Julius Smith is a purchasing agent for a Louisiana state agency. He has a projec
ID: 2540643 • Letter: J
Question
Julius Smith is a purchasing agent for a Louisiana state agency. He has a project budgeted for $24,000 and would like to hire RGS Consultants to handle it. Unfortunately for Julius and RGS Consultants, the state has a requirement that all projects over $10,000 must be sent out for competitive bids. To avoid the bidding process, Julius breaks the project into three component projects worth $8,000 each. RGS Consultants is subsequently awarded the contracts for all three projects. What kind of fraud could Smith be charged with and why?
Explanation / Answer
Answer
In the current scenario the total project value is $ 24,000, however Julius break the project in 3 parts for the purpose of avoiding the state requirement and tendering process. Thus, finally the contract has been awarded to RGS Consultants.
The situation reflect the effect of favouratism. In case Julius have gone through tendering process there are possibility of selection of better consultant and at low cost. However, because of favourtism and influence Julius has selected RGS Consultants. Julius may be charged with the fraud of alloting the project to related/known party without following the adequate and defined procedure. Julius may be charged with the fraud of unnecessary increasing the project cost and may be not maintaining the optimum service quality.
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