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Complementary Bids Not So “Complimentary” For Commercial Flooring Contractor

Complementary bidding (also known as “cover,” “courtesy” or “shadow” bidding) occurs when competitors agree to submit a series of higher-priced bids or deliberately defective bids that give the appearance of genuine competition, but in actuality ensure the selection of a designated winner at inflated prices. In exchange for manipulating the bid process, the designated winner may share profits with the losing bidders, hire them as subcontractors or coordinate with them so that they can win other contracts.

In November 2020, Donald E. Church Jr., the president and co-owner of Vortex Commercial Flooring Inc., pleaded guilty in federal court to participating in a scheme to rig bids and fix prices for commercial flooring services and products. According to court documents, for years Church attended meetings and communicated with co-conspirators to manipulate bidding processes related to flooring services. One of the approaches involved exchanging pricing information so that the vendors could submit complementary bids, setting up their choice to win the contract and reap ill-gotten gains. Church and his co-conspirators engaged in this anti-competitive scheme at various times from 2009 to 2017.

To date, Church and five other co-conspirators have pleaded guilty to violating federal antitrust laws by subverting the competitive bidding process. Church himself faces a maximum penalty of 10 years in prison and a $1 million fine.

Such anticompetitive conduct is often embraced by unscrupulous vendors who want to cheat public purchasers. As a result, public purchasers should carefully review bids and watch out for any signs that vendors may be working together to undermine the competitive bidding process.

Red flags of possible bid-rigging among vendors include: 
  • Unexpected similarities in the bids of different vendors, such as documents all having the same unusual font, postage stamps, math errors, spelling errors, postmarks, fax number or contact person.
  • Geographical patterns, where the same vendors consistently win the same geographical areas.
  • Bid rotation patterns, where different vendors win contracts in succeeding years in a predictable order.
  • For electronic bid submissions, similarities in documents’ metadata, such as the author’s name.
  • Evidence of haphazard, last-minute changes to bids, such as white-outs, erasures or other physical alterations that might indicate the changes happened during a conversation among bidders (perhaps just moments earlier in a parking lot).
  • References to “industry-wide” or “association-set” price schedules and blanket statements such as “all the businesses in this industry charge the same” or “there’s no difference in product, and that’s why prices are the same.”
  • Statements that a bid was a “courtesy,” “token” or “cover” bid or statements that indicate advance, nonpublic knowledge of a competitor’s pricing or the specifics of a competitor’s bid.
  • A suggestion that the bidder has discussed prices with competitors or that it is the bidder’s “turn” to win a bid or contract.
  • A reference to “my customer,” “my contract” or “my territory” (except when referring to territories established by a distributor).
  • Any statements that a company has been meeting with its competitors (whether at a social outing, trade association conference or business meeting) where pricing and contract specifics were discussed.
If you suspect anticompetitive activity, contact the Antitrust Section of the Ohio Attorney General’s Office at 614-466-4328 or submit a bid-rigging tip here.