Common tactics behind the secret \"pre-determined\" outcomes in engineering bidding

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This post was last edited by “Hasty Passerby” on January 18, 2019, at 15:35. Common tactics used under the shady practice of “pre-determined winners” in construction bidding: 01 Taking action first and seeking approval later. A chemical company, aiming to expand its production, wanted to build a new plant in a certain region; thus, it applied to relevant authorities for all necessary approvals. To meet the deadline, the company issued a tender for the construction of the new factory before all necessary approvals had been obtained. The company hired an agency to prepare the tender documents and issue the tender announcement. Six organizations, after reviewing the tender documents, decided to submit bids. Thus, after visiting the site, the potential bidders carefully prepared their bids. On the day of the bidding, the 6 potential bidders arrived at the bidding location on time, only to be informed by the staff of the chemical company that the bidding process had been canceled due to the failure to obtain approval for the project. It turns out that the location of the new factory is near the city center, and due to pollution concerns, the city authorities have not approved the establishment of a chemical plant in that area. 02 Tailored bidding: A large state-owned coal mine issued a tender for the construction of employee dormitories. It had already selected several construction firms with which it had a good relationship and that had previously carried out projects for this company, and therefore one of the requirements specified in the tender announcement for applicants was prior experience in working on projects at this coal mine. Finally, apart from the construction companies that have already been selected, no other construction companies are allowed to submit bids. 03 Tendency toward preferential bidding: According to an informed source, a state-owned enterprise, when bidding for an office building project, selected a company with which it had good relations in advance to be the winner of the bid, but competitive open bidding does not guarantee such a result. Thus, the vice president of that state-owned enterprise, who served as the chairman of the evaluation committee for this project, provided information on each bidding company during the evaluation process. He gave brief descriptions of the other bidding companies, but when it came to the company that was chosen as the winner, he said that this company had previously worked with us, was suitable in terms of project management and staffing, and had cooperated well with us in every aspect; the tenderer attached great importance to these factors, so he asked the judges to consider them carefully. When the final bid evaluation results were released, the company that the deputy director had emphasized was the one that won the contract. 04 Hidden announcement: A certain tendered project is a large-scale infrastructure project that affects the public interest; in accordance with the Law of the People’s Republic of China on Bidding, bidding must be carried out. For some reason, the tenderer for this project wants Company A to win the bid. But if the bidding process is carried out through normal channels, the bidder has no control over the outcome of the bidding, so the bidder took advantage of the step of publishing announcements: they published the bidding announcement only in an obscure local newspaper with a low circulation. As a result, only a few companies submitted bids; aside from Company A, the other two bidding companies were relatively weak. During the bid evaluation, the judges recommended that Company A win the contract, and the tenderer successfully got their preferred Company A to win the bid. 05 Borrowing resources to achieve success: Lin owns a construction company, but it lacks strength in terms of personnel, equipment, and construction techniques. Shen is the president of a large construction company that is very well-known in the industry. Lin and Shen were high school classmates and were very close friends. Once, an organization issued a tender for the construction of an office building. The requirements specified in the announcement regarding the qualifications of bidders and their company performance could not be met by Lin’s company. So Lin approached Shen and asked Shen’s company to submit a bid. After winning the bid, Lin’s company carried out the project, and paid Shen’s company a \"thank-you fee\". As a result, Shen’s company became the winner of the bid for this project, but it was actually Lin’s company that carried out the construction work. Ultimately, the construction quality was substandard and the project timeline was delayed due to Lin’s company’s insufficient construction capabilities. 06 Exclusion of bidders: A company issued a tender for the expansion of its factory, but it wanted only a few construction firms with which it had good relations to submit bids; therefore, it rated all the applicants during the prequalification stage. Due to the opaque procedures and evaluation methods used in the prequalification process, which rely on scoring systems, there is a great deal of room for individual manipulation; as a result, the company allowed only a few construction firms with which it had close relationships to pass the prequalification. 07 Hiring someone to submit a bid on behalf of another party: A real estate company is issuing a tender for a building project. After the tender announcement was issued, a construction company entered into a private deal with the real estate company, and ultimately the real estate company decided to award the project to this construction company. To reduce competition, the real estate company invited several construction firms with which it had good personal relationships to submit bids, and beforehand informed these firms of its intention to award the contract to them, thereby implying that they should prepare their bid documents carelessly. Later, during the bidding process, several invited companies bid together with a construction firm; however, since the bids submitted by those invited companies were not carefully prepared, their prices were relatively high. In the end, the judges recommended the construction firm as the candidate to win the contract. A construction company successfully won the contract for this project. 08 Wrong Attribution: According to people familiar with the construction company, a city issued a tender for municipal roads, and the company participated in that bidding process. Its company has carried out such projects in that city, and has had a very pleasant cooperation with the city. Therefore, for this project, the city still hopes that the company will win the bid. However, according to the evaluation results, its company ranked third. Since the owner’s evaluation method was not disclosed in the tender documents, after changing it, the owner reassembled the evaluation panel to conduct another assessment, which ultimately resulted in their company winning the bid. 09 Collusive bidding: A school issued a tender for a student dormitory building. Since the school has long-term business relationships with a construction company, it still hopes that this company will win the bid this time as well. Thus, an understanding was reached between the two parties. During the bidding process, the school asked the construction company to submit as low a bid as possible in order to ensure winning the contract, with the amount owed for the work to be increased later when the contract was signed. As expected, at the bid opening, this company’s bid was the lowest. After consideration by the judging panel, this company was ultimately recommended as the winner of the bid. The school sent a notice of award to the company. Before signing the contract, the company increased the original bid price by 10% on the grounds of rising material costs; as a result, the revised cost of the project was higher than the bids submitted by all competitors at the bidding stage, and it was this company that signed the construction contract with the school that issued the tender. 10. Secret contracts: A real estate company selects a construction company through bidding to carry out the construction work, and all bidding processes in that city require participation in the city’s bidding center. To comply with the inspections by the municipal authorities, the real estate company issued tender announcements in accordance with the procedures and requirements set by the municipal bidding office, sold the tender documents, held bid openings, and conducted bid evaluations. At the time of signing the contract, the winner of the bid secretly negotiated with the real estate company; driven by self-interest, the real estate company redrafted a new contract that increased the price specified in the bidding documents. The real estate company knew that a contract with such terms, different from those in the bidding documents, would certainly not be approved by the regulatory authorities. Therefore, in order to pass the inspections, the tendering party signed another contract with the winning bidder that differed from the terms in the bidding documents, but both parties agreed that the privately signed contract would prevail.