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27 to DBEs at contract award is actually performed by the TABLE 11 DBEs. This mechanism must provide for a running tally of BID DATA TRACKING actual DBE attainments (e.g., payments actually made to DBE firms) and include a provision ensuring that DBE par- ticipation is credited toward overall or contract goals only No. of STAs when payments are actually made to DBE firms. Tracking Information Tracking Data* Track Number of Bid Submissions for all DBE 17 Firms Quoting as Prime or Subcontractor Table 11 is a summary of the STA data tracking for bid sub- missions and awards. Tracking DBE Prime Bid Dollar Volume 24 Tracking DBE Prime Award Dollars 33 The questionnaire did not include a responsive section to determine why all STAs were not tracking the required data Tracking DBE Subcontract Bids for all Prime 9 Bidders (DBE and Non-DBE) at this time. However, five volunteered that they were still in the process of trying to implement a mechanism to track these Tracking DBE Subcontract Dollar Awards 34 data or that the information was not readily available. The responses suggest that there is overall compliance with track- *Multiple responses possible from each of the 36 responding STAs. ing the prime contractor dollar commitments (33 of 36) and subcontractor commitments (34 of 36). The types of fraud commonly encountered in DBE inves- FRAUD INVESTIGATIONS tigations include Situations where fraud may become an issue can be brought to Individuals and companies applying for DBE certifica- the attention of the STA from various sources. Complaints tion that submit misleading or false information that is from individuals or firms can be used to initiate the investiga- not easily detectable. tion. New Mexico requires all complaints to be submitted in Inconsistent interpretation of the regulations by the cer- writing with specific reasons why the firm should be exam- tifying entity and a lack of uniformity in the certification ined. In some situations, the STA is notified that the U.S.DOT process among agencies receiving DOT funds, enabling is conducting a fraud investigation depending on the reason some companies and individuals who do not meet DBE for the complaint. Generally, fraud investigations can be gen- requirements to obtain certification. erated by complaints from nearly any credible source. For the DBEs that were legitimately certified at one time that 36 STAs responding to the survey, 26 state-level investiga- may fail to meet eligibility requirements in subsequent tions for fraud were reported for 2002. The U.S.DOT Office years and are not decertified in an expeditious manner. of Inspector General (OIG) is involved in a larger share of the fraud investigations where there are federal contracts and The most common DBE schemes reported in the docu- grants involved. ment were (OIG): Fraud involving the DBE program for minority and women con- Front or sham companies--established to illegally take tractors who are used as "false-front" companies is an area with advantage of the DBE program by falsely representing serious enforcement and compliance problems that appears to be nationwide in scope and requires more attention ("Disadvan- ownership and control. taged Business Enterprise Program," Nov. 18, 2003). Pass-through or conduit companies--prime contractor indicates that the DBE performs the work they were hired As of November 1, 2003, OIG had 40 ongoing DBE fraud to do when in actuality the DBE did not perform the work investigations in 19 states. The summary of the activity is in False eligibility--when DBEs misrepresent their profits Table 12. or other criteria to qualify them as a DBE. TABLE 12 U.S. DOT OFFICE OF INSPECTOR GENERAL DBE FRAUD INVESTIGATIONS Contract and Fraud Cases DBE DBE Cases Grant Year Opened Cases % Total Indictments Convictions FY 99 47 3 6% 5 1 FY 00 39 7 18% 9 4 FY 01 68 12 18% 10 9 FY 02 57 14 25% 10 11 FY 03 74 22 29% 9 5 277 56 20% 40 29 Note: From web document, Federal Office of Inspector General (OIG) Nov. 18, 2003, Backgrounder.