Fraud scheme spotlight: Overbilling or fictious invoicing in hourly contracts
Every March, during Fraud Prevention Month, Public Services and Procurement Canada (PSPC) raises awareness of the risk of fraud and the channels to report it. In recent years, many organizations have identified an increase in cases of a form of fraud called "overbilling." This fraud occurs more often in consulting contracts, and is perpetrated when a particular consultant works on multiple contracts for different clients at the same time and falsely bills for work that is not actually performed. The scheme involves the consultant “double-dipping” by submitting multiple false billings indicating that they worked during the same time interval on more than one contract. This can also result in false billings for the particular consultant exceeding a plausible number of hours worked on a given day (e.g., an excess of 24 hours in a day).
What is PSPC doing on overbilling?
PSPC takes overbilling very seriously and has an array of internal controls in place to prevent, detect and respond to this threat. The department employs a Special Investigations Unit that will review all detected cases of possible overbilling. PSPC is also actively looking to detect this behaviour through the use of fraud analytics, and has a number of reporting channels that enable anyone with knowledge or suspicions of overbilling to report it. In the event a person is found to be involved in overbilling and is convicted of an offence, they may lose their security clearance and be ineligible from working on government contracts in the future.
What should you do?
The good news is that you can help prevent this practice by reminding your subcontractors, consultants and even your employees of the importance of billing accurately, and by periodically reviewing their timesheets and invoices. It is also a good practice to ensure your firm is being billed properly.
Red flags of overbilling
There are certain red flags to watch out for that can signal the possibility of overbilling:
- Hours billed by a certain consultant exceeds a plausible number of hours (e.g., more than 24 hours in a day)
- Invoices lack detail regarding the hours worked
- Hours billed by a certain consultant seem suspicious or too high
Report overbilling to the federal contracting fraud tip line
If you suspect overbilling or any other suspicious contracting activity in a federal government contract, report your concerns anonymously to the federal contracting fraud tip line!