Construction

The Reporting and Detecting of Fraud

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:

OIG Headquarters Region in Washington, D.C., (202) 366-1461/0681, covering D.C., MD, VA, and WV; OIG Hotline 1-800-424-9071; or e-mail to hotline@oig.dot.gov.

RC/GFCs:

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, MN, MS, NC, OK, SC, TN, TX, and Puerto Rico and Virgin Islands.

Region 5 OIG Investigation Office in Chicago, IL, (312) 353-0160, 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:

Below are some indications 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.

Specifications:

• 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:

• 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

• 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:

• 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:

• 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 showing the source, specifications, and laboratory tests of products and materials.
• Unsigned certifications, or certifications with forged or different signatures of authorized technical personnel from the contractor, subcontractor, suppliers, etc.

Cost Mis-Charging for Materials and Labor:

• 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.