Unreasonably high line item bids can indicate a collusive bidding scheme. This is because the colluding bidders deliberately inflate their bid prices, particularly the designated losing bidders.
In civil works or large construction contracts, the guilty bidders can evade detection by inflating unit prices on line items that are priced as a multiple of smaller, individually-priced units. For example, line item quotes for earthworks might be per cubic meter, which is then multiplied by thousands of cubic meters or more to arrive at the full line item price. A relatively small, seemingly insignificant increase in the bid price for a single cubic meter can become very significant when multiplied by the total amount.
Unreasonably high line item bids also can indicate an unbalanced bidding scheme. In this scheme corrupt project officials leak information to a favored bidder that a certain line item will be increased after contract award, allowing the bidder to profit substantially. For example, a bidder for a road contract might quote a very high price for a relatively minor item, such as 100 safety barriers, which would not unduly affect its total bid price, and thereafter profit substantially when the number of barriers to be purchased is increased to 1000. The bid price of other line items can be reduced to keep the overall bid price low.
This red flag can indicate the following schemes:
Click on the scheme listed above to see more information on the scheme, a more complete listing of its red flags and steps to determine if the scheme is actually present.