FAC Fraud Detection & Prevention 3 — Questions and Answers
Question 1: Which indicator is most likely a red flag for collusive bidding among contractors?
- Multiple bids submitted on the same day
- All bidders use the same bid form
- Losing bids are consistently higher by a predictable margin
- Winners alternate among the same group of contractors on similar contracts (Correct answer)
Correct answer: Winners alternate among the same group of contractors on similar contracts
Bid rotation—where the same group of contractors takes turns winning contracts—is a classic indicator of collusive bidding agreements.
Question 2: Under the Anti-Kickback Act, which of the following is prohibited?
- Offering volume discounts to the government
- Providing a gift to a subcontractor to influence subcontract award (Correct answer)
- Charging overhead on fixed-price contracts
- Hiring former government employees
Correct answer: Providing a gift to a subcontractor to influence subcontract award
The Anti-Kickback Act prohibits any money, fee, commission, or gift given to influence the award or administration of a subcontract under a prime government contract.
Question 3: A contractor submits certified cost or pricing data that it knows is inaccurate. This constitutes:
- Defective pricing (Correct answer)
- Cost avoidance
- Price gouging
- Unallowable cost submission
Correct answer: Defective pricing
Defective pricing occurs when a contractor submits cost or pricing data that is inaccurate, incomplete, or not current, in violation of the Truth in Negotiations Act (TINA).
Question 4: Which of the following government databases should a CO check to identify contractors who are debarred or suspended?
- Federal Procurement Data System (FPDS)
- System for Award Management (SAM.gov) (Correct answer)
- USASpending.gov
- FAPIIS
Correct answer: System for Award Management (SAM.gov)
SAM.gov (System for Award Management) contains the Exclusions list, which COs must check before awarding contracts to ensure contractors are not debarred or suspended.
Question 5: When a contractor employee reports suspected fraud internally and is retaliated against, they are protected under:
- The Privacy Act
- Whistleblower protection provisions of the National Defense Authorization Act (Correct answer)
- The Freedom of Information Act
- The Competition in Contracting Act
Correct answer: Whistleblower protection provisions of the National Defense Authorization Act
The NDAA and related statutes provide whistleblower protections for contractor employees who report fraud, waste, or abuse related to federal contracts.
Question 6: A contractor charges the cost of an executive's country club membership to a government cost-reimbursement contract. This is best classified as:
- Direct cost misallocation
- Unallowable cost (Correct answer)
- Indirect cost overrun
- Fringe benefit expense
Correct answer: Unallowable cost
FAR 31.201-6 and FAR 31.205-14 identify entertainment costs such as club memberships as unallowable and therefore cannot be charged to government contracts.
Question 7: What is the primary purpose of the Contractor Responsibility determination before award?
- Ensuring the contractor has the lowest price
- Verifying the contractor is technically capable and has satisfactory integrity (Correct answer)
- Confirming the contractor is registered in SAM
- Checking that the contractor has no pending lawsuits
Correct answer: Verifying the contractor is technically capable and has satisfactory integrity
FAR 9.104-1 requires COs to determine that prospective contractors have satisfactory records of integrity and business ethics, among other standards, before awarding a contract.
FAC Fraud Detection & Prevention 3
Which indicator is most likely a red flag for collusive bidding among contractors?