Monitoring Practices And Fraud Detection & Prevention
DBE ProgramMonitoring Practices and FraudDetection & PreventionAirport Business Diversity ConferenceSan Diego, CAJune 11, 2013Federal AviationAdministration
DBE Program – 49 CFR Part 26Who must have a DBEprogram “plan”?§26.21(a)(3) FAA recipientsreceiving grants for airport planningor development who will award primecontracts exceeding 250,000 inFAA funds in a Federal fiscal year.2
DBE Program Plan & OverallDBE Goal – Any Difference? DBE Program – Update as Necessary– Your overall plan– Identifies DBELO– Policy Statement– Includes several attachments Overall DBE Goal – Due every three years– A section of your DBE Program plan,typically included as an attachment3
DBE Program: Key ElementsDBECertificationGoal Setting(Overall vs.Project)DBEProgramAnnualReporting4
Monitoring and Oversight Contract ProvisionsGood Faith Effort ReviewPerformance of ParticipantsSite VisitsCommercially Useful Function5
Contracts ProvisionsMust contain these provisions: Non-discrimination (26.13) Prompt payment (26.29(a)) Retainage (26.29(b)) Enforcement Provisions (26.29(d)6
26.13(b) – ContractAssuranceThe contractor, sub recipient or subcontractor shall notdiscriminate on the basis of race, color, national origin,or sex in the performance of this contract. Thecontractor shall carry out applicable requirements of 49CFR part 26 in the award and administration of DOTassisted contracts. Failure by the contractor to carryout these requirements is a material breach of thiscontract, which may result in the termination of thiscontract or such other remedy as the recipient deemsappropriate.7
Prompt Payment No later than 30 days after completionand acceptance– “Satisfactory Completion” means portion ofthe work has been completed and accepted(26.29(c))8
Retainage – Three OptionsAirportPrimeDoes not withholdfrom PrimeDoes notwithhold fromSubDoes not withholdfrom PrimeDoes withholdfrom subsWithholds fromDoes withholdfrom SubsPrimePartial paymentsto prime uponcompletion of workDBEPrime must pay within 30 daysof completion of subcontractor’sworkPrime must pay all retainage tosub for completion of acceptedwork within 30 days of prime’sreceipt of payment from Airport9
Enforcement Provisions Appropriate means to enforce DBErequirements– Penalties for failure to comply– Delay or postponement of payment – Goodcause and prior approval Additional Mechanisms– Use of dispute resolution– Clause on payment withholding– Other – consistent with state and local law10
Federally Assisted Contracts RESTRICTIONS All contracts that include Federal fundsmust incorporate the DBE program andmay NOT impose local MBE/WBEsubcontracting goals Federally-funded contracts may NOTinclude local hiring goals or preferences 49CFR § 18.3611
Monitoring & Oversight 26.37(a) Monitoring performance ofProgram Participants 26.37(b) Ensure work committed toDBEs is performed by DBEs– Written certification – reviewed contractingrecords– Written certification – monitored work sites12
Monitoring - 26.37 (c) Running tally of attainments Compare attainments to commitments13
Site Visits 26.37(b) - Written Certification Commercially Useful Function Fraud Prevention14
COMMERCIALLY USEFUL FUNCTION (CUF) Prime Contractor and Airport only getcredit when DBE performs a CUF Do not confuse CUF with certification May only count the value of the actualwork or service it is “actually”performing on specific contract. DBEhas to be certified for that specific trade.15
Performance 26.53(a) Good Faith Effort Reviews26.53(b) Responsive v. Responsible26.53(f) Termination of DBEs26.55 Counting DBE participationtoward meeting DBE goals –Commercially Useful Function16
Good Faith Efforts Rigorous review of documented efforts Review performance of other bidders Lowest price not sufficient reason toreject Review all subcontractor quotes Follow up with DBEs to see if contacted Beware of meaningless, pro-formacontact/solicitation17
Termination & Substitution ofDBEs Notify DBE of intent to terminate Five days to respond Verification of “Good Cause”18
Enforcement Actions 26.107 Fraud Prevention19
Fraud in Work Performance Areas where fraud can occur:– Primes completing work committed toDBEs– Erosion of independence through resourcesharing– Payment20
FRAUDA Generic Term That Embraces All theWays One Person Can Falsely RepresentSomething to Another in Order to InduceThat Person to Surrender Something ofValue.21
Detecting Fraud Monitor work performed Examine/Question Certification Preventing– Have a plan/train staff– Use contract remedies Suspected Fraud– Who to call– Penalties to invoke22
