Contract and procurement fraud

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  Competitive bids are confidential; therefore, they are, of course, supposed to remain sealed until a specified date at which all bids are opened and reviewed by the purchasing company.
  
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  Accordingly, employees of a procuring entity can leak pre-bid information or confidential information from competing bidders to a favoured bidder, giving that bidder an unfair advantage in the bidding process. Thus, in such schemes, the employee does not alter the specifications to suit the vendor; instead, he gives the favoured vendor a head start on planning his bid and preparing for the job.
  

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  Typically, these schemes involve a corrupt vendor who pays a procurement employee for the right to see the specifications earlier than the competition. Consequently, the person or persons who have access to sealed bids are often the targets of unethical vendors seeking an advantage in the process.
  

EXAMPLE
Gifts and cash payments were given to a majority owner of a company in exchange for

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  Leaking schemes might also involve measures to restrict the time for submitting bids.
  
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  Because leaking schemes give favoured suppliers advanced notice of contracts, they are able develop their bids before their competition. And if a procurement employee also restricts the time for submitting bids, he will limit the period bidders have for developing bid proposals, and the supplier with advance knowledge of the contract will have an advantage over the competition.
  

Some common red flags of leaking bid data schemes include:

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  The procuring entity has weak controls over its contracting system.
  
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  The winning bid is just under the next lowest bid.
  
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  The winning bid is unusually close to the procuring entity’s estimates.
  
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  The last party to bid wins the contract.
  
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  The contract is unnecessarily re-bid.
  
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  A contractor submits false documentation to get a late bid accepted.
  
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  Contracting personnel provides information or advice about contracts to a contractor on a preferential basis.
  

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  In general, procuring entities are required to use competitive methods for projects over a certain dollar amount, and because of such requirements, employees of a procuring entity might break a large project up into several small projects that fall below the mandatory bidding level, allowing them to avoid these requirements. Thus, by splitting large contracts into smaller contracts, the employee can avoid the scrutiny required for larger-dollar-value contracts.
  
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  And once the contract is split, the employee can award some or all of the component parts to a contractor with whom he is conspiring.
  

Some common red flags of bid-splitting schemes include:

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  Two or more similar or identical procurements from the same supplier in amounts just under upper-level review or competitive bidding limits
  
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  Two or more consecutive related procurements from the same contractor that fall just below the competitive bidding or upper-level review limits
  
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  Unjustified split purchases that fall under the competitive bidding or upper-level review limits
  
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  Sequential purchases just under the upper-level review or competitive bidding limits
  
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  Sequential purchases under the upper-level review or competitive bidding limits that are followed by change orders.