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Exam CFE - Financial Transactions and Fraud Schemes All Questions

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Exam CFE - Financial Transactions and Fraud Schemes topic 1 question 202 discussion

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

  • 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.
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Suggested Answer: B 🗳️

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_denw
1 week ago
Selected Answer: D
In collusion among contractors, it's common for a favored bidder to win a contract and then subcontract the work to co-conspirators as part of a bid rotation or cover bidding scheme. So, when the winning bidder does not subcontract — especially on large or complex projects where subcontracting is typical — it may suggest that the job was prearranged and there’s no real competition involved. It may also signal that the conspirators are concealing their connection.
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