Highway Crack-Sealing Contractor: An Offer to Buy Off a Rival

An attempted market allocation for highway crack-sealing contracts in Montana and Wyoming involved a $100,000 offer to a competitor, according to the Justice Department’s account of the criminal case. In his guilty plea, the contractor admitted attempted monopolization through the proposed market allocation. For someone who heard a similar offer, the conversation may explain a decision to stop pursuing work that the business was equipped to win.

A Proposed Payment for Less Competition

The contractor offered money to divide highway territories with a competitor.

We see the absurdity: pay the rival to stay away, then sell to a public buyer with fewer choices. The offer puts a price on getting competition out of the way.

A territorial bargain reaches an earlier decision: which business will pursue the work at all. For an insider, that makes the discussion about where to bid as important as the estimate that eventually reaches the buyer.

An estimator may know what a job would cost and whether the company could perform it. A manager may know why it stopped pursuing a territory. A rival may have heard the proposed exchange directly. Those accounts concern different parts of the same business decision, and we work with the person who can explain the part they saw.

What a Highway Bidder Would Recognize

Road-construction bids reflect the work a contractor already has, the equipment and workers available, and its experience in the area. Those business facts give a proposed territory division its practical meaning: whether a company capable of competing is being asked to stand aside.

The National Research University Higher School of Economics examined that connection in its 2013 working paper, Collusion Detection in Procurement Auctions. The paper studied highway-construction procurement in a Russian region. It describes how machines, workers and material stocks constrain road contractors, and how taking on recent contracts can make a bidder less aggressive in the next auction. It also treats experience with local roads and costs as a potential competitive advantage.

In the study’s high-price auctions, bidding did not track contractors’ available capacity or experience as the competitive model predicted. The paper describes the disconnect plainly:

The paper treats that behavior as a possible sign of coordination. For an insider, the question is simple: could the company compete for the work, and why didn’t it bid? A project list shows the work available. Capacity records and estimates help explain whether the company could pursue it. A conversation about staying out can explain a decision those numbers leave puzzling.

That is where knowledge of the business becomes valuable. Someone who helped prepare an estimate may be able to explain why a promising bid disappeared. Someone responsible for the crews may know whether the company had room for the work. We connect that knowledge to the proposed arrangement and the projects it concerned.

What Are the Red Flags of Bid Rigging?

Bid-rigging red flags include repeated participation patterns tied to geography, bids that follow another bidder’s price, and bidding behavior that does not track the costs of doing the work. Their value is in connecting the apparent competition to how the contractors actually operated.

A 2018 paper in the Proceedings of the Creative Construction Conference, Review of Collusion and Bid Rigging Detection Methods in the Construction Industry, reviews studies of those patterns. Its account of a Long Island road-construction cartel describes fake competing offers, smaller differences between the lowest bids, and bids less closely connected to service costs than those of firms outside the cartel.

The review also describes a study of Swiss construction tenders that compared where firms competed and how they bid against each other. That asks more than whether a price looks high: how do these firms behave when they meet in the same competition?

For a territory proposal, we would connect that question to the places named in the offer. The bid history supplies the projects and participants. The insider supplies the explanation for decisions made before those bids appeared. The review specifically identifies current and former employees as valuable sources because their accounts can include direct evidence of collusion.

When a Bid Is Designed to Lose

In a separate criminal case, the Fourth Circuit’s account of the evidence at a Contech executive’s trial describes Contech using Pomona Pipe Products’ price to submit an intentionally higher bid with a false procurement certification that it was competitive and free of collusion.

For the crack-sealing proposal, the proposed payment was the revealing exchange. Both accounts put the focus on decisions inside the business that a buyer looking only at submitted prices could miss.

The Records Behind the Offer

The most useful account connects who proposed the territory division, which work it concerned and what decisions followed. Communications about the offer, the projects under consideration, estimates, capacity records and bid submissions give us different views of that connection.

For a competitor who was approached, the offer itself may be the starting point. For an employee, it may be an instruction to stop pursuing work or to prepare a bid using another firm’s number. We work from the specific decision you witnessed and connect it to the public purchasing it affected.

You may know the bidding operation far better than the person who receives its paperwork. Our role is to bring that understanding into the case, with government procurement whistleblower lawyers who know how competitor communications, bid preparation and payment records fit together.

How Much Money Can a Whistleblower Get From a Qui Tam Lawsuit?

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. Our work on a potential government procurement whistleblower reward starts with the conduct you know and the government money it affected.

You Know Why the Bid Disappeared

If you heard an offer to divide highway work, or saw the bidding decisions behind one, speak to one of our Whistleblower Experts about what you witnessed. We work with you to build your strongest government procurement whistleblower case, bring in government procurement whistleblower lawyers who understand public-construction bidding, and stay beside you as it moves forward.