to companies for a wide variety of needs, and for federally funded programs. The FBI watches over the procurement process to prevent private companies from overcharging the government for ordered items. The massive Departments of Agriculture, Defense, Education, Energy, Housing and Urban Development, Transportation, the General Services Administration, and National Aeronautics and Space Administration, all are aided by the FBI's watchful supervision over purchasing activities.

The government awards billions of dollars in contracts to private companies every year. Contracts range from huge dollar amounts to the relatively small—from military contracts for airplane and shipbuilding to contracts to excavate archaeology sites. Fraud often proves too tempting to pass up. In the late 1990s the government brought charges against Bay Ship Management, Inc. (BSM), which had a contract to maintain U.S. Navy vessels. BSM overcharged the navy millions in excessive fees for repair work, some for work never done. Fraudulently collected money often goes directly to company officials for luxury homes, expensive cars, and vacations.


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