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Price fixing when bidding for government contracts

On Behalf of | Jul 10, 2023 | Government Contracts

Applying for a government contract requires such high levels of preparation, that most companies just won’t bother. Hence, especially if you work in a niche field, you may find yourself with only a few competitors and you might know them well.

You know that setting a price for the work which is too high above a competitor’s price could see you straight out of the race. They will be equally wary of going above your price. So how do you work out a suitable price that makes you money while winning you the bid?

Consulting with competitors could lead to trouble

Imagine your main competitor for this and future contracts is also a close friend. You feel sure that if you don’t get the work then they will and they feel the same way about you. So you might consider discussing a suitable price range for both of you to stay within, one where you will each win and lose some contracts to the other, but overall make enough profit for it to be worthwhile.

The government could see that as price fixing if it discovers your arrangement. Even if you have no formal agreement, it might get suspicious if you constantly submit very similar bids. If it finds evidence you discussed the matter, perhaps someone overheard you discussing it in a bar or one of your employees tells on you, it might pursue legal action, accusing you of price-fixing.

Not only will this destroy your chances of winning contracts, but it could also see you behind bars. Understanding the rules you must abide by when bidding for government contracts can be challenging, but it’s crucial you do. Do not be afraid to reach out for help to do it.