Highway Crack-Sealing Attempted Monopoly: A Contractor Tried to Buy a Rival’s Absence

The highway crack-sealing attempted-monopoly case centered on a rejected territorial allocation offer: a contractor proposed paying a rival to stop competing for public road work. The rival reported the approach and cooperated as investigators recorded later calls. The contractor’s president admitted the facts in his criminal plea agreement. For someone in the paving business, the revealing details are familiar business terms put to a different purpose: a partnership, a purchase option and an equipment sale.

Highway Crack Sealing Often Came Down to Two Bidders

The contractors routinely competed for the same publicly funded highway crack-sealing projects. In many instances, they were the only two bidders for work administered by Wyoming’s transportation department and those in neighboring states, according to the criminal charge.

Crack sealing fills openings in asphalt or pavement to keep water, sand and dirt from damaging the material underneath. Montana and Wyoming invited contractors to bid for that work on highways and other public roads, typically awarding projects to the lowest bidder. The charge explains that these projects often received some or all of their funding from the U.S. Department of Transportation.

According to the charge, the contractor making the approach was a paving and asphalt business based in Billings, Montana. Approximately 95% of its business came from crack sealing on publicly funded highway projects. The criminal plea agreement put the relevant volume of commerce at $2,700,000.

That concentration gives the proposed territory split its meaning. Where these businesses were the only bidders, getting the other contractor to withdraw would remove the buyer’s competing offer. Taxpayers funding the road work stood to lose the price competition their money was supposed to buy.

The Territory Split and the Equipment Deal

The proposed exchange was specific: the rival would stop bidding for publicly funded highway crack-sealing projects in Montana and Wyoming, while the Montana contractor would withdraw from South Dakota and Nebraska. The criminal charge describes the terms laid out during a June 16, 2020 call.

The contractor also offered $100,000 as additional compensation for the rival’s lost business in Montana and Wyoming. The offer put a price on staying away from the work.

According to the charge, the president said from the outset that he intended to eliminate the rival as a competitor in Montana and Wyoming. He told the rival’s owner that ending competition would make both companies’ revenue streams more stable and their margins higher.

The paperwork was supposed to obscure that bargain. The charge describes a proposed written contract containing an option to purchase the rival’s company, even though its owner had said he had no intention of selling. It also included the sale of a piece of equipment valued significantly above its worth.

A purchase option for a business whose owner did not want to sell and an inflated equipment value supplied a commercial appearance for the arrangement. The territory withdrawals supplied its purpose. Someone looking only at the proposed asset transaction would miss the conversation about which public contracts each business would leave alone.

What Is the Role of Whistleblowers in Bid Rigging Cases?

A whistleblower can bring investigators inside the conversation that bidding records alone cannot show. In this case, the rival who received the approach reported it and cooperated with recordings of the later calls.

The criminal charge traces that sequence. In January 2020, the contractor’s president telephoned the rival’s owner to propose a strategic partnership. The owner reported the approach, bringing investigators into the conversation. With the owner’s cooperation, investigators recorded further calls between March and October of that year.

The recipient knew both sides of the conversation: the proposed arrangement and the business it would affect. He was the owner of a contractor that regularly bid against the company making the offer. His account gave investigators access to the approach as it developed.

The charge says the rival ultimately refused the sham agreement and rejected the invitation to divide territories. The same person who was supposed to become a partner in the allocation instead helped investigators document it.

The Justice Department’s account of the guilty plea describes the investigation as part of its Procurement Collusion Strike Force.

Why the Rejected Offer Became an Attempted-Monopoly Plea

The contractor’s president pleaded guilty to attempted monopolization after his rival rejected the offer. The admitted offense was the attempt to gain monopoly power in the Montana and Wyoming crack-sealing markets.

The plea agreement connects the approach to its intended result. The president admitted the facts in the criminal charge, his intent to gain monopoly power and actions that substantially advanced that objective. He also acknowledged a serious likelihood that his company would have gained that power if his conduct had succeeded.

The bidding market matters to that admission. The proposed withdrawal concerned a rival that was often the only other bidder. The promised higher margins, the territories and the proposed payment all fit the same objective: removing that competitor from the work.

An invitation to divide business also appeared in the Federal Trade Commission’s action against Valassis Communications. The agency alleged that statements during a call proposed pricing and customer-allocation coordination to a rival in free-standing newspaper inserts. That action ended in a consent order in 2006.

The parallel is the proposal to replace competition with an understanding between rivals. The highway case adds the owner’s direct report, recorded follow-up calls and an admission to attempted monopolization.

How Is Bid Rigging Detected?

Bid histories can reveal patterns in who competes, who wins and how prices relate to costs. A competitor’s account can explain the conversations behind those patterns. The highway case shows the value of that direct access: investigators recorded the proposal itself.

In the Montana case, the strongest evidence described in the charge came from the proposed bargain and the recorded conversations.

The 2018 construction-bidding review proposes bringing tender histories together with bidder locations, ownership, subcontracting, prices and winners. One relationship it suggests examining is a contractor winning only in particular geographic areas despite bidding elsewhere. In the highway proposal, geography was the bargain itself.

For an estimator or project manager who knows the local bidders, those are recognizable business records. We examine how the approach fits the work: the projects discussed, the bids each company pursued and the proposed transaction between them. An equipment price takes on a different meaning when the same conversation includes a proposal to stop competing.

The Public Work and the Whistleblower Case

For someone with evidence of collusion over public work, we examine the offer alongside the bids, government payments and any false statements used to obtain them.

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

You may have received the approach, worked on the bids or seen the proposed transaction. Each gives you a different view of how the offer connected to the public work.

You Know Which Bids Were Supposed to Disappear

Our whistleblower experts can work with you on a proposed territorial deal, including the payment terms, the rival’s response and what was reported.