Competition Matters

Everyone loves a good Letterman-style “Top 10” list.  And while a list focused on what documents you should be retaining in your procurement files after the contract is awarded certainly won’t score high enough on the comedic scale to find its way onto late-night television, it is nevertheless an important tool in achieving one of every public entity’s most important goals – making tax dollars go as far as possible.

The vast majority of public entities retain a core set of materials from each of their competitive selection processes after the contract is awarded – the winning bid, the advertisement, the engineer’s estimate, and the bid tab.  But there are additional materials that in a normal, truly competitive, successful solicitation, may seem unnecessary to retain post-award.  As such, they are discarded after the solicitation concludes and as soon as the applicable records retention schedule allows in order to conserve physical or digital storage space.

But what if that seemingly normal, competitive solicitation turns out to be just the opposite?  The practice of retaining only the bare minimum number of documents in the bid file could significantly hamper the detection and prosecution of vendor collusion.

So, what are the most common (and problematic) omissions from post-award bid files (from the perspective of an antitrust enforcer)?  Here’s our Top 10:

#10:  The planholder list (the list of everyone who picked up a bid packet).  Knowing who expressed interest in the project at the outset can not only help establish who might have dropped out for collusive reasons, but can also help you maintain a robust invitation list for the next time the project is up for bid.

#9:  A list of all vendors who were invited to bid.  Just like the planholders list, the list of firms who were invited to bid on a job – and declined – can be an important starting point for investigators when collusion is suspected.

#8:  The sign-in sheet for any pre-bid meeting(s).  Again, proof of a prospective bidder’s initial interest in a project combined with a failure to bid, while not conclusive, is certainly informative.

#7:  The sign-in sheet for any post-award meeting(s).  This can be a key piece of evidence in putting together the story of competitors who suddenly switched roles to become prime and sub as a result of an anticompetitive agreement to share the business rather than compete.

#6:  All non-collusion affidavits submitted by winning and non-winning bidders.  Sworn statements that no collusion has occurred can be valuable evidence that the alleged conspirators in a bid-rigging scheme purposefully and fraudulently concealed their wrongdoing.

#5:  The envelopes or other packaging in which physical bids are delivered.  Oddly enough, some vendors are careful to cover their collusive tracks in generating the bids themselves, only to make a colossal mistake on the packaging, such as using the same return address or handwriting on envelopes that are supposed to be coming from independent sources.

#4:  Supporting memos and other documentation related to awards to non-low bidders.  There are often completely valid reasons for awarding contracts to someone other than the low bidder.  Such situations, however, are fodder for disgruntled and disappointed bidders to challenge the fairness of the process.  Documenting the decision-making process in these cases – and retaining that documentation after the fact – can be a vital weapon with which to defend your purchasing process from unwarranted (and resource-draining) attacks.

#3:  All electronic submissions in their original format – not pdf’d or printed in hard copy.  The metadata (the computer-assigned digital attributes) of any electronic document often hold vital clues about who created or modified it, and thus about the bidder’s independence.

#2:  All bid submissions – not just the winner’s.  While the winning bid is certainly the single most important piece of documentation in every contract, the losing bids become vital evidence whenever there are allegations that the bid results arose out of collusion rather than competition.

And the number one item you should be sure to keep in your post-award bid files …

#1:  Your notes! Whether these are notes of phone conversations with bidders explaining why they won’t be bidding this year, notes of conversations with neighboring municipalities or fellow agencies who have noticed the same odd bidder behavior, or notes of seeing bidders chatting in the parking lot just before dropping off their bids, these post-its or electronic notes to the file can capture pivotal information that might be lost otherwise.  The memories of busy people fade quickly, so document and retain all of these details!