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Bid Rigging

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What is bid Rigging?

 

Call me crazy, that honesty is good business, in my opinion. I realize that the word "honest" is subjective, and there are all sorts of grey areas that people travel in and around. Ast the end of the day, we all have a basic understanding of what is right and what is wrong. "Its just business" is the thing the guys says in the mobster movies just before he kills someone as if that makes what he is doing ok. Sadly that same kind of reasoning does not stay in the film; people do all sorts of things in business they would never do in their personal lives. But since it's "just business" it's ok. In my industry, some suppliers won't sell to this guy or that guy. Some manufacturers will pick and choose who they will certify or not based on personality. Some contractors do anything to get the inside scope during a bidding process. All of them are just doing business and find ways to justify themselves. 

I would be as bold as to say that "back-scratching" deals, you know you scratch mine and I will scratch your's have become so commonplace in some areas; it's just how things are done. A company I was working for a long time ago, did a terrible job on a roof I sold. I found more than 17 very severe problems. I did my inspection, took photos, make a list, and gave it to the boss. He got mad at me, insulted me, threatened me and said "That's just how things are done in Arizona."  

Another time, before the time I just talked about, I was working with a guy who was an executive of a local bank branch. He was in charge of making sure the money they loaned out was given to trustworthy people. He wanted me to help him scam his insurance company for a new roof; the problem was that his roof was just old and there was no storm damage. At least not any new storm damage that would have justified his claim. After I gave him the news, he said "If you can't make it happen, someone else will. I am not paying for a roof" and damned sure; he found some contractor who did it. I knew that guy too, and you know what he said to me "Hey, man it's business." 

One last example, I did several roofs for this particular family, and they wanted me to do another one. I came to the house, walked the site with the owner, and talked about the job he wanted to do. The house was shingled, he had a few outbuildings, and the was guttering all the way around.  After we walked the site, we looked over the insurance documents from his claim. He points out that the outhouse and gutters were valued at about $5000 and said, "Henry, do the roof on the house and invoice me for the rest... I need that extra money to help cover the cost of moving". I said, "I can't do that, it's illegal" he yanks my sign out of the yard and throws it at me "get the fuck off my property." 

I do not doubt that if you are a contractor, consultant, or whatever profession. You have your book of stories to tell about customers like the ones I talked about and stuff your competition has done to win a bid against you.  It is part of the world, like it or not. The question is who are you and are you part of the problem or part of the solution. You cant be both, and since this kind of thing is stitched into the fabric of our industry, it's going to be hard to unravel it. 

While doing some research on this topic I found this and wanted to share it

https://www.ftc.gov/tips-advice/competition-guidance/guide-antitrust-laws/dealings-competitors/bid-rigging

Bid Rigging

Whenever business contracts are awarded by means of soliciting competitive bids, coordination among bidders undermines the bidding process and can be illegal. Bid rigging can take many forms, but one frequent form is when competitors agree in advance which firm will win the bid. For instance, competitors may agree to take turns being the low bidder, or sit out of a bidding round, or provide unacceptable bids to cover up a bid-rigging scheme. Other bid-rigging agreements involve subcontracting part of the main contract to the losing bidders, or forming a joint venture to submit a single bid.

Example: Three school bus companies formed a joint venture to provide transportation services under a single contract with the school district. The joint venture did not involve any beneficial integration of operations that would save money. The FTC found that the joint venture mainly operated to prevent the bus companies from offering competing bids.

Are you a procurement officer? The Department of Justice has developed a tip sheet to help you assess suspicious bidding behavior and determine when to notify the government.

(Down load the tip sheet, it is very helpful) 

 

Arizona we can be better, we can lead the way. But it takes each one of, individually, one person at a time to recognize and correct our own errors and work as ethically and honestly as we can. The alternative is a gamble, and eventually, someone will end up paying the price. 

 

Henry Staggs

Roof Consultant and Industry Advocate

(480) 265-1613

 

 

The Arizona Roofer and Waterproofing Processional, LLC has made every attempt to ensure the accuracy and reliability of the information provided on this website. However, the information is provided "as is" without warranty of any kind. This website and its content are copyright of The Arizona Roofer and Waterproofing Processional, LLC - © The Arizona Roofer and Waterproofing Processional, LLC 2019. All rights reserved. Any redistribution or reproduction of part or all of the contents in any form is prohibited other than the following; you may print or download for your personal and non-commercial use only. You may copy the content to individual third parties for their personal use, but only if you acknowledge the website as the source of the material and do not alter the content of the article in any way. You may not, except with our express written permission, distribute or commercially exploit the content. Nor may you transmit it or store it in any other website or other form of electronic retrieval system.

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