This article was featured in the May 2026 edition of the Utility Contractors Association of New England, Inc.’s Construction Outlook.
In an April 7, 2026, written memorandum for the United States Department of Justice (“DOJ”), the Acting Attorney General of the United States established a new “National Fraud Enforcement Division” to streamline and strengthen efforts to attack government fraudsters. This latest enforcement effort underscores the need for public contractors to deal forthrightly with federal, state, and local governments.
The Acting Attorney General advised that the DOJ “has never adopted a comprehensive and coordinated approach to investigating and prosecuting fraud against taxpayer dollars and tax-payer funded programs.” Until now.
The “core mission” of the National Fraud Enforcement Division will be to “zealously investigate and prosecute those who steal or fraudulently misuse taxpayer dollars.” It will “fulfill” this “mission” by:
- “coordinating with agencies responsible for administering benefit programs”;
- “partnering with federal, tribal, state, territorial, and local law enforcement on fraud-fighting efforts”;
- “developing systems and processes that ensure identification of fraud against taxpayer dollars”; and
- “equipping prosecutors and law enforcement with state-of-the-art tools and resources needed to bring criminal actors to justice.”
The DOJ will start by “consolidating and realigning relevant resources into the National Fraud Enforcement Division” to “avoid duplication,” “minimize layers of bureaucracy,” and “maximize results.” The DOJ will also take “immediate action” to expand the new National Fraud Enforcement Division into a “robust litigating division.”
The memorandum went on to direct the establishment of more than a dozen detailed “protocols” to “ensure swift movement towards fulfilling the mission” of the new division. Among other things, the National Fraud Enforcement Division will assume “operational control” over several fraud units, including the Government Fraud Unit. Not only that, each United States Attorney’s Office: (1) will designate an experienced prosecutor to be responsible for administering the mission of the National Fraud Enforcement Division in each district; and (2) must “ensure” that “investigations and prosecutions for fraud against taxpayer-funded programs are adequately staffed and diligently pursued.” The memo also called for the establishment of a grant program “to enable state and local prosecutors to join the mission of the National Fraud Enforcement Division as Special Attorneys or Special Assistant U.S. Attorneys.”
In addition, the memo requires the Office of Legal Policy to review “relevant laws, regulations, and guidelines bearing on fraud investigations, prosecutions, and penalties, and provide recommendations to the Deputy Attorney General for strengthening such laws, regulations, and guidelines.”
Public contractors should take notice, as the DOJ routinely seeks to hold contractors in fraud and false claims cases accountable for their actions. Only 15 days after the DOJ announced its new fraud-fighting initiative, the DOJ announced that it had commenced a civil forfeiture action against an out-of-state defense contractor. Alleging a “corrupt scheme” to obtain taxpayer dollars in connection with Department of Defense contracts, the government is seeking the forfeiture of a mansion that was allegedly purchased and renovated with $30 million in illicit funds.
This is just a recent example. Public contractors often operate under a microscope because they are constantly making statements, representations, and certifications to federal, state, and/or local governments in exchange for payment for work performed under government contracts. Think: applications for payment, change order requests, and the like. Contractors face the risk of potential exposure if these types of statements, representations, and certifications are not fully accurate. Of course, each case rises and falls on its facts.
That said, knowing that the government is further ramping up its efforts to mount more coordinated and streamlined enforcement actions against suspected fraud, public contractors should review and update their policies as necessary, diligently administer those policies, and train their teams. It is critical for public contractors to recognize potential red flags or exposure areas, and act appropriately to address them. Even where government officials seemingly invite action – such as requesting a contractor to bill for one pay item under a different pay item – contractors should be careful not to bill for work they did not actually perform. Otherwise, they can run the risk of an unwanted government enforcement action.