The process: Referral-Investigation - ProsecutionInvestigations23
Red Flag Indicatorsof DBE Fraud Lack of expertiseEmployee shuttling between prime & subVehicle Magnetic SignsPayment for necessary suppliesPrime facilitates purchase of DBE-owned businessAbsentee ownerPrime always uses same DBEFinancial agreements between Prime and DBEJoint bank accounts (Prime/DBE firm)No written contracts24
Detection of Fraud Schemes Fraud is much morelikely to be detected bytips than by any othermethod. 2012 Association of CertifiedFraud Examiners, Inc.25
Detection of OccupationalFrauds 2012 Association of CertifiedFraud Examiners, Inc.26
Why Employees Do NotReport FraudAccording to a Business Ethics Study(Association of Certified Fraud Examiners),employees do not report fraud because they: Believe nothing will happen. Don’t know who to contact. Think the report will not be kept confidential,so supervisors or co-workers might retaliate. Believe the situation has no personal impacton them.27
Sample Cases False Eligibility Bribery to Falsify DBE CertificationBackground DBE firm does not complete any of thecontracted work DBE sells its status to another companywho completes the work28
REMEDIES Contract Specific RemediesCivil False Claims RemediesCriminal Prosecution RemediesDepartment of Transportation AgencyRemedies29
DOT/OIG Hotline Call:1-800-424-9071 E-Mail: Hotline@oig.dot.gov Write: U.S. DOT/OIGP.O. Box 23178Washington, DC 20026-017830
http://www.oig.dot.gov/fraud-awareness-posters31
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Thank You!33
Detection of Fraud Schemes Fraud is much more likely to be detected by tips than by any other method. 2012 Association of Certified Fraud Examiners, Inc. 26 Detection of Occupational Frauds 2012 Association of Certified Fraud Examiners, Inc. 27 Why Employees Do Not Report Fraud According to a Business Ethics Study (Association of Certified Fraud Examiners), employees do not .
Types of economic crime/fraud experienced Customer fraud was introduced as a category for the first time in our 2018 survey. It refers to fraud committed by the end-user and comprises economic crimes such as mortgage fraud, credit card fraud, claims fraud, cheque fraud, ID fraud and similar fraud types. Source: PwC analysis 2
Types of economic crime/fraud experienced Customer fraud was introduced as a category for the first time in our 2018 survey. It refers to fraud committed by the end-user and comprises economic crimes such as mortgage fraud, credit card fraud, claims fraud, cheque fraud, ID fraud and similar fraud types. Source: PwC analysis 2
fraud detection and the techniques used for solving imbalance dataset problems. The literature review is divided into two parts: insurance fraud detection and techniques for handling the imbalanced problem in a dataset. 2.1 Insurance Fraud Detection The use of data analytics and data mining is changing the in-surance fraud detection method.
Card Fraud 11 Unauthorised debit, credit and other payment card fraud 12 Remote purchase (Card-not-present) fraud 15 Counterfeit Card Fraud 17 Lost and Stolen Card Fraud 18 Card ID theft 20 Card not-received fraud 22 Internet/e-commerce card fraud los
Fraud risk management strategy Fraud prevention Anti-fraud culture Risk awareness Whistleblowing Sound internal control systems A fraud policy statement, effective recruitment policies and good internal controls can minimise the risk of fraud. Fraud detection Performing regular checks. Warning signals/fraud risk indicators:
Auditors are not effectively trained to detect or recognize fraud. One expert noted that fact patterns suggesting that fraud exists (i.e., fraud schemes) are unfamiliar to many auditors because they have not been trained in this area and because fraud is a rare event. Auditors' lack training in fraud detection methods or fraud investigation
Handling Debit Card Fraud STRATEGIZE- Debit card fraud and disputes must have a strategy based on evolving fraud. INVENTORY - Inventory all types of debit card fraud and how you mitigate fraud. TRAIN - Train your front line and investigators. DOCUMENT - Clearly document the strategy and fraud management and
Tank 6 API-653 In-Service, Internal Inspection Report less severe corrosion than the west perimeter. The average thickness of the sketch plates away from the west perimeter was 0.281”. Other than the perimeter corrosion noted, the remainder of the tank bottom showed no signs of significant metal loss and the thickness readings appeared consistent with the readings from the 2004 robotic .
