What would you do if you responded to a request for quotation, received an order, and shipped products — only to later discover that the entire transaction was fake?
This is what happened recently to a businesswoman who reported to the Georgia Tech Procurement Assistance Center (GTPAC) that she received purchase orders from two out-of-state public universities, one located in Mississippi and the other in Minnesota. She responded by shipping goods, and sent along her invoice.
It turns out that the purchase orders were bogus. This small business now finds that it will not receive payment and may not be able to recover the equipment that was shipped.
What are some of the lessons you can learn from this unfortunate experience? Here are six tips:
- An unsolicited order from a governmental entity (e.g., agency, city, county, school) is a virtual impossibility. If you didn’t submit a bid, chances are you won’t receive a purchase order.
- When you receive a purchase order, make sure it identifies the government official placing the order and is signed.
- Never assume that any purchase order is valid. Call the point-of-contact (POC) listed on the order to make sure it is legitimate. Be alert to the possibility that the phone number on the order might be bogus too.
- Even if the order appears to be legitimate, conduct an Internet search for the purchasing office of the government buyer to see if the location and contact information line-up with what’s on the purchase order. If the contact phone numbers are different on the order and on the web site, call the buyer to inquire about the order — and be sure to call the buyer at the phone number listed on the government entity’s website.
- Also pay attention to the “ship to” location. If it looks suspicious (i.e., it’s a location other than the government entity’s location), ask the buyer why it’s different.
- If, after checking, you suspect the purchase order to be fake, report the incident to the real government organization as well as to appropriate law enforcement authorities.
In the case brought to GTPAC’s attention, the business has reported the incidents to the purchasing offices of both universities. She furnished them with copies of the documents she received — orders that are on official letterhead and appear to be legitimate. She also reported the incidents to local law enforcement authorities who are investigating the locations where the equipment was shipped.
GTPAC recommends that all businesses stay alert to possible fraud in the government contracting process and in other government functions. Here are some tips:
- Be wary of what may be fraudulent phone calls and correspondence. Veterans and small businesses are frequent targets. Remember that when you register in public databases, your contact information is readily available to anyone with access to the web.
- In addition to being alert to the possibility of phony purchase orders, be wary of offers to register your business in a government database, offers to sell you access to contracting decision-makers, and offers to guarantee you a government contract. While offers for similar services can be legitimate, make sure you know who you’re dealing with and what you’re buying.
- Familiarize yourself with the government’s Financial Fraud Enforcement Task Force. See: http://www.stopfraud.gov.
- Learn how to report fraud. See: http://www.stopfraud.gov/report.html.
- The U.S. Department of Justice also operates the National Procurement Fraud Task Force. As recently as last month, that Task Force was responsible for setting the stage for successful prosecution of a case involving $30 million in fraudulently-obtained government contracts and embezzlement of $1.6 million. (See: http://contractingacademy.gatech.edu/2015/08/05/husband-and-wife-admit-to-military-contracting-fraud-and-other-schemes)
- Internet-based crime (cyber crime) is commonplace. The FBI and the National White Collar Crime Center (NWC3) operate the Internet Crime Complaint Center (IC3). Find out how to file a complaint at: http://www.ic3.gov/complaint/default.aspx.
- To learn more about consumer and other fraud in Georgia, see: http://consumer.georgia.gov. To report waste, fraud or abuse in state government, see http://oig.georgia.gov/file-complaint.
- For more information on registration in vendor databases, and what to be wary of, check out our earlier articles about the federal government’s vendor data base (SAM) at http://gtpac.org/sam-gov-registration-is-free-and-help-with-sam-is-free-too and about registering as a vendor with FEMA at http://gtpac.org/fema-warns-vendors-to-look-twice-at-privately-operated-registration-schemes.
Remember the old saying, “If something looks too good to be true, it probably is.” Whenever you receive a call, letter, fax or email about something involving government contracting — and it looks fishy — feel free to contact your team at GTPAC. We’ll be glad to give you any facts we are aware of, along with suggestions about how you might best proceed.