Anti-Fraud, Waste, and Abuse

There are many variations of embezzlement and theft, contracting and procurement, bribery, kickbacks, bid ridding, conflicts of interest, and identity theft which can involve procurement officials and bidders working alone or in collusion to commit fraud.

What To Look For

• A false certification of regulatory and statutory compliance or qualifications necessary to obtain a contract; 

• Colluding with others to win a contract using bid rigging, phantom or altered bids, or split bids; 

• Falsifying information on contract proposals; 

• Using Federal funds to purchase items that are not for government use; 

• Billing more than one (1) contract for the same work; 

• Billing for expenses not incurred as part of the contract; 

• Billing for work that was never performed;

• Falsifying data such as employee credentials, experience, and rates; bonds; and test or inspection results; 

• Abusing change orders; 

• Underbidding to win a contract and colluding with the procurement officer to make up profits through unnecessary change orders; 

• Substituting approved materials with unauthorized products; 

• Misrepresenting a project’s status to continue receiving government funds; or

• Charging higher rates than those stated or negotiated for in the bid or contract.

Bribery is the offering, giving, receiving, or soliciting of anything of value to influence an official act. Bribery is an unethical business transaction where one (1) person, usually the person benefiting from the transaction, is paying for the influence of another.

What To Look For

• Most bribery schemes begin with gifts and favors; 
• Be cautious of free entertainment, vacations, travel, conference perks, sports events, parties, home or business repairs, and use of resort facilities; 
• Companies submit bids with identical individual line items or lump sums; 
• Bids greatly exceed the agency’s estimate of contract value or exceed comparable bids by the same companies in other areas similar in demographics; 
• Winning bidder awards subcontracts to one or more of the losing bidders; and
• Last minute alteration of bids after submission.

A kickback is a type of bribe. A kickback is a collusive agreement where a “cut” of the profit is given to the bribe taker for services rendered. Kickbacks can be in the form of money, credits, gifts, gratuity, services, or anything of value.

What To Look For

• Paying a kickback is a two-sided financial transaction. The vendor making the illicit payment must divert funds to pay for the bribe; and 

• Payments coded as “fees” for consulting or other services should be scrutinized.

Bid rigging is a fraud that involves impeding competitive bidding. Generally, bid rigging involves an agreement to limit competition. These schemes usually occur in the pre-solicitation, solicitation, or evaluation phase of the bidding process.

What To Look For

Pre-Solicitation Red Flags 

• Specifications and statement of work are tailored to a specific product or vendor; 

• Pre-qualification procedures restrict competition;

• Unnecessary sole source or non-competitive justifications;

• New vendors added to the qualified list without justification;

• Projects split into smaller awards to avoid review;

• Costs of materials are out of line;

• Established bidding policies and procedures are not being followed; and

• Materials not being ordered at optimal reorder point.

Solicitation Phase Red Flags

• Improper communications between purchasers and contractors at trade or professional meetings; 

• Improper social contacts between purchasing agents and contractors; 

• Purchasing officials with business or financial interest in the contractor; 

• Falsification of documents or receipts so that late bids are accepted; 

• Indications of collusion between bidders; 

• Falsification of contractor qualifications, work history, or personnel; 

• An indication of last-minute alteration of bids; and

• A large gap between the winner’s proposed pricing and losing bidders’ pricing.

Bid Submission or Contract Acceptance Red Flags

• Winning bidder awards subcontracts to one or more of the losing bidders;  

• Procurement that has been restricted to exclude or hamper any qualified contractor;

• Improperly accepting late bids;

• A bidder who always bids last on contracts and consistently wins;

• Falsification of contractor information, like financial capability, personnel qualifications, and previous performance; and

• Bids tend to be awarded in a geographic pattern or in a noticeable rotation, such as a particular type of work always being awarded to a particular company.

A conflict of interest occurs when an employee, manager, or executive has an undisclosed economic or personal interest in a transaction that adversely affects that person’s employer. A criminal conflict occurs when an employee participates substantially in a particular matter where they have a financial interest, if the particular matter will have a direct and predictable effect on that interest.

What To Look For

• Overly friendly relationship between government employees and contractors such as frequent socialization outside of the work environment; 

• Unexplained increases of business with one (1) contractor or subcontractor; 

• Change orders with a high percentage of original costs; 

• Defining statements of work and specifications to fit the products or capabilities of a single contractor; 

• Government personnel or their families acquiring stock or a financial interest in a contractor or subcontractor; 

• Government personnel discussing possible employment with a contractor or subcontractor for themselves or a family member; and 

• Employment of family members by a contractor.

Program administrators and others who steal identities or create false identities to apply for and illegally receive various HUD funded benefits such as rental assistance, mortgages, or block grant program funds.

What To Look For

• Contractors certified as small or disability-, minority-, woman-, or service-disabled veteran-owned businesses are often given preferential treatment related to contract awards. For this reason, some contractors have been inclined to falsely certify themselves, or obtain legitimate certifications, through invalid means; and 

• Programs have seen various scams in which websites and other social media sites are used to induce the public to send money in order to receive various HUD benefits, grants, or contracts. They sometimes falsely advertise as being government representatives or agents of HUD to promote their scheme further.

Protects Federal employees and Applicants for employment who lawfully disclose information they reasonably believe evidences a violation of law, rule, or regulation; gross mismanagement; a gross waste of funds; an abuse of authority; or a substantial and specific danger to public health evidences.

What To Look For

• If an employee is discharged, demoted, or otherwise retaliated against for making a protected whistleblower disclosure.

Any person who suspects, witnesses, or discovers any FWA related to the CDBG-DR Program should report it immediately by any of the means listed below. In addition to the contacts listed below, you may contact HUD’s Office of Inspector General Fraud Hotline via phone 1-800-347-3735 or via email at hotline@hudoig.gov. All allegations and complaints received will be treated with absolute confidentiality.

To the DED Internal Auditor:

Online or Anonymous Email: Fill out the Contact Form available here: https://opportunity.nebraska.gov/contact/#form 

Phone: 800-426-6505

Postal Mail: 
Nebraska Department of Economic Development
Attn: Internal Auditor
245 Fallbrook Blvd, Suite 002
Lincoln, NE 68521

In Person: 
Nebraska Department of Economic Development
245 Fallbrook Blvd, Suite 002
Lincoln, NE 68521

To the Nebraska APA

Online or Anonymous Email: Fill out the FWA Submission Form, available at the Nebraska APA’s website: https://auditors.nebraska.gov/About_Us/SAE_E-Mail.html  

Phone: Nebraska APA Confidential Hotline at 1-800-842-8348

Postal Mail: 
Nebraska Auditor of Public Accounts
State Capitol, Suite 2303
P.O. Box 98917
Lincoln, NE 68509-8917

In Person: 
Nebraska Auditor of Public Accounts
State Capitol, Suite 2303
Lincoln, NE 68509-8917