DOJ put government contracts on its fraud priority list

01What the directive does

Directive 26-12 is a memorandum from Colin M. McDonald, Assistant Attorney General for the National Fraud Enforcement Division, to all Fraud Division personnel. Its opening sets the tone: "Division prosecutors will take an aggressive, all-tools approach to investigating and prosecuting our health care, government, tax, and trade fraud priorities". It then sets out how the Division handles companies, as distinct from the people who work for them.

Before it reaches the priorities, it does more groundwork. It tells prosecutors to follow the Department's existing rules for business organizations, the Principles of Federal Prosecution of Business Organizations in the Justice Manual and the Corporate Enforcement and Voluntary Self-Disclosure Policy. It routes every corporate case through the Division's new Corporate Enforcement Section: prosecutors had seven days from the directive to report every open corporate investigation to the Section's chief, and the Section now evaluates whether a company keeps the terms of a criminal resolution. And it promises balance: "we will also firmly guard against overbroad corporate enforcement".

Two things narrow the reach. The priorities govern cases the Fraud Division opens or supervises; a footnote leaves out cases a U.S. Attorney's Office assigns to its own District Fraud Counsel without Division supervision. And the directive is about criminal enforcement. The word "fraud" appears in it 42 times; the False Claims Act, the civil statute most procurement fraud is resolved under, appears nowhere.

02The ten factors, read from a contractor's side

When a Division prosecutor recommends what to do with a company, the directive says the prosecutor "must place great weight on the following factors in determining whether to bring charges and negotiating plea or other agreements". The list is not exhaustive, and it sits on top of the Justice Manual's own factors rather than replacing them.

Five of them can be read straight out of a government contract file. Factor 2 names concealment from auditors and obstruction of oversight: in a defense contract the auditor is usually DCAA, and an incomplete or altered response to an audit request is the kind of record this factor describes. Factor 4 names threats to military readiness, which is what a nonconforming part in a weapon system or a skipped test on military equipment amounts to. Factor 6 names conduct affecting more than one taxpayer funded program: of the 2026 matters below, 16 named more than one agency.

Factor 8 sets a line at $25 million in loss. Loss is not what a company pays to settle a civil case, which can include multiple damages and penalties or be well below the loss; three of the year's civil matters were announced at that amount or more, and the figure says nothing about the loss behind any of them. Factor 9 names the exfiltration of American dollars to support foreign adversaries, a factor that sits close to the trade fraud priority.

03The 2026 False Claims Act record

Two terms before the numbers. A matter is one resolution; the Department often announces the same resolution twice, once from the Civil Division and once from the U.S. Attorney's Office, so the 46 releases of calendar 2026 through October 8 come down to 39 matters, and every count here is a count of matters. A qui tam case is one a private whistleblower filed on the government's behalf under 31 U.S.C. 3730; the liability itself is in 31 U.S.C. 3729.

Across those 39 matters the Department announced $788.4 million. Whistleblowers brought 19 of them, 48.7 percent. All but one were settlements, which means a defendant paid without a finding of liability.

The dollars are not spread evenly. Perfectus Aluminum Inc. and Related Companies agreed to pay $549.5 million to resolve allegations of evading antidumping and countervailing duties on aluminum extrusions imported from China, which is 69.7 percent of the year. Set it aside and the other 38 matters total $238.9 million. The next largest, Tetra Tech EC Inc. at $57 million, resolved allegations that soil samples were swapped and data falsified at the former Hunters Point Naval Shipyard.

By theory, small business program fraud is the most frequent, in 8 matters, among them Broadway Electric Inc. and Cornerstone Contracting Inc., which paid $21.3 million over contracts reserved for service-disabled veteran-owned small businesses. The Department of War is the agency named first in 16 of the 39, 41 percent, more than any other.

04Where the year's matters meet the directive

The civil matters are not criminal cases, and nothing here says any of them would have been charged. But several match the conduct the directive names, and they show what that conduct looks like in a contract.

Trade. Five matters alleged customs duty evasion, the conduct priority 4 covers, led by Perfectus Aluminum Inc. and Related Companies. The releases for New York Packaging II LLC and Taiwan LED Manufacturer describe the Department's cross-agency Trade Fraud Task Force as drawing on both its Civil and Criminal Divisions.

