Automated Tests for Collusive Bidding and the Data Required to Conduct Them

All of the following basic tests for collusive bidding can be conducted if the data, listed below, primarily from the bidding documents, is available. Tests for collusive bidding: Different bidders have the same addresses, phone or fax numbers or email addresses Persistent high bid prices: Compare line item and total bid prices to cost estimates, prior bid […]

Data Required to Conduct Proactive Tests

All of the listed “proactive” fraud detection tests can be conducted if the following data, listed in green, is available.  Many of the tests can be conducted if some but not all of the data is available.  The “other useful information” lists include data that would be useful but is not essential to conduct the […]

Examples of Common “Proactive” Fraud Detection Tests

Below are a few examples of relatively easy to conduct automated tests that can be used to detect indicators of: 1.   COLLUSIVE BIDDING  2.   FICTITIOUS CONTRACTORS  3.   QUESTIONABLE CONTRACTORS (by address checks) 4.   QUESTIONABLE CONTRACT AWARDS  5.   FRAUDULENT INVOICES  1.   TESTS FOR COLLUSIVE BIDDING: Persistent high bid prices: Compare line item and total bid prices to estimates, prior […]

Red Flag: Incomplete, Questionable Payment Documentation

The lack of  complete or appropriate supporting documentation is a potential indicator of many different schemes, but most directly of false, inflated or duplicate invoices and failure to meet contract specifications.  Be alert for: Unexplained or excessive delays in producing supporting documents that should be readily available; Discrepancies in the documentation, for example, between the amounts […]

Red Flag: Payment of Unjustified High Prices

Unreasonably high prices are a primary indicator of corruption, as the bribe-payer usually inflates its prices, with the permission and assistance of the bribe recipient, to fund the bribe and exploit the corrupt relationship.  Generally, corruption causes prices to rise dramatically, not just the few percentage points that might be expected as the result of […]

Red Flag: Questionable Invoices

“Questionable invoices” include those that: Are submitted without supporting documentation, or with copied rather than original supporting documents; Cannot be matched to the associated work product; Include terms and amounts that differ from the related purchase orders or contracts; Are unprofessional in appearance, e.g., lack complete addresses, are handwritten or without pre-printed numbers; Are unmarked […]

Red Flag: Questionable Contract Amendments (Change Orders)

Questionable contract amendments, or “change orders,” include those that: Increase the value of a contract without adequate justification or documentation; Increase the price of a sole source contract award above the sole source  threshold; Promptly follow a low bid award, making the contract price higher than other bid prices; Are disproportionately approved for certain contractors, […]

Red Flag: Delivery of Poor Quality Goods, Works or Services

Poor quality works can reflect not only shoddy workmanship but deliberate fraud. To constitute fraud, the poor quality work must be accompanied by willful and knowing misrepresentations by the contractor, for example, a contractor bills for work that it knows it did not do. This red flag can indicate the following schemes: Failure to meet contract […]

Red Flag: Acceptance of Poor Quality Goods, Works or Services

The continued acceptance of poor quality goods, works or services by project officials or inspectors, particularly after they are on notice of such problems, is a strong indicator of corruption. This red flag can indicate the following scheme: Corruption Click on the scheme listed above to see more information about the scheme, a more complete listing […]

Red Flag: Complaints Regarding Goods, Works or Services

Poor quality goods or works are the primary indicator of fraudulent implementation by a contractor.  Corruption should be suspected if project officials or construction supervisors continue to accept such works, especially after being put on notice of quality problems. This red flag can indicate the following schemes: Failure to meet contract specifications Product substitution Corruption Click on the […]