Potential Scheme: Split Purchases

Project officials can split what should be a single contract or purchase into two or more components, each below the relevant procurement threshold, to facilitate sole source or less competitive contract awards.  For example, what should be a single procurement of labor and materials for $200,000 can be arbitrarily split into two contracts Рone for labor for $99,000 and the other for materials for $99,000 Рto avoid the need for competitive bids for contracts over $100,000.

Split purchases also can be used to avoid upper level approval or competition to facilitate other schemes, such as kickbacks or fictitious vendors.

RED FLAGS OF SPLIT PURCHASES

  • Two or more related purchases from the same supplier each in amounts just under competitive bidding thresholds
  • Unjustified separation of components, for example, labor and materials, for a single contract, to avoid competitive bidding thresholds
  • Bid packages in amounts just below procurement thresholds

CASE EXAMPLES OF SPLIT PURCHASES

See actual case examples of split purchases from investigated cases.

BASIC STEPS TO DETECT AND PROVE SPLIT PURCHASES

  1. Identify and interview all complainants and confidential sources to obtain further detail.
  2. Obtain the following documents and information and examine them for the red flags listed above:
    • Relevant procurement thresholds
    • Purchase orders and contracts
    • Change order requests and approvals
  3. List purchases by date, amount and supplier and examine for indications of split purchases.