Automated Tests for Collusive Bidding and the Data Required to Conduct Them

All of the following basic tests for collusive bidding can be conducted if the data, listed below, primarily from the bidding documents, is available.

Tests for collusive bidding:

  1. Different bidders have the same addresses, phone or fax numbers or email addresses
  2. Persistent high bid prices:
    • Compare line item and total bid prices to cost estimates, prior bid prices, industry averages, etc.; note significant price increases
    • Look for unusually high line bid prices in losing bids (e.g., bid prices at least 50% higher than competitor’s prices)
  3. Unusual bid patterns:
    • Identical line item bid prices submitted by different bidders
    • Line item or final bids from different bidders that are an exact % apart
    • Bids that are too close (e.g., within 1%) or too far apart (e.g. more than 20% apart) vs. the norm
    • “Ping-ponged bids” (e.g., in first bid, Bidder A quotes $100 per lot and Bidder B $200 per lot; in second bid with identical terms, Bidder A quotes $200 and Bidder B quotes $100.
    • Pattern of losing bidders becoming subcontractors
    • Rotation or allocation of winning bidders by time, geography, job description, product line or market
    • Same bidders rebid in the same order in later rounds of bidding
  4. Sequential bid securities submitted by different bidders:
    • List bid securities by contractor, bank, date and number, note sequential securities and those issued by the same bank on the same day

Data required to conduct the tests:

  1. Job info:      
    • Job description, location, bidding date
  2. Bidders’ info:              
    • Bidder’s names, addresses, telephone and fax numbers and email addresses
  3. Bidding info:              
    • Number of bid packages sold; line item and final cost estimates; bid prices for key line items and total bid prices for all bidders; disqualified bidders; subcontractors   
  4. Bid security info:     
    • Name of issuer, date and place issued, serial number