Section 5: DBE Fraud Indicators
DBE Fraud Indicators
TxDOT will report any false, fraudulent, or dishonest conduct
in connection with the DBE program to the USDOT Office of the Inspector
General (OIG) for appropriate action. The OIG looks at ten key indicators,
or “red flags,” in determining whether to investigate a contractor
for DBE fraud. These red flags include:
- DBE firm’s owner lacking background, expertise or equipment to perform subcontract work
- Employees shuttling back and forth between prime contractor and DBE-owned business payrolls
- Business names on equipment and vehicles covered with paint or magnetic signs
- Orders and payment for necessary supplies made by individuals not employed by DBE- owned business
- Prime contractor facilitated purchase of DBE-owned business
- DBE owner never present at job site
- Prime contractor always uses the same DBE
- Financial agreements between prime and DBE contractors
- Joint bank accounts (prime/DBE)
- Absence of written contracts
Under 49 CFR, Part 26.107, businesses working in the DBE program
who engage in the conduct may be subject to suspension or debarment,
enforcement actions under 49 CFR Part 31, Program Fraud and Civil
Remedies, or criminal prosecution. USDOT OIG makes investigating
and prosecuting DBE fraud a priority. The OIG, working with U.S.
Attorney’s offices has helped to create successful criminal prosecution
for fraudulent conduct in the DBE program. Anyone who becomes aware
of fraud, waste, or abuse in these programs should inform the OIG
as well as TxDOT staff.
Reporting Fraud
TxDOT has established a hotline for employees, contractors,
and others to report suspected fraud or abuse. The TxDOT Watch reporting
system allows individuals to anonymously report suspected unethical
and illegal activities within the agency in one of two ways:
- Report incidents by visiting TxDOT Watch
- Call toll-free (877) 769-8936