Procurement fraud in the U.S. Department of Defense: implications for contracting processes and internal controls

Thumbnail Image
Authors
Rendon, Juanita M.
Rendon, Rene G.
Subjects
Internal controls
Fraud
Auditability theory
Contract management
Advisors
Date of Issue
2016
Date
Publisher
Emerald Publishing
Language
Abstract
Purpose - This paper aims to explore selected real-world procurement fraud incidents in the US Department of Defense (DoD) and the implications of these incidents to the DoD’s contracting processes and internal controls. Design/methodology/approach - This paper analyzes actual procurement fraud incidents and identifies in which phase of the contract management process the fraud occurred and which internal control component was associated with the fraud scheme. Findings - The fraud incidents generally occurred during the source selection and the contract administration phases and involved the control activities, monitoring and control environment components of internal control. Research limitations/implications - The fraud incidents are analyzed using contract management and internal control frameworks adopted by the US Government. Recommendations are developed for improving contracting processes and internal controls as an approach to deterring and detecting procurement fraud and may be applicable to other international public procurement bodies. Practical implications - Governments are ensuring auditability in public procurement as a means of improving agency governance. The research findings suggest that an emphasis on capable contracting processes and effective internal controls should be adopted for fighting procurement fraud. Social implications - Ensuring auditability in public procurement has a far-reaching effect in society. The value of capable processes and effective internal controls is gaining much attention in public agencies, as they strive for accountability, integrity and transparency in their governance processes. Originality/value - By emphasizing capable processes and effective internal controls, governments can apply a strategic approach to detecting and deterring fraud and thus ensure that government monies are spent in the most effective and efficient ways.
Type
Article
Description
URI
https://hdl.handle.net/10945/55671
Series/Report No
Department
Organization
Identifiers
NPS Report Number
Sponsors
Funding
Format
20 p.
Citation
J.M. Rendon, R.G., Rendon, "Procurement fraud in the U.S. Department of Defense: implications for contracting processes and internal controls,", Managerial Suditing Journal, v.31, no. 6/7, (2016), pp.748-767.
Distribution Statement
Rights
This publication is a work of the U.S. Government as defined in Title 17, United States Code, Section 101. Copyright protection is not available for this work in the United States.
Collections
Publications