Transcript No Slide Title

The Ethics of Preparing, Awarding,
and Administering Department of
Transportation Contracts
North Carolina
Department of Transportation
Agenda
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History of Bid Rigging - North
Carolina Carolina Example
Why Is Bid Rigging an Issue
Today?
National Case Histories
Example Ethics Policy
History of Bid Rigging in
North Carolina
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Bidding Irregularities Disclosed
in June 1980
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31 Contractors Convicted in
Federal Court
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Testimony That Bid Rigging Had
Gone on Since the 1920s
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Convicted Contractors Fined in
Excess of $6 Million
History of Bid Rigging in
North Carolina
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Civil Settlements > $13 Million
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Company Principals Convicted and
Sentenced to Active Prison Time of 3090 Days
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33 Contractors Debarred
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1/3 of all Contracts Between July 1975
and December 1979 were Rigged
History of Bid Rigging in
North Carolina
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50% of Asphalt Plants Certified in the
State Were Owned by 3 Companies
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Investigation Revealed Territorial
Agreements Throughout North
Carolina That Revolved Around the
Location of These Plants
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Territorial Arrangements Followed
County and Division Lines
History of Bid Rigging in North
Carolina
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NCDOT Responsibility
– Evidence of Only One Case of
NCDOT Involvement
– Employee Charged, Tried, and
Found Not Guilty
– Evidence of Engineer’s Estimate
Made Available to Some Contractors
Highway Contract
Oversight Commission
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Created As a Result of Improper
Bidding Activities
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Established June 4, 1981
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Governor James B. Hunt, Jr.
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Membership: Lawyers, Professors,
& Private Business Leaders
Oversight Commission
Recommendations
1. System to Detect Collusion
AASHTO BAMS in Now Used
2. Department’s Estimating Techniques
Needed to Be Strengthened - Use of
Historical Bids Most Common Fault
Cost Based Estimating is Now Used
3. State Should Conduct Periodic Antitrust
Audit to Look for Evidence of Collusion
And/or Bid Rigging
Contract Monitoring Office Now Performs
This Function
Oversight Commission
Recommendations
4. Engineer’s Estimate Must Remain
Confidential
Only Exposed at Bid Opening
5. NCDOT Should Continue to Find Improved
Methods of Cost Estimation
Continuous Improvements are Made
6. Bidders List Must Be Confidential on Project
by Project Basis
Plan Holders List is made Public
Oversight Commission
Recommendations
7. Bid Depositories Must Be Located Only On
State Property
All Bid Openings are Held in State Facilities
8. Department Should Continue Efforts to
Encourage Competition and More
Responsive Bids Through Advertising, Prebid Conferences, Increasing the Number of
Pre-qualified Contractors, And Structuring of
Contracts
Efforts are Continuous...
Oversight Commission
Recommendations
9.
NCDOT Should Perform Periodic Reviews and
Analyses of Contract Bids for Purpose of
Detecting Bidding Irregularities Including
Token or Complimentary Bidding
AASHTO BAMS is Utilized for This
10. To Promote Competition, Permit Each Bidder
to Establish Maximum Amount of Work
Awarded at Any One Bid Opening
Only done when Contractor Submits Bids on
Multiple Projects and Concerns May Exist Over
Taking on too Much Work
Other Comments & Findings of The
Commission
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Lack of Competition in Certain Areas
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Engineer’s Estimates Used Bid
Averages - Not Actual Cost + Profit
– If Contractors Consistently Bid High,
Average Prices Will Be High
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Small Division Projects Are Excluded
From BAMS Analysis
Why Are Fraudulent Activities Such
an Issue Today?
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Nationally - Bid Rigging Runs in 20 Year
Cycles
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Agency, Contractor Employee Turnover,
Knowledge Lost
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Small, More Numerous Division Let Projects
– No Central evaluation of Bids &/or Bid
Patterns
Why Are Fraudulent Activities Such
an Issue Today?
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Increased Opportunities for Fraud
– Less Oversight by Agencies
– Inspection by the Contractor
– Expanded QMS Type Programs
– Fewer Agency Employees
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National Economic Situation
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Responsibility High, Opportunity High
Other Fraud Issues
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Falsification of Test Results
– Quality Management Type Programs
With High Contractor Responsibility
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DBE Improprieties
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Bribery
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Materials Charged to Projects but
Used Elsewhere
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Material Substitutions
Our Responsibility
If Inappropriate Activity Is Suspected, Contact
the Following:
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Supervisor
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Division Engineer
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Chief Engineer’s Office
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Attorney General’s Office
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USDOT, SBI (As Appropriate)
National Case Histories
142 Indictments With 106 Convictions
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Contech Materials Substitution
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Straight Arrow Construction Company False Invoices, Falsification of Payroll Records
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White Construction Company False Claims
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Daniel Benkert, Yahara Materials False Weight Tickets
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Palumbo Brothers Ghost Weight Tickets, Inflated Weight Tickets
NCDOT Ethics Policy
The Holding of a Public Office by
Appointment or Employment is a Public
Trust. Independence and Impartiality of
Public Officials are Essential to Maintain
the Confidence of Our Citizens.
