IGs Recommend Harsher Deterrents for Small Biz Fraud

November 4, 2011

The federal government does not have strong enough deterrents to fight small business contracting fraud, said two inspectors general before a House committee hearing.

The biggest problem is the government prosecutes based on the financial loss to the government. But in cases of preferential contracting programs, the fraud arises from who performed the work — not the work itself.

The inspectors general at the General Services Administration and the Small Business Administration propose the government prosecute small business contract fraud based on the contract amount instead.

"If you say in law, if you are a dishonest actor who should not have gotten this 8(a) contract and this is a $20 million contract, that is now a $20 million loss to the government because the government has lost the benefit of awarding that contract to somebody they were meaning to help," said SBA IG Peggy Gustafson before a Oct. 27 hearing of the House Committee on Small Business's Subcommittee on Investigations, Oversight and Regulations. 

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