Complementary Bidding

Bid rigging schemes can also be perpetrated by means of complementary bidding. Complementary bidding is also referred to as courtesy bidding or cover bidding. Basically this refers to the concept of one firm submitting an artificially high bid that they know is sure not to win in exchange for some sort of participation in the profits of the winning bidder. For instance, a company might submit a bid knowing that it is too high to win, or they might include conditions in the bid that they know would be unacceptable to the agency calling for bids. Like bid suppression, courtesy bidding is almost always in exchange for some form of payment, kickback, or subcontracting arrangement. Courtesy bidding has the same effect as suppression bidding – keep the low bid from being submitted in order to inflate profit margins for the next-lowest bidder. In bid suppression schemes the low cost provider will not submit a bid at all; by contrast, in complementary bidding schemes the low cost provider will submit a bid for a higher price than would be required for them to perform the job.