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What is bid rigging?

On Behalf of | Apr 18, 2024 | Criminal Defense

When many companies are seeking jobs or contracts, they will submit bids. For instance, a construction project may be planned in town, and local construction companies will bid to see if they can be awarded the project. This often happens on commercial properties, rather than residential properties, where the prospective homeowner will choose their own builder.

Bid rigging is essentially when these companies work together or coordinate their efforts in order to influence the price. This can be an illegal practice because it doesn’t create a fair marketplace for everyone.

How would this happen?

For example, imagine that there are three construction companies in the area. In a fair system, they would all submit bids without knowing what the other bids were, which should theoretically keep the costs low and realistic. 

But the construction company owners may discuss their bids with each other before submitting them. If two owners agree to submit artificially high bids, that means the other can undercut them and still get an inflated price. The three owners have essentially colluded in order to drive up the price of the construction project.

But it’s not just construction where things like this happen. It could also happen with transportation contracts, cleaning contracts, contracts for food and medical services, and much more.

Are you facing bid rigging accusations?

As a business owner, if you’re facing accusations of collusion or fraud, it’s a very serious situation. It could drastically impact your career and your company moving forward. It’s critical that you and all involved understand exactly what legal options you have.