It is not the first time the bidding process has been hauled into the spotlight for all the wrong reasons.
Just one allegation from a number of US firms suggests that the process allows large businesses to represent themselves as small companies to compete for set-aside contracts, which are supposed to be restricted to companies which fit certain monetary and personnel criteria.
Small business set-asides don’t actually prelude small distributors of larger companies, one source told me. “That’s how many operate,” he added. “Large companies bid on them anyhow. Then it is up to the other bidders to protest. The government needs to narrow the definition of small business a bit. As it stands now the set-asides don’t narrow the playing field enough.”
In the latest case, New York firm Peck & Hale LLC agreed to pay a $275,000 fine for its role in a conspiracy to rig bids on US Navy contracts, including those for metal sling hoist assemblies.
From December 2002 through January 2004, Peck & Hale conspired to rig bids on contracts for metal sling hoist assemblies sold to the US Navy, reports suggested. Charges also reflected a separate agreement to rig bids on six different types of tiedown equipment and cargo securing systems.
It immediately reminded me of two executives of a Pennsylvania, US-based company who agreed to plead guilty, pay a fine, and serve jail time for participating in a conspiracy to rig bids on US Navy contracts for metal sling hoist assemblies.
Thomas Cunningham, vice president, and Richard Barko, general manager, of Total Industrial & Packaging Inc., located in McKees Rocks, pleaded guilty in a US District Court in Islip, New York.
They agreed to pay a criminal fine of $10,000 each and to serve up to six months in jail for their participation in a conspiracy to rig bids for the Department of Defense (DOD) contracts for metal sling hoist assemblies, which are used to transport bombs and other munitions.
The DOJ said between August 2003 and January 2004, the conspirators submitted non-competitive bids to the US Navy and discussed and agreed among themselves who of them would win contracts from the DOD.
Under the plea agreement, which is subject to court approval, Cunningham and Barko have agreed to cooperate with the DOJ’s ongoing investigation.
“The charges demonstrate the Antitrust Division’s resolve to hold accountable individuals who engage in anticompetitive practices,” said Thomas O Barnett, Assistant Attorney General in charge of the Department’s Antitrust Division.
He added: “We will continue to seek out and prosecute those who subvert the competitive bidding process through bid rigging and allocation schemes.”
Cunningham and Barko were charged with carrying out the bid-rigging conspiracy by:
– Attending meetings and engaging in discussions regarding the sale of metal sling hoist assemblies to the US Navy.
– Agreeing during those meetings and discussions not to compete on certain contracts with the US Navy either by not submitting prices or bids, by alternating winning bids, or by submitting intentionally high prices or bids.
– Discussing and exchanging prices on certain contracts so as not to undercut each other’s prices.
– Submitting bids in accordance with the agreements reached.
– Selling metal sling hoist assemblies to the US Navy at collusive and non-competitive prices.
– Accepting payment for metal sling hoist assemblies sold at the collusive and non-competitive prices.
Cunningham and Barko are charged with bid rigging in violation of the Sherman Act, 15 USC section 1, which carries a maximum sentence of 10 years of imprisonment and a fine of $1million for individuals and $100m for corporations.
Different hoist and crane companies have very different views when it comes to pursuing government tenders, or contracts. Some firms seek out government work only sparingly, while for others it is one of their main sources of income.
“They don’t understand what it takes to do business with the government and treat it like a private company,” said one source of companies that stay away from government contracts. But can you blame them?
Anyone with information concerning bid rigging or other anti-competitive conduct is urged to call the National Criminal Enforcement Section of the Antitrust Division at +1 202 307 6694 or the Long Island Office of the Defense Criminal Investigative Service at +1 631 420 4302.
What are your experiences of working with the US government? Write to me at the usual address.
Richard Howes, Editor
rhowes@wilmington.co.uk