Readiness. Four matters alleged a nonconforming product: Teledyne Electronic Safety Products over a part in the sequencer units of military ejection seats, Insect Shield LLC and Co-Founder’s Estate over falsified test results for insect repellent on Army uniforms, Judd Wire Inc. over tests skipped on wire and cable used by the Navy, and Tetra Tech EC Inc. over the shipyard soil tests. These are the facts factor 4 is written for.

Certifications. Two matters were about cybersecurity representations in defense contracts, Honeywell Aerospace Inc. and LOGZONE Inc. of Huntsville, and three were civil rights certification cases, among them Accenture at $25 million and Deloitte at $21.5 million. In each, the allegation was that the company did not meet a contract requirement it had agreed to or certified.

Criminal first, civil second. In four of the year's matters, the release records a criminal case behind the civil one. Sierra Nevada Company, LLC paid $7.75 million over its hiring of a Department of War official who kept working on its contracts; the official had pleaded guilty. KDHK, Inc. and its owners paid civil penalties after guilty pleas over Army housekeeping contracts; the government won a civil judgment after a bribery conviction over construction contracts in Alaska; and the University of Hawaii settled a grant case that grew out of earlier prosecutions.

05Disclosure: what the directive rewards and the FAR requires

The directive says the Department must "appropriately credit those that demonstrate a willingness to disclose misconduct, cooperate, and remediate". Its last section tells Division leadership to "design and implement policies and programs that appropriately incentivize whistleblowers to bring forward credible information pertaining to fraud", including people who took part in the conduct.

The Department is also looking on its own. With data analytics at a National Fraud Detection Center, the directive says, "the Fraud Division is proactively generating leads and opening new individual and corporate fraud investigations at a rapid pace".

A contractor does not have to wait for that program. If your contract carries FAR 52.203-13, Contractor Code of Business Ethics and Conduct, the duty to disclose is already a term of it:

The clause says "timely" and sets no number of days. It flows down to subcontracts above the clause's threshold, and FAR 52.203-17 requires you to tell your employees in writing about their whistleblower protections. The consequence of staying silent sits in Part 9. FAR 3.1003 says a contractor may be suspended or debarred for a principal's knowing failure to disclose whether or not the clause is in the contract, and FAR 9.406-2 lists it as a cause for debarment:

The year's record shows what disclosure buys. In three matters the release credits the company's cooperation: Ascend Elements received credit for a timely self-disclosure and paid $7.5 million over a Department of Energy grant, and Judd Wire Inc. and Teledyne Electronic Safety Products were each credited for cooperating with the investigation.

Part 9 is also being rewritten. The Department of War's Class Deviation 2026-O0042 puts the FAR Overhaul's Part 9 in force for its contracts, and 35 agencies have issued one. The rule that would codify it, FAR Case 2026-011, covering Parts 9, 27 and 47, was published as a proposed rule on September 18, 2026. Comments close October 19, 2026. The passages above are the codified FAR as the eCFR prints it; read the overhauled Part 9 your contract incorporates beside them.

06Where GovConDash fits

The regulations this piece quotes and the record it counts are two tabs of the platform you can open today.

Step 1Read the Part 9 that governs your contract

Part 9 holds suspension and debarment. The FAR Overhaul sub-tab opens it with the Department of War deviation that applies it, the open FAR cases for the part, including FAR Case 2026-011, and a link to every agency's own signed deviation.

Step 2Find the matters that look like your business

Browse lists the matters newest first, one row per matter, with the scheme, resolution and agency filters, a search over every headline and release, and an Excel export.

Step 3See the whole record before you read one case

Insights opens on an executive overview of the whole corpus, then breaks it down by recoveries, allegations and who brought each case.

Documents and data used in this piece

This piece is commentary on a published Department of Justice directive, the Department's public announcements and the Federal Acquisition Regulation. It is not legal advice. A settlement resolves allegations without a finding of liability, and nothing here says any company named committed a crime or would be charged under the directive.

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Check a company's False Claims Act record before you rely on it

The False Claims Act section holds every procurement matter the Department has announced since 2009, one row per matter, with the settlement agreements the releases link. Browse finds a teaming partner, a competitor or a scheme like yours; Insights shows the whole record by recoveries, allegations and who brought each case.

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