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 prices, industry averages, etc. - Unusual bid patterns:
Identify losing bids that are identical or an exact percentage apart, etc.
Rotation of winning bidders by time, product line or geography
Losing bidders become subcontractors - Sequential bid securities submitted by different bidders:
List bid securities by contractor, bank, date and number
2. TESTS FOR FICTITIOUS CONTRACTORS:
- Paid vendors not on the approved vendor list:
Compare paid vendor list to approved vendor list, note paid vendors that are not approved - Paid vendors not listed in business or telephone directories:
Identify paid vendors not listed in business or telephone directories - Vendors at high risk (mail drop) addresses:
Compare vendor addresses to high risk (mail drop) addresses - Sequential invoice numbers:
Identify sequential invoice numbers from the same supplier over an extended time period - Discrepant invoice numbers:
Identify suppliers with inconsistent invoice numbering systems, e.g., four digit numbers vs. six digits - Vendor address matches employees address or telephone number:
Match contractor’s address and telephone numbers to project officials
3. TESTS FOR QUESTIONABLE CONTRACTORS (by address checks):
- Contractors: are located in or receive payments in secrecy jurisdictions:
Match contractor business and bank account locations to secrecy jurisdictions - Have a “mail drop” (mail receiving service) address:
Match contractor’s address to mail drop addresses - Have the same address as a debarred contractor or individual:
Match contractor’s address to addresses for debarred companies and individuals - Have the same address or telephone numbers as project officials:
Match contractor’s address and telephone numbers to project officials - Are located at the same address as another contractor:
Sort contractors by address; identify matches
4. TESTS FOR QUESTIONABLE CONTRACT AWARDS:
- Contracts just under procurement thresholds and “split purchases”:
Identify contractors with multiple contract awards within 5% of the procurement threshold
Identify multiple simultaneous awards to contractors just under sole source thresholds (split purchases) - High cost contracts:
Compare per kilometer costs in targeted road projects to the costs for similar roads and locations;
Compare the square foot cost for construction of structures to the computer-generated norm for similar structures - Long term, open contracts with excessive disbursements:
Identify contracts open for over 5 years that have disbursed more than 50% of the original contract valueBillings for goods and services not delivered:
Compare items billed in supplier’s invoice to receiving and inventory records
5. TESTS FOR FRAUDULENT INVOICES:
- Billings in excess of contract, purchase order or received amounts:
Compare items billed to contract, purchase order, receiving and inventory records - Duplicate invoices for the same items:
Compare supplier’s invoices to payment records, note duplicate payments for same items