Is this illegal or just unethical?

In order to prevent further complications, let’s just hypothetically say this question is hypothetical.

Employee is told to get bids on equipment the company needs. After the employee collects a bid or two, the employee’s boss asks to see the lowest bid. The boss takes the lowest bid and shows it to another vendor who has not bid yet, but is a personal friend of the boss. Boss tells vendor, “beat this price.” Order is filled by vendor/friend without a bid, completely circumventing the bid process. Total purchase amount is very small, less than $10,000.

Were the boss’ actions illegal, or simply unethical?

Assuming it’s a private company, the boss is under no obligation to give the contract to the lowest bidder. He can give it to anyone he darn well pleases (after all, it’s his money).

Zev Steinhardt

On the other hand, if taking bids is required by law (like some government contracts), then that law was broken. Without knowing specifics (I have the impression those laws are full of twitchy details), no one here will be able to give a definite answer.

Well, I am aware that the boss can give the contract to any bidder he or she wants to. However I was more interested in the legality of sharing bid information without informing the other party that he/she intended to do that.

Oh, and it’s not a government agency, utility, or any other entity that faces those types of restrictions.

This is legal although possibly unethical. If the guy who did this actually owns the company then he can do as he pleases. If the guy who did this has bosses of his own he had better be prepared to answer to them (or even shareholders). Given that he had others bid it out then had his buddy undercut those prices it looks as if he’s covered his ass to some degree.

I often get vendors begging me for the ‘other guy’s’ bid. Initially I have everyone in the dark when I accept bids to get a sense of who seems to be playing fair and who is right out of the ballpark to begin with. After that I will happily play one bidder off of the other to get them to lower their bids even further. In general I’ve found thay hate this sort of thing but at the same time they ask me to be allowed to revise their bids to beat the other guy.

From where I stand it only benefits my company so all’s good in my case (I think).

Depending on the specifics of the request for bids, the other bidders might call this fraud. Often, a lot of work goes into preparing a bid. If there was an RFP that described how winning bids would be selected and this process wasn’t followed, the other bidders might be able to make a case about some kind of implied contract.

In our business, we used to go to great lengths to prepare very detailed bid proposals. In some cases, the client would choose someone else, but give them our bid package as a blueprint for the project. I would never have bothered to sue a potential client for this (especially since we’d usually get the contract six months later after the low bidder screwed up), but we certainly got smarter about how we handled things.