Contract and procurement fraud
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- Bid Rotation
| Complementary Bidding
Complementary bidding (also known as protective, shadow, or cover bidding) occurs when competitors submit token bids that are not serious attempts to win the contract. Token bids give the appearance of genuine bidding, but by submitting token bids, the conspirators can influence the contract price and who is awarded the contract. Often, conspirators in complementary bidding schemes submit token bids that: Are too high to be accepted Appear to be competitive in price but deliberately fail to meet other requirements of the tender Contain special terms that will not be acceptable to the buyer Bid Rotation Bid rotation, also known as bid pooling, occurs when two or more contractors conspire to alternate the business between them on a rotating basis. Instead of engaging in competitive contracting, contractors perpetrating these schemes exchange information on contract solicitations to guarantee that each contractor will win a share of the purchasing entity’s business. EXAMPLE
the lowest on the first contract, B’s bid will be the lowest on the second contract, and C’s bid will be the lowest on the third contract. Although none of the vendors will get all three jobs, each vendor is guaranteed to get at least one job. Furthermore, because they plan their bids ahead of time, the vendors can conspire to raise their prices. Thus, the purchasing company suffers as a result of the scheme. Additionally, bid rotation schemes might be coupled with a scheme involving an agreement that the winning bidder will award subcontracts to losing bidders. This allows losing bidders to improve their cash flow as they wait for their turn to win. Similarly, losing bidders might receive a percentage of the winning company’s profits. Download 0.62 Mb. Share with your friends:
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