FRAUD IN THE DOD: IS THE CURRENT FRAUD PENALTY SYSTEM AN EFFECTIVE DETERRENCE TOOL?
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Authors
Rowe, Michael L.
McLaughlin, Gerald P., Jr.
Subjects
DOD
procurement fraud
fraud penalties
fraud cases
penalty effectiveness
defense contractors
procurement fraud
fraud penalties
fraud cases
penalty effectiveness
defense contractors
Advisors
Sullivan, Ryan S.
Hermis, Judith M.
Date of Issue
2019-12
Date
Dec-19
Publisher
Monterey, CA; Naval Postgraduate School
Language
Abstract
The purpose of this research is to assess the relationship between fraud penalties levied by the Department of Justice (DOJ) against defense contractors (firms) that commit fraud against the Department of Defense (DOD) and the effect of those penalties on future fraud recidivism. Using hand-collected historical data related to fraud committed against the DOD, we find a total of 511 fraud cases and $13.5 billion in fines between 1995 and 2018. An estimated regression model is used to analyze the relationship between fraud penalties and fraud occurrences. Multiple specifications of our model show little to no relationship between DOD- and DOJ-imposed fines and subsequent contractor fraud commission. Given the magnitude of resources deployed for setting and enforcing fines and penalties, the DOD should consider employing alternative tools to encourage compliance with procurement laws and discourage contractor fraud.
Type
Thesis
Description
MBA Professional Project
Department
Graduate School of Defense Management (GSDM)
Graduate School of Defense Management (GSDM)
Organization
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NPS Report Number
Sponsors
Funder
Format
Citation
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.