Fraud by contractor: Variation

Example:  The contract provides that the contractor would be paid its proven actual additional costs if the Road Agency changes the contract specification.  RA changes the specification to widen the road from 5.5 metres to 6 metres.

• The actual additional cost to the Contractor of the extra width is $2m.
• Contractor deliberately invoices RA for $3m for the additional cost (i.e. an overcharge of $1m).
• Contractor attaches to the invoice false equipment and personnel work sheets to cover the false additional claim of $1m.

Fraudulent acts by the contractor:

• Creating and submitting an invoice which states an incorrect cost.
• Creating and submitting false equipment and personnel work sheets.

Result:

• Contractor receives unlawful profit of $1m.
• RA overpays by $1m.