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    Major Fraud Act and False and Fraud Statement Act

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    A contractor receives an un-priced change order on a $500,000 fixed price contract. The contractor incurs $50,000 in additional labor costs in performing the change. In its request for equitable adjustment, the contractor "pads" the claim and requests to be reimbursed for $60,000 in additional labor. To support its claim, the contractor includes records purporting to document the extra $10,000 worth of hours worked, but these extra hours were actually spent on a different contractual effort unrelated to the contract for which an adjustment is sought. What statute has the contractor violated? [Personal note: I think it is between 'B' & 'D', but I seem to favor 'D'...please assist]

    A) Sherman Anti-Trust Act

    B) Major Fraud Act

    C) Bribery of Public Officials

    D) Fraud and False Statements Act

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    Solution Preview

    The answer is (D) Fraud and False Statements Act

    Major Fraud Act only applies when the property or services being questioned is more than $1,000,000 which in the above scenario it is not.

    Here is some other helpful information for you:

    The Major Fraud Act of 1988 (Pub.L. No. 100-700, § 2, 102 Stat. 4631) created a new offense, 18 U.S.C. § 1031:

    1. Whoever knowingly executes, or attempts to execute, any scheme or artifice with the intent --

    1. to defraud the United States; or
    2. to obtain money or property by means of false or fraudulent pretenses, representations, or promises, in any procurement of ...

    Solution Summary

    What is the major fraud act and what is the Fraud and False Statement Act and how to tell when each applies