FHWA Briefing

**Fraud Prevention - Suspension/ Debarment**

July 6, 2001

# Background:

Pursuant to the Inspector General Act of 1978, the Office of Inspector
General, (OIG) Office of Investigation, U. S. Department of
Transportation is responsible for conducting investigations of fraud,
waste, and abuse involving FHWA programs. Any suspected fraudulent
activities by any Federal or State employees, contractors,
subcontractors, and any other participants on federally funded highway
constructed projects should be reported to the OIG.

Suspension and Debarment, (S/D) actions are discretionary actions taken
to protect the Federal Government by excluding certain firms and persons
from participating in Federal programs. The S/D action ensures that the
Federal Government does not conduct business with a person or firm that
has an unsatisfactory record of integrity and business ethics. The S/D
actions are administered government-wide; consequently, a person or firm
excluded by one Federal agency is excluded from doing business with all
Federal agencies.

# Talking Points:

-   The OIG maintains confidentially on all information and, if
    requested, anonymity of the source.

-   In October 2000, FHWA representatives participated in a US DOT OIG
    sponsored Fraud Prevention Conference in Atlanta. A similar
    conference is being planned for Missouri in late 2001.

-   The FHWA Contract Administration Group invites the OIG to give a
    30-minute presentation on fraud awareness during each presentation
    of the FHWA Contract Administration Core Curriculum Course.
    Approximately 15 courses have been held so far in calendar
    year 2001. The attendees at our courses have found this presentation
    to be very helpful.

**[Reporting and Detecting of Fraud]{.underline}**

## Reporting Fraud to the OIG

Pursuant to the Inspector General Act of 1978, the OIG Office of
Investigations, U. S. Department of Transportation (USDOT), is
responsible for conducting investigations of fraud, waste, and abuse
involving FHWA programs. Any suspected fraudulent activities by any
Federal or state employees, contractors, subcontractors, and any other
participants on federally funded highway construction projects should be
reported to the OIG Suspected fraudulent activities include, but are not
limited to, bid rigging, product substitution, theft, charges for
services not performed and materials not delivered, kickbacks between
the prime contractor and subcontractor, false certifications and
representations by DBEs to obtain contracts on highway construction
projects.

Any allegations of bribery, kickbacks, gratuities, and conflicts of
interest involving Federal or state employees should also be reported to
the OIG When contacting the OIG, persons should provide as much
information as possible about the suspected fraudulent activities. The
OIG maintains confidentially on all information and, if requested,
anonymity of the source.

Within the OIG, the National Contract/Grant Fraud Coordinator (NC/GFC)
and Regional Contract/Grant Fraud Coordinators (RC/GFCs) in the OIG
regional investigation offices nationwide will handle all allegations of
fraud, bribery, kickbacks, etc., concerning highway construction
projects. They can be contacted as follows:

[NC/GFC:]{.underline}

OIG Headquarters Region in Washington, D.C., (202) 366-1461/0681,
covering D.C., MD, VA, and WV; OIG Hotline 1-800-424-9047; or e-mail to
hotline@oig.dot.gov.

[RC/GFCs:]{.underline}

Region 2 OIG Investigation Office in New York, NY, (212) 264-8700;
covering CT, DE, MA, ME, NH, NJ, NY, PA, RI, and VT.

Region 4 OIG Investigation Office in Atlanta, GA, (404) 562-3850;
covering AL, AR, FL, GA, LA, NM, MS, NC, OK, SC, TN, TX, and Puerto Rico
and Virgin Islands.

Region 5 OIG Investigation Office in Chicago, IL, (312) 353-0106;
covering CO, IA, IL, IN, KS, KY, MI, MN, MO, ND, NE, OH, SD, WI and WY.

Region 9 OIG Investigation Office in San Francisco, CA, (415) 744-3850;
covering AK, AZ, CA, HI, ID, MT, NV, OR, UT, and WA.

**[Detecting Fraud in Highway Construction Projects:]{.underline}**

Below are some indicators for the detection of fraud in all phases of
the contract award process for highway construction projects. They
provide general guidance to Federal and state officials and supplement
any existing fraud detection measures. Any fraudulent activities should
be reported to the NC/GFC or RC/GFCs within the USDOT/OIG.

[Cost Mis-Charging for Materials and Labor:]{.underline}

-   Consistent cost overruns on highway construction project because of
    intentional under-estimating or bidding by contractor in order to
    receive the contract; as a result, the cost overruns substantially
    exceed the original project estimates or highest bidder.

-   Truck weight tickets showing loads of materials that exceed the
    capacity of the truck, production output of the plant amount needed
    for the particular job site, etc.

-   Excessive truck tickets for a particular job site.

-   Truck weight tickets that are handwritten or have missing
    information, such as initials of highway inspector, job site, and
    codes and temperature of materials, etc.

-   Production plant records with altered, modified, or missing
    information such as job sites, loading times, and codes and
    temperatures of materials, etc.

-   Any manual entries or adjustments to electronic payroll records.

[Specifications:]{.underline}

Specifications by government engineers or hired consultants, architects,
engineers, etc., that appear to favor the services and materials of
certain contractors, subcontractors, suppliers, sole sources, etc.

[Conflict of Interest:]{.underline}

-   Consultants, architects, engineers, etc., who were hired by the
    government to develop contract specifications are affiliated or
    later subcontract with contractor receiving the contract.

-   The disclosure by government officials or personnel of confidential
    information, such as bids, to contractors, engineers, etc., during
    any phase of the contract award process.

-   Government officials or personnel or their family members having
    financial interest in the contractor or subcontractor who was
    awarded the contract.

-   Government officials or personnel seeking employment for themselves
    or their family members with the contractor or subcontractor who was
    awarded the contract.

-   Government officials or personnel assisting the contractor or
    subcontractor with preparing the bid, or leasing or renting any
    equipment to them for performing the contract.

[Collusive Bidding and Price Fixing:]{.underline}

-   Repeated awarding of contracts to the same contractors in a
    particular geographical area.

-   Alternating high and low bids from the same contractors.

-   Low or no participation by contractors for bidding on certain
    contracts.

-   Subcontracting between the unsuccessful bidder and the bidder who
    was awarded the contract

[Questionable Documentation from Contractors:]{.underline}

-   Any documents or certifications with altered, backdated, modified,
    or missing information concerning the contractor\'s bond and
    pre-qualifications, minority or women owned business status,
    financial history, previous debarment and suspension, ownership of
    equipment and facilities, performance on other jobs, etc., for the
    purpose of obtaining the contract.

-   Use of multiple mailing addresses, post office boxes, or unusual
    mailing addresses on documents and certifications from the
    contractor, subcontractor, suppliers, etc.

[Production Substitution:]{.underline}

-   Any mis-marking and mis-labeling on products and materials.

-   Use of foreign suppliers for products and materials.

-   Incomplete contractor, subcontractor, or supplier files with no
    originals or copies of originals, such as, delivery records and
    certifications showing the source, specifications, and laboratory
    tests of products and materials.

-   Any backdated, modified, altered, or falsified documents or
    certifications concerning the source, specifications, laboratory
    tests, and delivery of products and materials etc.

-   Unsigned certifications, or certifications with forged or different
    signatures of authorized technical personnel from the contractor,
    subcontractor, suppliers, etc.

Point of Contact: Jerry Yakowenko, HIPA-30, 202-366-1562

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November 13, 2023