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.