INCREASED SPEND ON SERVICES CERTAIN TO BRING INCREASED AUDIT ACTIVITY

The federal government spent over $35 billion in professional services via MAC vehicles last year according to data sited in the article above.  That number continues to rise as federal agencies, including the Department of Defense, obligate more and more money on service acquisitions than on products.  Yet, for all of this increase, much audit activity on these contracts has been on whistle-blower-initiated cases on traditional topics like Trade Agreements Act compliance.  One reason for this may be due to the complex nature of service acquisitions.  Where the money goes, though, the whistleblowers and auditors will follow.  It is essential that contractors remember that the bulk large-dollar False Claims Act cases in this market segment are driven by whistleblowers.  Similarly, it is important to remember who the whistleblowers are.  Almost all are disgruntled former employees who felt that they were never listened to, or competitors who know so much about how business in a particular area is done that they can make accurate conclusions about unethical or illegal behavior.  Service contractors should not have any sense of false security just because most False Claims Act articles focus on TAA, Schedule pricing, or allegations of healthcare fraud. Plaintiff attorneys and people whose 401k programs have tanked may well already be preparing actions.  Scrutiny of contract spending in general is increasing due to concerns over how COVID-19 monies were spent.  The best way to make sure your company is prepared is to conduct regular self-audits.  Not only do these identify potential trouble areas, they show responsibility.  Both factors can be key in eliminating or containing any problems that are discovered.