U. S. Department of Transportation Office of Inspector General BAMS/DSS vs. COLLUSION WHO’S WINNING?

1. Senior Special Agent Mark Peters Telephone 312-353-0106 Mark.E.Peters@OIG.DOT.GOV U. S. Department of Transportation Office of Inspector General BAMS/DSS vs. COLLUSION WHO’S WINNING? Vermont 2003 TUG Conference Burlington, Vermont September 9, 2003

2. Typical Contractor Frauds • Antitrust • DBE • Product Substitution • Labor Mischarging • Materials Mischarging • Bribery/Gratuities

3. OIG Investigative Statistics Contract/Grant Fraud Investigations (January 1998 thru December 2002) • Indictments: 237 • Convictions: 180 • Fines, Recoveries, & Restitution: $96.92 Million

4. ANTITRUST—HIGHWAY STRIPING U.S. v. ACCENT STRIPE, INC. • Competition among three companies for striping contracts in NY and VA Misrepresentation: • $ Value: • Inflated bids on contracts for reflective pavement markings and stripes on highways in NY and VA due to advance agreement not to compete • Felonies: • Sherman Antitrust Act • $1.2M fine and restitution • Debarment

5. 577 Pending OIG Cases

6. OIG’s Pending Contract/Grant Fraud Cases

7. NorthDakota Minnesota South Dakota Wisconsin Wyoming Michigan Iowa Nebraska Chicago Colorado Illinois Kansas Indiana Missouri Kentucky OIG INVESTIGATIVE REGIONS National & Regional Contract & Grant Fraud Coordinators REGION 5 Senior Special Agent Mark Peters Chicago, IL REGION 2 Senior Special Agent Craig Furey New York City, NY REGION 9 Senior Special Agent Tim Parker San Francisco, CA Maine Vermont New York City Seattle Washington Cambridge Montana Minneapolis New York Mass. 37 42 RhodeIsland Pennsylvania Connecticut Oregon New Jersey Idaho 42 Ohio Delaware Cincinnati Nevada San Francisco Utah Maryland West Virginia 17 California Virginia NorthCarolina Los Angeles Tennessee Arkansas HEADQUARTERS Senior Special Agent Elise Woods Washington, D.C. Arizona Oklahoma New Mexico M i s s . South Carolina 37 Atlanta Alabama REGION 4 Senior Special Agent LaVan Griffith National Fraud Coordinator Atlanta, GA • Ft. Worth Georgia Texas Alaska Louisiana Florida (Includes Puerto Rico, Virgin Islands) Ft. Lauderdale

8. What the Experts Say • FHWAencourages state DOT’s to continually improve their bid analysis procedures by using computers to analyze bids and detect bidder collusion.

9. What the Experts Say • INFO TECH’s BAMS/DSS supports computerized detection of “collusion red lights”: • Stable market shares • Predictable win patterns • Territorial allocation of contracts • Rotation of markets • Prices above competitive levels

10. Bottom-line Questions ? ? ? ? ? ? ? ? ? • Who’s winning the war against bidder collusion? • What is the score? • What does collusion look like?

11. State DOT Questionnaire • In the past 5 years, how often has your state DOT’s computerized bid analysis system identified possible bid collusion? • never • 1 or 2 times • more than 2 times but less than 10 times • more than 10 times but less than 25 times • over 25 times • uncertain

12. State DOT Questionnaire • When collusion was detected, what steps did state DOT representatives take? • no action but further monitoring • bids rejected and contract re-let • contractors interviewed / supplier information collected • referral to state DOT legal counsel • referral to criminal law enforcement • uncertain

13. Summary Similes • Bid collusion is like the Loch Ness monster. • Collusion detection is like hunting mushrooms.

14. Senior Special Agent Mark Peters Telephone 312-353-0106 Mark.E.Peters@OIG.DOT.GOV U. S. Department of Transportation Office of Inspector General BAMS/DSS vs. COLLUSION WHO’S WINNING? Vermont 2003 TUG Conference Burlington, Vermont September 9, 2003