Contractor fraud makes life difficult for all the hard-working honest contractors. This truth is easily illustrated by the fact that most government auditing programs start by looking for fraud and then look at what the contractor actually did.
The link below is to another case where the contractor billed the government for wages plus associated fringe benefits but hired the workers as independent contractors while pocketing the money for the associated fringe benefits.
When I first started in this field decades ago, I experienced a lot more interaction with DCAA auditors. They audited every single incurred cost proposal, they audited every accounting system, they did mini audits on billing rates, individual vouchers, labor floor checks, and so on.
Not so much now. When I started keeping track, each DCAA auditor finished about six (6) audits a year. Now it is under one (.87).
The guilty contractors, when caught, are usually turned in by on of their employees.
I realize that most small business contractors are happy not to see auditors, but one must wonder how much fraud and waste are out there. Waste and fraud consuming tax dollars that could be spent on honest contractors.