By Chetan Rane, REI Offerings Lead for Application Modernization and Case Management, and Munish Satia, REI Enterprise Architect

The federal government loses a staggering $233 billion to $521 billion every year to fraud, according to a recent report from the Government Accountability Office (GAO). The study, which looked at data from 2018 to 2022, is the first of its kind to estimate just how much federal money is lost to fraud. Even though the range is wide, it’s clear that these numbers are far too high. GAO suggests the federal government improve its methods for evaluating and identifying fraud to manage the risk better.

Fraud isn’t just about the money—it undermines the integrity of federal programs, erodes public trust, and can create serious security concerns.

REI’s Expertise in Fraud Detection

At REI, we’ve been tackling fraud for over 30 years with our case management system solutions. If your organization deals with gathering facts and applying laws, regulations, or policies to those facts, then you’re managing “cases.” These often involve individuals or entities seeking benefits from your agency, such as immigration benefits, disaster recovery assistance, or loan guarantees. Unfortunately, as the GAO report highlights, some may try to deceive the government altogether.

We see these situations as case management challenges and are here to help agencies with grants management, proposal organization, claims approvals, food and drug compliance, fraud detection in immigration benefits, and more.

Understanding the Current Fraud Landscape

Fraud in the federal government varies by agency, and the Department of Homeland Security (DHS) is no different.

U.S. Citizenship and Immigration Services (USCIS) often deals with people falsifying documents for asylum, refugee status, or permanent residency. Similarly, the Transportation Security Administration (TSA), Customs and Border Protection (CBP), and Immigration and Customs Enforcement (ICE) face fraud related to identity theft, cargo, illegal transportation of goods and people, and human trafficking. The Federal Emergency Management Agency (FEMA) handles many fraud cases tied to disaster and non-disaster relief benefits and grants. Almost every agency has its own process for small businesses applying for federal grants and contracts.

Even though fraud takes different forms in each agency, the tools and techniques to detect, monitor, and prevent it can be used across the entire government.

Our Work with Fraud in SBIR Programs, Grants Management & Case Management

REI has decades of experience in detecting and fighting fraud in the grants and Small Business Innovation Research (SBIR) space. These programs often face issues like misrepresentation of certification and eligibility, falsification of fund usage, and the same companies applying for multiple grants across different agencies.

To tackle these issues, REI developed capabilities to manually and automatically identify fraudulent patterns in applications. By understanding the entire application timeline, from when solicitations open to when grants are awarded, we can flag suspicious activity for review. In 2020, we built a custom fraud-based abuse engine for NASA to streamline this detection process and better identify fraudulent companies.

For the Health Resources and Services Administration (HRSA), we created a module to identify any grant compliance.  This module starts with 90-day deliverables. If these conditions aren’t met, it triggers a task and a 60-day extension. If those aren’t met, there’s a final 30-day extension. All extensions are documented and filed as a case.

If a grantee fails to meet the 30-day timeline, it risks being defunded. This system helps agencies identify grantees misusing funds or engaging in fraudulent behavior. This process led to the defunding of 30-40 grantees, all with proper documentation.

Once a grantee is defunded, all the data is sent to Congress. With minimal technology involved, this case management process allows grantors to track timelines and deliverables, ensuring compliance and exposing those who aren’t. Companies found guilty of fraud can then be placed on an “ineligible list” for future grants.

REI and Fraud, Waste & Abuse with DoD

Since 2019, REI has managed the Department of Defense (DoD) grants system, including fraud, waste, and abuse (FWA) prevention. The DoD funds small businesses through Broad Agency Announcements (BAA), requiring applicants to complete FWA training and certification. When a BAA application is submitted, the system collects all relevant data, including an FWA component, and shares it with the Office of Commercial and Economic Analysis (OCEA). To make this process faster, REI is developing a system that automatically forwards BAA proposals to OCEA, allowing the DoD to focus on background checks and submission validation.

A key challenge has been applicant duplication, so REI is creating a new FWA module with Amazon SageMaker to detect duplicates. This module will eventually connect with other federal agencies to share information on fraudulent activities.

Data transparency and access to information are crucial to FWA prevention. Through its fraud detection work, REI has learned that siloed government data makes it hard to spot cross-agency fraud. The more data available, the stronger the fraud detection. This insight shaped the progressive action module REI developed for the Health Resources and Services Administration (HRSA), which tracks non-compliances, financial issues, or risks for organizations receiving multiple grants from HRSA bureaus. This system creates a trackable case management folder, allowing REI to build a case against organizations if necessary.

Through our work with agencies like NASA and DoD, REI identified key fraud indicators and developed continuous auditing and monitoring capabilities, using advanced technologies like AI and automation. For instance, Amazon SageMaker analyzes data to identify risk profiles and prevent fraud before it occurs.

At REI, we tailor our solutions to meet the evolving needs of agencies. We start small, prove concepts, learn from experience, and scale our solutions, leveraging decades of expertise in building the right tools, technologies, and teams to support our government partners.