Preventing fraud, waste and abuse in grant programs

Fraud, waste and abuse, a perennial problem for federal agencies, costs the government billions of dollars each year. The Government Accountability Office estimates that fraud alone totals anywhere from $233 billion to $521 billion in annual losses. 

Grant programs are especially ripe for fraud, as the number of applications can rapidly outpace an agency’s ability to thoroughly vet applicants for eligibility. Fraud can take multiple forms, such as false identification credentials, duplicate applications by people hoping for duplicate benefits or inaccurate income information. 

Implementing technology tools to fight fraud

While technology advances rapidly, and more sophisticated tech becomes more affordable over time, some fraud strategies remain decidedly unsophisticated. Fake IDs, altered documents and various social engineering schemes are as common now as they were a half-century ago. 

Technology does, however, provide an arsenal of techniques to detect and prevent fraud. Depending on the program’s shape and structure, its leaders can implement a variety of measures. For most organizations, creating a centralized team devoted to data analytics, risk and fraud will help narrow your focus to your program’s specific challenges. 

The web itself can be a good starting point for gathering information. Develop a list of the keywords that people intending to defraud your grant program might use and search social media platforms and other websites using them. Artificial intelligence or intelligent automation tools may help do this faster. This can turn up people providing tools for fraud such as falsified pay stubs. 

Consider digging even deeper on the dark web, where you may find black market sellers offering false documents or tutorials and guides on ways to defraud federal programs. Arming yourself with information about the tools and tactics your adversaries might be using can help develop effective defense strategies. 

To develop detection and defense measures, here are a few effective approaches, best used in combination: 

• Predictive analytics: Pattern of Life (POL) A POL is simply a description of individuals' or entities' habitual behaviors, routines, and activities over time. Leveraging predictive analytics to create and monitor a grantee or individual beneficiaries can identify anomalous behaviors that could indicate something improper is happening, such as identity theft.
• Fraud detection/payment integrity: Preventing duplication and fraud with visualizations—Duplication is a common fraud technique. De-duplication methods—there are several, some AI-powered—detects potential duplication and other risk factors for individuals in real time. Converting the data into visualization can enhance the tool’s power. 
• Document verification: Digital forensics tools can analyze images and scanned documents to detect alterations. For images with metadata still attached, this can be simple. Many documents, however, have had metadata stripped out, often as a necessary byproduct of scanning or otherwise digitizing. There are tools that can analyze these documents, which are called “flat files,” and discover evidence of changes. 
• Decision Support Tool (DST): This tool should be employed when the risk of fraud is identified within a grant program. The primary function of the DST is to gather and present evidence for review, facilitating informed human decision-making. By automating the extract, translate, and load (ETL) process from various systems, the DST supports the identification of potential fraud cases. It enables the visualization of data and provides dashboards that aid in the analysis and review of evidence. This ensures that any suspected fraudulent activities are backed by solid evidence, allowing for appropriate actions to be taken to prevent improper payments and ensure program integrity.

Stemming the flow of improper payments

Federal spending is always under scrutiny, and agencies need to spend their funding judiciously. When payments go to people defrauding the program, that money is no longer available to an eligible recipient. Preventing fraud almost always creates a positive return on investment, contributes to compliance with laws and requirements and facilitates overall program success. 

To learn more about how CGI Federal is preventing and controlling fraud, waste and abuse, read our case study on the work performed for the Department of Agriculture, specifically its Farm and Food Workers Relief program.