Red Flags of Corruption, Bid Rigging, Collusive Bidding and Fraud

This section describes the most common “red flags,” or indicators, of possible corruption, bid rigging, collusive bidding and fraud in development projects. When relying on red flags to detect possible misconduct, look for a number or a pattern of red flags, rather than relying on any one red flag, before drawing any firm conclusions.

Knowledge of red flags, and the schemes they indicate, also can be useful in evaluating complaints.  If, for example, a whistle blower alleged kickbacks, look for the red flags of kickbacks in the contract documentation as you follow up on the complaint.

The information is organized as follows:

Red Flags Listed by Project Cycle

See 30 of the most common “red flags” in the contracting and procurement process, listed in the order that they might appear in a project, from the initial planning stage through the bidding process to contract award and implementation. You can match each red flag to the related scheme or schemes and see how to follow up to determine if the scheme or schemes are in fact present. A more comprehensive list of red flags, organized by scheme, can be found under each scheme in the Most Common Schemes and Steps of Proof section.

The Visible Red Flags of Implementation Fraud

View photos and descriptions of the most common signs of implementation fraud, including the failure to meet contract specifications, product substitution and billing frauds, in the construction of roads and buildings and the delivery of goods.

“Proactive,” Computer-Aided Tests for Collusive Bidding, Bid Rigging and Fraud

This section briefly describes the steps to proactively look for indicators of bid rigging and fraud through computer-aided techniques. These are particularly effective to detect indicators of collusive bidding by contractors.