President Obama announced his 2015 proposed budget last week. The budget shows a renewed focus on combating fraud, waste and abuse in government contracting by increasing the number of compliance and fraud enforcers at several agencies.
The Department of Labor (“DOL”), Department of Defense (“DOD”), Department of Health and Human Services (“HHS”) and the General Services Administration (“GSA”) plan on hiring more personnel specifically to investigate fraud. The President’s budget also increases the funding for HHS’ inspector general from $300 million to $400 million. It appears that HHS will continue to pursue record breaking fraud recoveries, as an additional $325 million was earmarked for the Health Care Fraud Prevention and Enforcement Action Team, along with other program integrity efforts. GSA Office of Inspector General (“OIG”), which has been particularly aggressive in recent years, plans on hiring more special agents in FY2015, which will increase the OIG’s ability to investigate allegations of fraud and misconduct and achieve even higher civil and criminal recoveries than in past years. GSA also expects audit work in the construction arena to increase significantly this year as Recovery Act projects come to completion.
The False Claims Act (“FCA”) will remain an important enforcement tool for agencies to use against government contractors. The government is looking to fraud enforcement as a mechanism to increase revenue. Through a joint effort with DOJ, HHS’ FCA recoveries reached a record $4.3 billion in 2013.
Even in an era of flat and declining budgets, agencies are devoting increased resources to both audits and fraud investigations. Contractors should be prepared for this trend by implementing comprehensive and up-to-date compliance programs, monitoring adherence, and promptly conducting their own investigation of any suspected non-compliances or fraud.