What is Bid Rigging?
One white collar crime that the Department of Justice is cracking down on quite hard of late is “bid rigging.” Bid rigging is the process of undermining the competitive process whenever businesses compete by submitting bids to a buyer. The Department of Justice takes an especially dim view of this practice when the government is the one soliciting the bid.
- Competitors agree in advance which firm will win the bid.
- Taking turns deciding who will win the bid.
- Bid suppression, wherein some companies agree to “sit out” the bid.
- Subcontracting to the losing bidder.
- Forming a joint venture to submit a single bid.
- Paying bribes or kickbacks to get a bid.
- Inflating bid prices by employing phantom bidders.
Companies often want to do this just to guarantee some business, or to drive up the value of the bids. It is one of those violations that is impossible to commit by accident, though of course it’s always possible to be falsely accused of this crime.
Some recent cases include:
- A military contractor indicted for a $15 million scheme.
- A former engineering executive convicted of rigging North Carolina DOT bids.
- A Minnesota concrete company accused of rigging bids for local government and public school contracts.
Bid rigging is all about collusion and market manipulation. It is a crime under United States Antitrust Laws, a violation of the Sherman Act. This is a felony punishable by up to 10 years of imprisonment, along with a $1 million fine for individuals and a fine of up to $100 million for corporations. Keep in mind that federal prosecutors will often add other crimes to the list, including mail fraud or wire fraud, both to increase the severity of the consequences you face and to ensure that at least one of the charges “sticks.”
There are a number of steps we can take on your behalf if there is a chance you could be accused of this form of collusion. It is important to involve a federal criminal defense attorney as quickly as possible even before you start seeing signs that your company may be under investigation. We may even be able to use affirmative defenses such as entrapment, duress, mistake of fact, or showing that you engaged in the bidding process fairly and properly. If not, we may be able to work out an agreement with the government that reduces the penalties for this crime.
Need help? Reach out today.
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