USAID—the U.S Agency for International Development—is the federal agency primarily responsible distributing tax dollars to civilian foreign aid projects. USAID projects cover a range of areas, including disaster relief, poverty relief, economic development, democracy, human rights and governance, and water and sanitation.
Unfortunately, USAID-funded projects have proved an attractive target for fraud. A number of practices, all of which can give rise to False Claims Act liabilities have plagued USAID contracts, including:
- Inflating supplier prices through associated “middle men”
- Collusive bidding and price fixing
- Cost mischarging
- Product substitution
- Progress payment fraud
- Rigged specifications
- Unbalanced bidding
- False representations concerning quality or performance
- Fraudulent cost proposal data
- Charging “direct” costs to overhead, so as to “distribute the loss” to other contracts
- Failures to meet contract specifications
- Falsifying government-furnished property records
- Co-mingling contracts
- Submitting false invoices
- Duplicate contract payments
- Change orders abuse
- Bribes or kickbacks to win or keep a contract
- Overstatement of shipment weights
- Violations of USAID source, origin and nationality regulations
Several successful False Claims Act cases have been brought charging the recipients of USAID funds with fraud. By way of example:
In 2013, Contrack International, Inc. agreed to pay $3.5 million to settle claims the company had violated the False Claims Act by fraudulently concealing the identify of its joint-venture partners, resulting in awards of USAID-funded contracts to Contrack and its partners, for which they were not eligible. Read more
In 2012, Harbert Corporation agreed to pay $47 million to settle whistleblower claims that the company had violated the False Claims Act by conspiring to rig bids on a USAID-funded construction contract in Cairo, Egypt. The whistleblower in this case was a vice president at another company that had also bid on the project. Read more
In 2011, the Academy for Educational Development agreed to pay $5 million to settle claims that the company violated the False Claims Act by violating regulations and contract specifications in connection with USAID-funded foreign assistance projects in Afghanistan and Pakistan. Read more
In 2010, the Louis Berger Group agreed to pay $50.6 million to settle whistleblower claims that the company violated the False Claims Act by knowingly charging both the Pentagon and USAID inflated overhead rates. The whistleblower in this case was a former employee who had been a senior financial analyst with the company. Read more
In 2005, Harvard University agreed to pay $26.5 million to settle claims that Harvard researchers had violated the False Claims Act by fraudulently using USAID-funded resource to advance their own personal business interests and investments.
If you have knowledge and solid evidence of fraud involving USAID funded projects, please contact our Chicago whistleblower lawyers.
Consultations are free and confidential.