Home » Law » National, State, Local

Bid Rigging - Conspiring to Fix a Bid Price

Oct 30, 2007
Bid rigging refers to the felony crime of conspiring with other competitors to raise purchase prices set for local, state, or federal government bids

The US government often accepts bids for the procurement of goods and services. When competitors commit the crime of bid rigging, they agree among themselves in advance which competitor will put forward the winning bid on the government contract.

By conspiring, bid riggers keep prices up and ensure that each competitor gets his crack at a government contract. It isn't necessary that all competitors are involved in the conspiracy. But if enough are, it can influence a government decision maker who will be likely to ignore or be skeptical about lower-priced bids if the majority submits higher price points.

Consequences for Riggers

Bid rigging violates federal law (i.e., the Sherman Act) and may carry fines for corporations up to $10 million. For individuals the penalty is up to $350,000, a 3-year prison term, or both, if the violation was committed before 22 June 2004.

If the violation was committed before this date, the maximum fine for corporations is $100 million. For individuals, it's $1 million and a maximum 10-year sentence.

In some cases, maximum fines are raised above Sherman Act limits to TWO TIMES the loss/gain involved. Penalty enhancers, include mail/wire law violations, false statements offenses, etc., which make the perpetrator subject to fines and sentencing for these other crimes.

Aside from criminal penalties, a bid rigger also faces potential civil recovery by victims who may get up to THRICE the amount of original damages suffered.

On top of it all is the damage to a firm's reputation, as in the case insurance giant Marsh & McLennan.

Beleaguered by bid rigging allegations, the firm had to change its leadership and sell off assets (like its $25-million Falcon jet) to cover losses. And, as if to distance itself from the excesses of the past, it even turned its ousted CEO's posh executive suite into a conference room.

Four Types of Bid Rigging

Virtually all types of bid rigging tactics involve an arrangement among several or all bidders to predetermine the winning bid and eliminate competition. Four of the most common types of bid rigging plans are

1. Cover Bidding. Also called complementary bidding, this is the most common form of bid rigging. Riggers agree to make bids priced too highly (hence the word "cover") to be chosen or that contain unacceptable terms to the purchaser. These cover bids make it seem that real competitive bidding is going on when, in fact, they conceal secretly puffed up pricing.

2. Bid Suppression involves refraining from bidding or withdrawing one's bid to cause a predetermined competing bid to be accepted.

3. Bid Rotation. Bidders conspire to take turns in submitting the lowest bid.

4. Subcontracting. Competitors who submit intentionally losing bids or suppress their bids receive, in exchange for their collusion, subcontracts from the winning bidder.

These tactics are usually difficult to uncover since collusion is done in secret. Out of the four tactics, however, subcontracting is the easiest to detect.
About the Author
We all want to think we are safe but are we? If you want to know more about the different types of crimes committed today, RecordsSiteReviews.com is offering FREE ACCESS to its Criminal Records Information section. If you have a nagging suspicion on someone, run a criminal check on him or her today!
Rating:
Please Rate:
(Average: Not rated)
Views: 298
Print Email Report Share
Article Categories
    • Artists
    • Gambling
    • Humanities
    • Humor
    • Movies
    • Music
    • Photography
    • Tattoos
    • Television
    • Classic Cars
    • Motorcycles
    • Recreational Vehicles
    • SUVs
    • Trucks
    • Vans
    • Branding
    • Business Opportunities
    • Careers and Jobs
    • Corporate
    • Customer Service
    • Direct Mail
    • Entrepreneurship
    • Ethics
    • Financing
    • Franchising
    • Home-Based Business
    • Human Resources
    • Import and Export
    • Leadership
    • Management
    • Market Research
    • Marketing and Advertising
    • Negotiation
    • Network Marketing
    • Networking
    • Organizational
    • Presentation
    • Project Management
    • Public Relations
    • Small Business
    • Strategic Planning
    • Team Building
    • Telemarketing
    • Training
    • Data Recovery
    • Databases
    • Games
    • Hardware
    • Networks
    • Operating Systems
    • Programming
    • Security
    • Software
    • Spyware and Viruses
    • Ask an Expert
    • College and University
    • Home Schooling
    • K-12
    • Languages
    • Online Education
    • Psychology
    • Accounting
    • Credit
    • Currency Trading
    • Debt Consolidation
    • Insurance
    • Investing
    • Leasing
    • Loans
    • Mortgage
    • Mutual Funds
    • Personal Finance
    • Stock Market
    • Structured Settlements
    • Taxes
    • Wealth Building
    • Coffee
    • Cooking
    • Gourmet
    • Recipes
    • Wine and Spirits
    • Acne
    • Aerobics
    • Alternative Medicine
    • Beauty
    • Cancer
    • Cosmetics
    • Depression
    • Diabetes
    • Diseases and Conditions
    • Fitness Equipment
    • Fitness
    • Hair Loss
    • Heart Disease
    • Medicine
    • Men's Health
    • Muscle Building
    • Nutrition
    • Skin Care
    • Supplements and Vitamins
    • Weight Loss
    • Women's Health
    • Yoga
    • Arts and Crafts
    • Babies
    • Collecting
    • Elderly Care
    • Genealogy
    • Hobbies
    • Parenting
    • Pets
    • Pregnancy
    • Woodworking
    • Feng Shui
    • Gardening
    • Home Appliances
    • Home Security
    • Interior Design
    • Landscaping
    • Affiliate Programs
    • Article Marketing
    • Auctions
    • Audio
    • Banner Advertising
    • Blogging
    • Broadband
    • Domain Names
    • E-Books
    • E-Commerce
    • Email Marketing
    • Ezines and Newsletters
    • Forums
    • Internet Marketing
    • Link Popularity
    • Pay-Per-Click
    • Podcasting
    • RSS
    • Search Engine Marketing
    • Search Engine Optimization
    • Security
    • Social Media
    • Spam
    • Video
    • Viral Marketing
    • Web Design
    • Web Development
    • Web Hosting
    • Buying
    • Selling
    • Baseball
    • Basketball
    • Boating
    • Cycling
    • Extreme Sports
    • Fishing
    • Football
    • Golf
    • Hockey
    • Hunting
    • Martial Arts
    • Running
    • Scuba Diving
    • Soccer
    • Swimming
    • Tennis
    • Dating
    • Divorce
    • Marriage
    • Weddings
    • Astrology
    • Buddhism
    • Christianity
    • Faith
    • Hinduism
    • Islam
    • Judaism
    • Meditation
    • Metaphysical
    • New Age
    • Cable and Satellite TV
    • Cell Phones
    • Communication
    • Gadgets and Gizmos
    • GPS
    • Satellite Radio
    • Video Conferencing
    • VoIP
    • Addictions
    • Coaching
    • Goal Setting
    • Motivational
    • Stress Management
    • Time Management
    • Clothing
    • Electronics
    • Fashion
    • Gifts
    • Jewelry
    • Causes and Organizations
    • Environment
    • History
    • Holidays
    • Men's Issues
    • Nature
    • Philosophy
    • Politics
    • Women's Issues
    • World Affairs
    • Air Travel
    • Camping
    • Cruises
    • Destinations
    • Outdoors
    • Article Writing
    • Book Reviews
    • Copywriting
    • Fiction
    • Non-Fiction
    • Poetry
    • Quotes
    • Screenplay
    • Tools and Resources