Call us: 1 (877) 692-1965
Free Consultation
Name (required)
Email (required)
Phone (required)
Message (required)
Enter Code (required)

General Contractor Fraud

Many people think that only military or defense contractors defraud the government, but our team has also represented whistleblowers in other contracting industries.  Federal, State and municipal governments often contract with companies to build, repair, or demolish housing projects or highways, or to haul waste or provide other services.  Unscrupulous companies in these industries can commit fraud in a variety of ways, including:

  • Cross-Charging/Improper Cost Allocation
  • Failure to Meet Contract Specifications/Product Substitution
  • Bid-rigging/Kick-backs
  • Failure to Comply with Affirmative Action Programs
  • Overcharging
  • Falsified Progress Reports
  • Prevailing Wage/Davis-Bacon/McNamara-O’Hara
  • Improper Disposal of Materials
  • Municipal Waste Disposal

Cross-Charging and Improper Cost Allocation

Cross charging is one of the most common types of procurement fraud cases. “Cross-charging” occurs when a company instructs employees to write down on their time cards that they worked on one project when they were actually working on another project.  The company does this because the project the employees are billing to is more lucrative than the one they are actually working on, either because of the hourly rate or because of the structure of the contract (for example, companies will often tell employees to bill to a cost-plus project when they were actually working on a fixed-price contract).  Improper cost allocation is a similar fraud, in which companies charge the costs of supplies or outsourced labor to one project, but use those materials or labor for a different project.

Failure to Meet Contract Specifications/Product Substitution

Fraud also occurs when a company provides a part or parts not manufactured in accordance with specifications, or uses materials not permitted by the project specifications, or otherwise takes short-cuts to lower its costs, in violation of the project’s specifications.


Bid-rigging and Kick-backs are a particularly insidious type of fraud, because they are usually unknown to all but a few individuals.  “Bid-rigging” occurs when a group of companies decide together how each of them will bid on a project or a group of projects.  Kick-backs occur when companies provide incentives to one another to purchase their products or services for use in a government project.  For example, a sub-contractor may agree to perform work on a private contract for free or at a reduced price, in exchange for the general contractor paying him or her a more favorable rate on a government-funded project.

Failure to Comply with Affirmative Action Programs/Small Business Set Asides

Some government contracts mandate that contractors either comply with certain affirmative action programs, or set aside a certain percentage of work for companies that are owned by minorities or women.  Other contracts or subcontracts are designated specifically to be granted to small businesses, or will provide subsidies to small business who fulfill them.  Some contractors circumvent these requirements in one or more of the following ways:  a) general contractors may claim to provide a certain percentage of subcontracts to minority or woman owned subcontractors, but do not do so; b) some contractors will claim to be small businesses, but have hidden the true size of their business through complicated ownership structures and/or dummy corporations; c) some contractors will claim to have implemented certain mandatory affirmative action programs, but have not done so.


Another common type of fraud is the overcharging of materials or hours.  Contractors that participate in this scheme will charge the government a higher cost for supplies or labor than they charge in the private marketplace, keeping the extra money for themselves.

Falsified Progress Reports

Many government contracts disburse payments based on progress.  In order to receive payments sooner, contractors sometimes falsify reports regarding the progress they have made.

Prevailing Wage/Davis-Bacon/McNamara-O’Hara

There are various Acts that protect employees from wage discrimination.  Under these Acts, contractors must adhere to the locally prevailing wages as set by the Department of Labor.  This is the minimum wage that must be paid to employees.

The Davis-Bacon Act applies to contractors (and subcontractors) executing federally funded construction or repair contracts exceeding $2,000.

The McNamara-O’Hara Service Contract Act (SCA) pertains to contractors carrying out services under contracts exceeding $2,500.

Some contractors certify that they have complied with these statutes, but in reality pay employees less than the prevailing wage, either by paying less per hour, by compelling employees to work extra hours for no compensation, or by otherwise wrongfully withholding pay.

Improper Disposal of Materials and/or Waste Disposal

Fraud is committed when contractors falsely claim to follow all necessary precautions regarding the disposal of hazardous materials or pollutants.  This occurs in several different contexts.  Some contractors are hired specifically to dispose of hazardous waste (ie to clean up “Superfund” sites), and fail to adhere to their contract’s provisions regarding the disposal of that waste.  In other instances, contractors that are hired to demolish or repair a structure or area may falsely claim to have properly disposed of the resultant debris.  Similar frauds occur in the context of municipal waste disposal (garbage collection).


If you have specific information related to the above-mentioned wrongdoings or similar fraud, contact us and we will analyze your case and provide step-by-step assistance with filing a whistleblower claim to stop the fraud.

Learn more on how to file a whistleblower suit.


Sponsored by:

Milberg Tadler Phillips Grossman LLP
© 2018
All Rights Reserved
Site & Hosting by Cohesive Websites