Adopted September 8, 2001
Conflicts of Interest
A Conflict of Interest Is a Situation in Which
an Employee’s Private Interest, Usually of a
Financial or Economic Nature, Conflicts or
Raises a Reasonable Question of Conflict
With the Employee’s Public Duties and
Responsibilities.
Duty & Disclosures
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Employees Shall Periodically Review
Programs, Policies, and Activities of the
Department to Identify Potential or Real
Conflicts of Interest.
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Any Employee of the NCDOT Who
Identifies a Conflict of Interest Shall
Disclose the Conflict Through
Appropriate Management Channels to
the Secretary of Transportation.
Disqualification & Contracts
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If a Conflict of Interest Is Identified, the
Employee Must Remove Him/herself
From the Source of Conflict.
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No Employee Shall Draft, Negotiate,
Accept, or Approve Any Contract or
Subcontract If Any Member of His/her
Family Has Any Financial Interest in
Such Contract or Subcontract.
Real/Personal Property
No Employee, or Member of His/her
Immediate Family, Shall Use Their
Position to Profit From an Interest in
Real or Personal Property.
Business Opportunities
No Employee, or Member of His/her
Immediate Family, Shall Accept Any
Business or Professional Opportunity When
They Know, or Reasonably Should Know,
That the Opportunity Is Being Afforded to
Them With the Intent to Influence the
Performance of Official Duties.
Restriction On
Future Employment
To Avoid Even the Appearance of Impropriety
While Conducting the Public’s Business...
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For One Year Following Employment With the
Department, Employees Are Restricted From
Accepting Any Employment or Contractual
Relationship With Any Business Entity in
Connection With Any Contract That They
Drafted, Negotiated, Developed Specifications
For, or Recommended During Their Tenure of
Public Service.
Restriction On
Future Employment
To Avoid Even the Appearance of Impropriety
While Conducting the Public’s Business...
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This Does Not Prohibit Employment With a
Business Entity If the Activity Is on Work
Other Than the Specific Contract With
Which They Were Involved.
Contracting Firms
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All Contracting Firms, Consulting
Firms, or Principals Thereof Doing
Business With the Department Shall,
When Entering Into a Contract With
the Department, Certify That They Own
No Real Property That Will Be Used for
the Project That Is the Subject of the
Contract.
Contracting Firms
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Does Not Prohibit Use of Materials
From Borrow Pits or Quarries Owned
by the Firms or Their Principals and
Located Adjacent to the Work Sites.
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Does Not Include Public-private
Agreements Authorized by General
Statutes 136-18(27) or 136-28.6.
Gifts & Favors
To Avoid Even the Appearance of Impropriety
While Conducting the Public’s Business...
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Gifts/Anything of Value - No Gifts Are
Acceptable With a Few Exceptions
Gifts & Favors
To Avoid Even the Appearance of Impropriety
While Conducting the Public’s Business...
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Favors - Any Opportunity, Service,
Accommodation, Use of Facility, or
Other Benefit Available for Less Than
Market Value
 What If You Pour a Concrete Driveway Yourself?
 What If You Buy Materials From a Department
Supplier?
Gifts & Favors
To Avoid Even the Appearance of Impropriety
While Conducting the Public’s Business...
Exceptions
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Advertising Items & Souvenirs of Nominal
Value
Food & Beverages at Professional Meetings
Where Equally Available to All Attendees
Gifts or Favors From Friends/relatives
Where the Relationship Is the Sole
Motivating Factor
(Any Gifts Must Be Reported to the Secretary)
Consultation
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If Any Issue Arises Where You Feel
Uncomfortable Regarding Any Ethical
Situation, Consult With the Attorney
General’s Office.
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Consultation Will Be Confidential As
With Any Client/Attorney Relationship.
Enforcement & Compliance
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Failure to Follow These Rules Is
Grounds for Disciplinary Action
Including Possible Dismissal.
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Failure to Follow Certain Conditions of
This Policy Is Illegal and Can Result in
Fines or Imprisonment.
Questions?