In procurement fraud, which practice involves contractors inflating the prices of goods and services through collusion?

The practice that involves contractors inflating the prices of goods and services through collusion is known as complementary bidding. In this scheme, competing contractors coordinate their bids to create the illusion of competitive pricing while actually agreeing on high prices among themselves. This collaboration allows them to secure contracts at inflated rates, ultimately defrauding the procurement process.

In complementary bidding, the collusion between contractors undermines the integrity of the bidding process, as the procurement entity believes it is receiving competitive offers when, in fact, the prices have been artificially leveraged. Such tactics not only lead to financial losses for organizations but can also diminish public trust in procurement practices.

The other options highlight various forms of procurement fraud as well but do not specifically pertain to collusion among contractors elevating prices. Shell company schemes typically involve fake entities created to facilitate fraud without delivering any actual goods or services. Material mischarging pertains to the improper allocation of costs related to materials, and labor mischarging focuses on fraudulent reporting of labor costs rather than collusive pricing practices.