A new initiative championed by Naval Sea Systems Command (NAVSEA) Inspector General (IG) is being stood up at Norfolk Naval Shipyard (NNSY).

Contract Fraud Risk Assessment and Mitigation (C-FRAM) is designed to provide a consistent, efficient, and effective method to assess and report contract fraud risks at NAVSEA activities by evaluating leadership's tone from the top, the effectiveness of internal controls, and monitoring efforts designed to deter contract fraud, waste, abuse, and mismanagement.

“Contract fraud is everyone’s responsibility,” said Command Evaluation & Review Office (CERO) Director Jay Jones. “We especially want to ensure our supervisors and leaders are communicating the importance of fraud awareness in general.”

There are five different aspects associated with the C-FRAM program: contract vulnerability assessment (CVA), contract command evaluation (CCE), CE technical authority (CE-TA), fraud risk assessment (FRA), and training and outreach.

“We’re focusing on training and outreach right now while we figure out how we want C-FRAM to look at NNSY,” said Command Evaluation and Review Analyst Kristal Vera, who is leading the initiative at the shipyard. “It’s not necessarily looking at if the contracts are being done correctly, but it’s looking at the risk and identifying areas where contract fraud is most likely to occur.”

According to the Association of Certified Fraud Examiners, five percent of an organization’s lost annual revenue can be attributed to fraud.

“So if we look at the shipyard, our annual budget is around $1.5 billion, which would mean $75 million could potentially be lost to fraud.”

According to a study performed by the Government Accountability Office (GAO), federal agencies obligated more than $430 billion through contracts for products and services in FY-15, accounting for almost 40 percent of the government’s discretionary spending.

“Competition, a fundamental element of a sound acquisition system, promotes the efficient use of taxpayer resources and establishes accountability for results by helping to drive down prices and motivate better contractor performance,” the study continued.

Contract Department Branch Head Scott Stewart said the federal acquisition process already has checks and balances in place to reduce the potential for contract fraud, but C-FRAM will help raise awareness for what the Contract Office (Code 400) does each day and what each of us can do to help reduce the potential for fraud.

“Here at the shipyard we already heavily scrutinize justifications for any non-competitive procurement actions to make sure they’re legitimate,” said Stewart. “Preventing contract fraud is not just a Code 400 issue or a CERO issue. It’s a shipyard issue. We can’t execute our important work without the contracting industry, but we have to be vigilant.”

“The goal is to keep Norfolk Naval Shipyard out of the news,” added Jones, referring to several recent fraud scandals involving Navy personnel. “We don’t want our Commanding Officer, Contracting Department Head or any NNSY employees to be a headline in one of these stories.”

Shipyard employees can expect to hear more about C-FRAM in the coming months as the initiative finds its footing at NNSY.

In the meantime, “if you see something, say something,” said Jones. “If you’re concerned about anything, you can always call the hotline. But you can also report it to your supervisor or up your chain of command.”

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