Construction and Public Works

Governments spend tens of millions of dollars on public works and infrastructure programs. They build roads, bridges, dams, schools, hospitals, subways and other projects. They buy buses, subway cars, trolleys, street cars and other vehicles. Given the large sums of money involved in purchasing, acquiring and maintaining these assets, transportation, construction and public works projects warrant a great deal of scrutiny.

Construction fraud may involve aspects of procurement fraud, contract fraud, grant fraud, or accounts payable and disbursement fraud. Large sums of money, complex specifications, frequent change orders and numerous contractors and subcontractors make construction and public works projects attractive targets for fraud.

Specifications might be prepared in such a way as to favor a particular contractor. Bid Rigging, bid rotation and kickbacks—all difficult to detect—may occur during the solicitation. The construction phase might be plagued by the overcharging of time or the delivery of materials of a quality less than that specified. Excessive change orders might be evidence of contract unbalancing.

Contract, bidding, payroll and payment fraud are discussed more fully within other pages of this website. You can also refer to the Glossary for specific term definitions.

Risks Risks Risks
Product Substitution

Complaints about quality.

A high rate of rejections, returns, or failures.

Lack of inspection/falsified reports.

A contractor that restricts or avoids inspection of goods upon delivery.

Mismarking or mislabeling of products and materials.

A contractor offers to select samples for testing programs.

A contractor refuses to provide supporting documentation regarding production or manufacturing.

Vendor fails to supply warranty information.

Vendor fails to apply manufacturers’ rebates/discounts toward final costs.

Photocopies of necessary certification, delivery, and production records exist where originals are expected.

Irregularities in signatures, dates, or quantities on delivery documents.

Certifications required in the contract are not signed.

Allegations of bribery of inspectors.

A supplier entertains or provides gratuities to procurement personnel.

Adequate project monitoring and oversight.

Agency verification of inspection reports.

Independent testing program.

Whistleblower mechanism.

Time Overcharging

Unauthorized alterations to timecards and other source records.

Hours and dollars consistently at or near budgeted amounts.

Timecards are filled out by supervisors, not by employees.

Photocopies of timecards submitted where originals are expected.

Inconsistencies between consultants'; labor records and a their employees' timecards.

Frequent payroll adjustment entries with descriptions such as “charged wrong accounts,” etc.

Labor charges with contracts are inconsistent with contract progress.

Personnel files cannot be found or are “found” after a delay.

Lack of a clear audit trail to verify propriety of labor charges.

Job misclassification – apprentice workers billed out at higher rates.

All contracts should allow audits of vendor and supplier books of account.

Audits should be periodically conducted.

Litle or no warning of the audit should be given to the contractor.

Vendor employees should be queried (at the job site, if possible) about the time they actually work.

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