Bid rigging is a fraudulent scheme in procurement auctions which can also be known as a form of price-fixing and market allocation, often practiced where contracts are determined by a call for bids, for example in the case of government construction contracts. The typical objective of bid rigging is to enable the “winning” party to obtain contracts at uncompetitive prices (i.e., at higher prices if they are sellers, or lower prices if they are buyers). The other parties are compensated in various ways, for example, by cash payments, or by being designated to be the “winning” bidder on other contracts, or by an arrangement where some parts of the successful bidder’s contract will be subcontracted to them. Bid rigging almost always results in economic harm to the agency which is seeking the bids, and to the public, who ultimately bear the costs as taxpayers or consumers.
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