Lawyer types, hoping to get your take on a situation. It’s a real case but completely past tense so there is no issue about future legality/illegality.
The situation is a sealed bid contract for a municipality. The potential bidders are actually two other municipalities, but that may or may not be relevant.
Is it considered illegal or collusion if one of the bidders asks the other bidder “Are you submitting a bid?” We all understand that asking what the bid is would be completely out of bounds, but is it illegal to find out if the other party plans to no-bid?
A side question, could a non-bidding party choose to publicly state that they are planning to not be part of the bidding process, such as during a public meeting?
I used to work for a construction company and we’d call and get calls from other contractors asking if they were planning to bid on projects. Sometimes they’d tell us who they’ve heard are also bidding.\
We’d adjust our bid up or down depending on who was bidding.
There’s always the risk that one party will declare a “no bid” to fool the other
into submitting a lower bid than the might have otherwise (thereby allowing
the first party to win with a lower bid than they may have had to submit).
Oh wow, my company’s compliance training is actually going to come into play today.
I’d say it really depends on in the process allows for public disclosure of participation.
Generally, the intended purpose of sealed bids is for each company to submit their own best bid, regardless of other companies. Even announcing you intend to bid or not is information that should not be disclosed, as it violates the spirit of the competitive nature of the process. As noted, that knowledge can affect how you intend to bid. I mean, if a company is known for always bidding lower (or higher!) than everybody else, just knowing if they intend to bid or not tells you a lot.
So, ethically, getting that information is a no-no and is collusion. I’m not surprised it happens, but it’s the sort of thing that shouldn’t happen.
That said, whether or not it is legally questionable depends on the rules of the bidding process. Many of them do not allow for disclosure of any information on your bid or require statements that your bid is only based on the information provided, i.e. not using information from other sources including whether or not a company intends on bidding or what that bid may entail. But unless it is disallowed, it may pass legal muster.
I don’t really see how saying you weren’t going to bid would be illegal unless you agreed to something beforehand which entitled you to get information. Certainly unrelated parties with no business dealings can’t be held to “agreements”
they didn’t participate in making
The point would not be for you but for anybody who does intend to bid and would benefit from that knowledge - soliciting that knowledge from unrelated parties (how ‘unrelated’ they may be can be subject to debate) or adjusting a bid package based on that knowledge could well be illegal.
For example, if there is a county in which there are only 4 qualified (presumably the local/state government to bid on such projects) construction companies to submit bids for a project and 2 companies pledge to the others not to bid on the current project but maybe hint they’re very interesting in a little quid pro quo on a project they expect to come up 4 months from now, that’s a rather large competitive difference for all involved and maybe not so great for the taxpayers of that county.
I would imagine that would be a key point that makes collusion by not bidding illegal.
let’s pick on the paving business - there are only so many companies/groups in the area with the equipment and expertise for a certain job. It’s probably well known what current projects they have, so whether they need and have the resources to bid for this job. So “who’s bidding?” based on that is probably hard to hide. However, colluding to the point of quid pro quo on passing up on one project in return for another is definitely bid fixing - even if it’s of the "nudge nudge, wink wink: category of collusion.
I didn’t thoroughly read through the entire document, but I don’t see anything about not contacting others to see if they’re bidding or not.
What I posted about calling and being called by others isn’t theory. It was a fact when I worked for a construction company in Hawaii from 2007-2010. We NEVER talked price. Just asked or were told who was or wasn’t bidding. From experience and knowledge of cost of past projects, the owners would bid higher or lower depending on who was also bidding.
We and others would sometimes hide our cards and say we hadn’t decided yet. And sometimes legitimately wait until the last minutes before we did or didn’t submit our bid. Tweaking it all along.
Again, it really depends on the conditions of the particular bid.
It can be considered a form of collusion or bid rigging to plan things out with potential competitors ahead of time, including knowledge of whether or not they will bid. As you note, the company you worked for changed their bids based on this knowledge. At a minimum, that’s an ethical issue and may have been a legal issue as well (though that sort of thing is pretty common and difficult to find/prosecute)
The specific words “the choice to bid or not” does not have to be in the document. Collusion includes actions that limit competition and anti-competitive actions that affect the prices customers get.
