The Risk of fraud is high in replacing windows, repairing roofs, ground maintenance, decoration and constructing extensions to new buildings. The National Audit Office found that despite the risk, the Ministry of Defence had no fraud strategy and low anti fraud control arrangements. The NAO estimates that the annual loss through fraud is about 135m pounds, which is 15 % of total expenditure on property management.Engaging and monitoring sub contractors is largely carried out by commercial contractors who have little incentive to prevent or detect fraud. The auditors found that important controls that commercial contractors were supposed to carry out, including the provision of expert advice on pricing, inspections of completed work and checks between invoices and standard contractual rates, were operated less frequently than the MOD staff believed them to be.
In response to the NAO report the MOD have set up a high level Fraud Prevention Steering Group to co-ordinate anti-fraud efforts, develop and implement a strategy for fraud deterrence and detection and promote a greater awareness of potentially fraudulent activities. There will be changes to the contracting strategy and better communications with contractors and it is planned to introduce an incentive scheme to encourage them to tackle fraud.