Bid-Rigging undermines the contract bidding process at the expense of American taxpayers.
Some companies, in attempts to circumvent the competitive bidding process for federal contracts, make unlawful agreements between themselves to not compete for government contracts or to put a price limit on the bids they do make. Such bid-rigging schemes undermine the integrity of the contract bidding process and serve only to line the coffers of the companies involved in such collusion, at the expense of taxpayers.
Examples of bid-rigging include the following:
The U.S. Department of Justice in February 2012 settled a False Claims Act case with two gas companies for $500,000 over an alleged bid-rigging scheme involving mineral rights leases. The anti-trust lawsuit filed by the government resulted from a whistleblower lawsuit filed in 2009 by a former vice president for one of the companies.
Gas companies SG Interests and Gunnison Energy Corp. were charged with violating federal law by rigging auctions for Bureau of Land Management (BLM) gas leases. According to the whistleblower's allegations, the presidents of each company entered into an illegal contract stating that future lease acquisition would be funded on a 50-50 basis by the companies, and that the companies would jointly decide which acreage to bid on and the authorized bid price for a parcel.
The suit further alleged that in 2005 and 2006, the companies agreed that only SG Interests would bid at certain BLM natural gas lease auctions and that the company would then assign an interest in acquired leases to Gunnison Energy. The illegal agreement resulted in the U.S. government receiving less revenue from the leases than it would have from a competitive bidding process.
According to the Department of Justice, the settlement is the first of its kind to challenge bid-rigging schemes for mineral rights leases. By coming forward, the brave whistleblower in this case helped to ensure that there is vigorous competition for federal oil and gas rights.
Government contract bid-rigging schemes are illegal. Whistleblowers help expose them.
Whistleblowers aware of such bid-rigging schemes perform an important public service by exposing the collusion through False Claims Act cases. Under the qui tam provisions of the statute, they are also entitled to a portion of an award or settlement obtained by the government as a result of their role in bringing such schemes to light.