Bid rigging practices and economic implications

Bid Rigging

An accusation of bid rigging is a serious matter. It has been suggested that the Denver Construction Inc. company colluded with the Dells Construction company to fix prices on property that was located in Illinois. These two companies have had a rocky history with four lawsuits in the last ten years as well as cases of the companies stealing bids from each other. An ex-husband has made the claim that the companies were involved in price fixing in a bid for two properties that each were sold well under the current market value. He claims to have emails and text messages to substantiate his claims.

Enacted in 1890, the Sherman Act is among our country's most important and enduring pieces of economic legislation. The Sherman Act prohibits any agreement among competitors to fix prices, rig bids, or engage in other anticompetitive activity. Criminal prosecution of Sherman Act violations is the responsibility of the Antitrust Division of the United States Department of Justice. Violation of the Sherman Act is a felony punishable by a fine of up to $10 million for corporations, and a fine of up to $350,000 or 3 years imprisonment (or both) for individuals, if the offense was committed before June 22, 2004 (Department of Justice, N.d.). Bid rigging is considered corruption and is illegal in procurement.

When bid rigging is suspected within an organization there are several steps that can be taken to undercover the reality of the situation. There are several warning signs that can lead to detection that bid rigging is occurring and all of those are present in this case. The first step to an investigation is to look at the bids that are submitted. Some of the warning signs that would suggest bid rigging occurred would be the same supplier always being the lowest bidder, suppliers unexpectedly withdrawing from the bid, suppliers that always bid but never win, a suppler that does not bid on an item they typically would, suppliers submitting joint bids, a winning supplier not accepting the bid, and winning bidders who continuously subcontract out to the other bidders.

To further investigate this case the digital material, including items such as text messages and emails, must be investigated. The husband's claims may or may not be true and there is a conflict of interest due to the fact that he is battling for custody of the children. Yet, his evidence may be valid and should be considered in an objective manner. Other emails and company records should also be examined to produce further evidence that bid rigging occurred. Given the fact that the ex-husband may also be illegally cyber stalking his previous wife, whatever evidence he provides must be independently verified.