What is bid rigging?

Bid rigging is a significant form of collusion that occurs when contractors coordinate their bids to manipulate the outcomes of the bidding process. This arrangement undermines fair competition by allowing contractors to pre-determine the winner of a contract, often leading to inflated prices and reduced quality of work.

In a competitive bidding environment, each contractor is expected to submit independent bids based on their costs and strategic pricing. When contractors engage in bid rigging, they may communicate and agree on who will win the bid, often by submitting artificially high bids or rotating contracts among themselves to maintain the illusion of competition. This practice not only distorts market dynamics but also violates legal standards and can lead to severe penalties for those involved.

Understanding bid rigging is essential for individuals working in contracting or project management, as it highlights the importance of maintaining honest and competitive bidding practices to foster a fair marketplace.