Eliminating Competition in the Solicitation Phase | CFE Exam | ACFE

Eliminating Competition in the Solicitation Phase

Question

Another way to eliminate competition in the solicitation phase of the selection process is to:

Answers

Explanations

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A. B. C. D.

A

The correct answer is A: Solicit bid from fictitious suppliers.

Eliminating competition in the solicitation phase of the selection process is a fraudulent activity known as bid rigging. Bid rigging occurs when individuals or organizations collude to manipulate the competitive bidding process to benefit one party over others. Bid rigging results in inflated prices, lower quality products or services, and decreased competition.

One way to rig bids is to exclude qualified bidders from the solicitation process. This can be achieved by creating fictitious suppliers and soliciting bids from them. By doing this, the perpetrators can limit the competition to a select few bidders who are in on the scheme. The bidding process may seem legitimate, but the outcome is predetermined, and the fictitious suppliers will not actually provide any goods or services.

Soliciting transaction from fictitious vendors (option B) is not a common method of bid rigging. It does not impact the selection process and does not eliminate competition.

Bid-splitting (option C) occurs when a single large contract is split into several smaller ones and awarded to different bidders. The practice creates an illusion of competition, but in reality, the bidders have colluded to divide the work among themselves. While bid-splitting eliminates competition, it is not achieved by using fictitious vendors.

Therefore, the correct answer is A: Solicit bid from fictitious suppliers.