A construction contract company decided to do just that… and was caught.
When contracted for work with the Postal Service, the company that is hired for the project is allowed to subcontract the work. When doing so, a subcontractor can only mark the cost up by 10 percent. However, this contract construction company went a little further. A USPS OIG criminal investigator uncovered overinflated labor and materials, and determined the construction company was not billing according to the contract terms.
The company had a multi-year contract to repair Postal Service facilities, both directly and as a supplier to a larger maintenance contract. Through the investigation, USPS OIG special agents discovered the company subcontracted a majority of the jobs for the facility repairs. Receipts for labor, materials, procurement, and service fee charges for those jobs showed the subcontractor’s fees were marked up more than the allowed 10 percent — more like 15 to 300 percent! This proved the construction company hired to complete repairs was methodically defrauding the Postal Service. The OIG recommended terminating the contract with the construction company, which the Postal Service ultimately did, and will not be using this company in the future.