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With continued advances in technology, changing business practices, and declines in most areas of Government spending, individuals are always developing new methods to defraud Do D programs and operations.
The webpage contains information about fraud schemes and indicators for the following areas: Bribery: Occurs when a Government employee or contractor accepts something of value in exchange for preferential treatment.Fraud indicators or fraud “Red Flags” may indicate the presence of fraud within a Do D organization, department, or program.However, the presence of fraud indicators does not always mean that fraud has occurred or is occurring.Instead, auditors should consider fraud indicators as clues that increase their awareness of potential fraud schemes.The fraud indicators and schemes presented are not intended to be all inclusive.(Naval Sea Systems Command, Office of Inspector General) Fraud indicators related to conflicts of interest include, but are not limited to: Collusive Bidding: Collusive Bidding is defined as bidders secretly agreeing to submit complementary high bids to allow preselected contractors to win.
Suppliers and contractors agree to prohibit or limit competition and manipulate prices to increase the amount of business available to each participant.
(Source: Defense Acquisition University,” Procurement Fraud Indicators Training Module”) Fraud indicators related to collusive bidding include, but are not limited to: Leaking Bid Data: Leaking bid data is defined as contracting or other personnel involved in the process, sharing information to help a favored bidder formulate a proposal.
An example of bribery is if money is accepted in exchange for the awarding of a contract.
(Source: Defense Acquisition University, “Procurement Fraud Indicators Training Module”) Kickback: An amount of money that is given to someone in return for providing help in a secret and dishonest business deal.
(Source: Merriam Webster Online Dictionary) Fraud indicators related to bribery and kickbacks include, but are not limited to: Anti-Kickback Statute: In 1986, Congress passed the Anti-Kickback Enforcement Act, contained in 41 USC 54, which makes it a crime for any person to “provide, attempt to provide, or offer any fee, compensation, gift or gratuity to a prime contractor or any higher tier subcontractor, or an employee of one of these, for the purpose of improperly obtaining favorable treatment under a Government contract.” (Source: Air Force Office of Special Investigations) Fraud indicators related to the Anti-Kickback Statute include, but are not limited to: Conflict of Interest: Conflicts of interest can arise if personnel have undisclosed interests in a supplier or contractor by: accepting inappropriate gifts; favors; or kickbacks from vendors; and engaging in unapproved employment discussions with current or prospective contractors or suppliers.
(Source: Air Force Office of Special Investigations) occur when a company is part of the development or specifications process for a product and another part of the company then tests or evaluates that product.