Never said it didn’t happen but that it may be ethically/legally questionable depending on the terms of the bids.
Just because somebody regularly does 90 mph in a 55mph zone and hasn’t been caught yet doesn’t mean it’s something that can’t possibly get them in trouble if they do it later. Though I do realize sometimes people do try use “Well, we never got in trouble for it before”.
There is a culture, probably universal, that says ripping off the government is fair game.
I used to work for the NHS, and there was a scandal at a neighboring Trust (a group of hospitals etc). There was a tender out for some building work and some sharp-eyed whistle-blower spotted and photographed the four local contractor’s bosses in the pub with the Works Manager of the Trust.
No one was prosecuted and the manager retired early with his full pension.
What are the general rules after the bids are made and the contract is awarded. Are companies allowed to retroactively declare whether or not they made a bid? Can the organization that solicited the bids announce how many other bids there were? Is the amount of the winning bid made public?
Edit: Note that the lowest bidder isn’t guaranteed the win. If they don’t meet all the requirements of the contract or don’t have a solid history, they may be disqualified.
Thanks all for the replies. It seems like learning about bid status is at least collusion-adjacent, though perhaps not illegal on its face. Given that my municipality likely had to sign a non-collusion document for the bid, I’d assume they would have avoided giving even the appearance of inquiring about our “competition’s” bid status.
Addendum: The contractor actually awarded the contract is later announced for public projects. For private projects, word of mouth usually or just passing by the construction site discloses the winner.
The list of bids is how contractors know how to adjust their bids. Company XYZ is bidding and they’re always the lowest and win the project, so we choose not to bid. Conversely, Company ABC is always high, so we’ll bid slightly higher and probably still be lower than them.
Some projects, can have certain requirements set by the project manager or general contractor that may make it difficult for some to bid. For example, they may state the use of ABC equipment or equipment. So the bidder would have to submit documentation that shows their XYZ equipment meets the specs. The bid may still be rejected without clarification of why.
Edit: To add to the knowing who’s planning or not planning to bid. Some projects have a mandatory pre-bid meeting. So if you see or don’t see someone from XYZ company, you know they may or will not bid.
In addition to asking if someone is bidding or not, it was common to ask you could be a subcontractor for a portion of the work. Hierarchy is General Contractor - Subcontractor (who becomes the General Contractor to you as a subcontractor) - Subcontractor. I believe there’s a limit to how many lower tier subcontractors there can be.
So it’s not completely…“Shhhh…we can’t talk about if we’re bidding or not.”
Are there consulting companies that keep track of bidding histories and advise companies on which of their competitors are likely to bid on a contract and what their likely bids will be?
Don’t know about private consultants, but I’m sure big general contractors have teams that track that because the info on government project is released publically.
In addition, labor pay on Federal projects is set by trade, Davis-Bacon wages and State usually city and county under Prevailing Wages which s based on local union wages.
When I was selling specialized electrical equipment for use in new construction, we subscribed to newsletters that gave us the names and contact numbers for new construction projects. We would then see if there was a portion we could bid - in specific, I was looking for projects with theatres or auditoriums, mostly schools and universities.
I would then call the project coordinator to obtain a list of bidders so we could contact them with a price on our equipment. We were frequently company XYZ when the contract documents specified company ABC, but the equipment was pretty fungible and I was good at my job. We got a lot of work this way.
I did this for several years and I was denied a list of bidders EXACTLY ONCE. I remember it not just because it was a rarity, but because the person I spoke with was convinced that releasing such a list would lead to massive price collusion.
They larger entities I dealt with, the people that did this all the time, like the NYC Board of Education and the State University of New York, had no such concerns and released that information routinely.
Not exactly the same topic, more from the other side - but I recall in the early days of PC’s, one of the engineers mentioned looking for some new computers for the Engineering department. He mentioned that he’d called vendor X and mentioned “vendor Y gave us a price of $Z, can you beat that?” The guy from purchasing said that was highly unethical. They could put out an RFQ and compare quotes, but not play the suppliers against each other.