QUANTICO, Va. -- Fraud in federal contracting isn’t just a white-collar crime, it’s a threat to mission readiness, says Office of Special Investigations top fraud fighter, and AFOSI is making it clear that no scheme is too complex, no deception too small to escape notice.
“Every dollar lost through procurement fraud damages mission readiness and public trust,” said Jason Hein, director of AFOSI’s Office of Procurement Fraud. “AFOSI PF is uncovering fraud at every level and ensuring that those responsible face real consequences.”
That message is backed by a growing list of settlements, including two recent cases in which AFOSI and its federal partners uncovered violations involving inflated project costs, improper certifications and sourcing practices.
First, a joint federal investigation recently led to a $9.6 million settlement with NORESCO, LLC, a Massachusetts-based contractor accused of inflating costs and misrepresenting charges on 29 federally funded energy projects.
“Pricing misconduct in government contracts undermines the integrity of our acquisition system,” Hein said. “Our role is to ensure transparency, protect taxpayer funds and send a clear message that even sophisticated schemes will not go unchecked.”
Special Agents from AFOSI’s Procurement Fraud Det. 6 executed a central role in the multiyear investigation, which involved six federal agencies and focused on NORESCO’s misuse of Energy Savings Performance Contracts, agreements that fund infrastructure upgrades with no upfront taxpayer cost.
The settlement resolved two allegations.
First, that NORESCO inflated a U.S. Navy project by embedding $3.46 million in undisclosed contingency costs. And second, that it miscalculated financing charges across the contracts, leading to projected overpayments in the millions.
NORESCO repaid or credited $5.6 million and received credit from the Justice Department for its cooperation and self-reporting. However, the NORESCO case isn’t isolated.
In a separate investigation, AFOSI contributed to a $300,000 settlement with LED Lighting Solutions, LLC and its owner. The company was accused of violating the False Claims Act by falsely certifying compliance with the Buy American Act and the Trade Agreements Act, while supplying foreign-manufactured lighting products to multiple government agencies, including the Department of the Air Force.
In this case, the government alleged that LED Lighting Solutions misrepresented products under at least 15 contracts and delivery orders, some of which involved items shipped directly from China to U.S. agencies, despite China not being an approved trade partner under the TAA.
The case follows multiple record-setting years for AFOSI PF, and underscore that even smaller-scale fraud, whether through sourcing deception or falsified certifications, can trigger federal enforcement and financial penalties.
For example, in Fiscal Year 2023, AFOSI-led investigations helped recover more than $1 billion, marking the largest single-year total since the agency’s founding in 1948.
Among the year’s most significant outcomes in 2023 included a $377.45 million settlement with Booz Allen Hamilton, which was accused of improperly billing the federal government for commercial work unrelated to its defense contracts.
Another major case involved an $18 million settlement with Amphenol Corporation, following allegations that the company sold non-conforming electrical connectors to the Department of Defense.
Other investigations revealed schemes involving inflated contract awards, bribery and kickbacks. In one example, fraud tied to $100 million in U.S. Air Force projects led to a 15-year prison sentence and a court-ordered restitution package.
According to Hein, the success of the mission is rooted in AFOSI’s collaboration with federal and military partners, the addition of intelligence analysts and the professionalization of the procurement fraud mission since its formal inception in 2013.
“These cases, both recent and historic, make clear that fraud in government contracts will not go unnoticed,” said Brig. Gen. Amy Bumgarner, commander of AFOSI. “Our agency’s investigative work continues to uncover even the most concealed misconduct, ensuring those responsible are identified and held accountable.”
Editor’s note: This article is part of “Price of Fraud,” a series examining the consequences of fraud within the Department of the Air Force. Each case reveals how fraud undermines readiness, wastes resources and results in lasting legal, financial and professional consequences.
If you see something, say something. Insider threats, fraud, and other criminal activity directly impact readiness, safety, and mission success. Help protect our service—report tips anonymously at: //www.p3tips.com/TipForm.aspx?ID=1111.
Related links
Price of Fraud: AFOSI recovers nearly $2 billion in recent years, targets fraud at all levels
Price of Fraud: Raytheon pays $8.4 million following cybersecurity failures
Government Contractor NORESCO Agrees to Resolve Allegations of Overcharging Federal Agencies
Connecticut Company and Owner Settle Liability for False Claims Related to Violations of Buy American Act and Trade Agreements Act