The Office of Inspector General (OIG) for the Department of Housing and Urban Development (HUD) has identified warning signs for procurement officials on how to spot anticompetitive bidding schemes that may be used to procure COVID-19 relief funds.
The Coronavirus Aid, Relief, and Economic Security (CARES) Act provided HUD with $12 billion to support homeowners, renters, landlords, and communities impacted by the pandemic, but HUD OIG says that CARES Act funding “will attract dishonest people, who are determined to steal government funds designated to help individuals and communities for their own personal gain.”
“Anticompetitive bidding is an agreement between individuals or entities involved in a competitive bidding process to work together to limit competition by agreeing in advance who will submit a likely winning bid, fixing prices, or engaging in other illegal activity,” the OIG wrote. “In a disaster environment, such as the one created by the COVID-19 pandemic, competitive pricing can be impacted by the lack of competition, the scarcity of products, the urgent need to acquire products and services quickly, and the lack of substitute product availability.”
Some schemes that procurement officials may encounter include Bid Suppression, Complementary Bidding, Coordinating Bidding, and Bid Rotation. The OIG identified Bidding, Pricing, and Documentary Red Flags including, among others:
- The same companies making bids, the same companies winning the bids, and the same companies losing the bids;
- Unusual bid patterns;
- Losing bidders being hired as subcontractors or suppliers;
- Pricing for bids dropping when a new or infrequent competitor enters the fold;
- Physical similarities in bids or proposals on documents submitted by different bidders; or
- Multiple losing bidders submitting defective, forged, or sequential bid securities or securities purchased at the same bank on the same day.