If you’ve been accused of bid rigging, the first thing to remember is that this is essentially a type of collusion. It happens within the construction industry. The collusion is between the companies that are bidding on the project.
At the end of the day, the goal of bid rigging is just to make the industry more profitable by artificially increasing the prices and eliminating actual competition. Bids are supposed to be entered blind so that no one knows what other bids are being put in for the job. This should theoretically keep those bids low, but collusion allows people to raise prices and still win the bids. Here are three ways that can happen:
Rotating the bids
In some cases, contractors will tell each other what their prices are going to be. They will then rotate around so that everyone gets jobs at a predetermined time.
Excessively high bids
In other cases, to make it look like the bidding process is legal and just, companies will enter bids that they know are vastly too high for the job. They’re planning to lose. The goal is just to make it look like the other company put in an authentically winning bid, even though it was already higher than it should’ve been.
Companies are also not allowed to suppress the bids of other companies. They can’t do this through threats, by offering bribes or even by coming to some sort of mutual agreement that the other person will drop out of the bidding.
If you’ve been accused of this type of fraud, it’s a very serious accusation for both yourself and your company. Make sure you know what steps to take.