CFE – Financial Transactions and Fraud Schemes — Question 92

Which of the following is a common red flag of procurement fraud schemes involving collusion among contractors?

Answer options

• A. Bid prices decline when a new contractor enters the competition.
• B. All contractors submit bids that are consistently low.
• C. More competitors than usual submit bids on a project or product.
• D. The winning bidder does not subcontract any work to a third party.

Correct answer: B

Explanation

The correct answer, B, indicates a situation where all bids are suspiciously low, suggesting possible collusion to manipulate the procurement process. Option A reflects a normal market behavior when new entrants appear, while C may indicate healthy competition rather than fraud. Option D does not imply collusion and could simply reflect the bidder's strategy.