Which is a common red flag of defective pricing procurement fraud schemes?

• A. A contractor submits a request for change orders.
• B. Cost estimates inconsistent with prices.
• C. A contractor uses valid cost schedules.
• D. Counterfeit products.

Answer: (B)

Defective pricing centers on inaccuracies in the cost or pricing data used to set a contract price. When the cost estimates used to develop the bid don’t line up with the prices actually charged or billed, it signals that the data behind the price is inconsistent or misleading. That mismatch is a classic red flag that the pricing information may be defective, potentially masking inflated costs or other improper pricing practices.

Change orders are common in projects and don’t by themselves indicate defective pricing. Using valid cost schedules would also be expected and non-problematic. Counterfeit products point to quality or supply-chain fraud rather than inconsistencies in cost data used to price a contract.