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Construction Law question: Criminal Charges for Unbalanced bidding?
Posted on 8/8/16 at 8:53 pm
Posted on 8/8/16 at 8:53 pm
Professor dinged me on an exam answer regarding unbalanced bidding.
It was not covered in any textbook, lecture, handout, or shite, not a single reference to criminal charges due to unbalanced bidding...but there was reference to bid rigging and a host of others that are criminal.
When I pointed this out, Dr. Dbag's response was:
I've been looking for references to Unbalanced Bidding and criminal charges for 3 days now, and can find only one mention from a 2002 article in "Contractor's Talk"
I see that it's not criminal Federally, do you know which state it is criminal?
FWIW: Unbalanced bidding is:
part A $5, part B $5...you bid $10 to do both parts but make Part A $8, and Part B$2....so that you get paid more upfront when you do Part A first.
Bid docs have a Typo that they meant 1000 units, but they asked for only 100 units....and you don't say anything about their error, and lower cost on things that they have right, and increase it on the things that they have wrong...so that after the fact when they realize they are 900 short, you are getting the higher price on the things they incorrectly wrote down.
quote:
This is mostly an ethical issue, but in some states it is considered criminal fraud
It was not covered in any textbook, lecture, handout, or shite, not a single reference to criminal charges due to unbalanced bidding...but there was reference to bid rigging and a host of others that are criminal.
When I pointed this out, Dr. Dbag's response was:
quote:
Nothing in the book should have dissuaded you from what you knew was correct.
I've been looking for references to Unbalanced Bidding and criminal charges for 3 days now, and can find only one mention from a 2002 article in "Contractor's Talk"
I see that it's not criminal Federally, do you know which state it is criminal?
FWIW: Unbalanced bidding is:
part A $5, part B $5...you bid $10 to do both parts but make Part A $8, and Part B$2....so that you get paid more upfront when you do Part A first.
Bid docs have a Typo that they meant 1000 units, but they asked for only 100 units....and you don't say anything about their error, and lower cost on things that they have right, and increase it on the things that they have wrong...so that after the fact when they realize they are 900 short, you are getting the higher price on the things they incorrectly wrote down.
Posted on 8/8/16 at 8:56 pm to Kujo
In your example sounds like the owner has a shitty purchasing agent.
Posted on 8/8/16 at 9:07 pm to 13SaintTiger
quote:
Bout tree fiddy or 288
That or because op touches himself.
Posted on 8/8/16 at 9:13 pm to Kujo
Per plans and specs. Engineers and architects want to talk the talk, they better walk the walk.
Posted on 8/8/16 at 9:14 pm to poochie
And we have a winner in Poochie.
Posted on 8/8/16 at 9:40 pm to Kujo
Perhaps bid rigging could be illegal on public projects.
Posted on 8/8/16 at 9:47 pm to Kujo
Buncha kids in law school might could figure this out for like $50.
Buncha lawyers on TV all desperate and shite. Call them.
Buncha lawyers on TV all desperate and shite. Call them.
Posted on 8/8/16 at 10:15 pm to Kujo
quote:
part A $5, part B $5...you bid $10 to do both parts but make Part A $8, and Part B$2....so that you get paid more upfront when you do Part A first.
If you're doing it to recognize revenue during a period in which it wasn't earned, that is financial statement fraud.
Posted on 8/8/16 at 10:19 pm to Kujo
quote:
Nothing in the book should have dissuaded you from what you knew was correct
Sounds like some douche bag shite professor Schneider would have said.
That being said the example is unethical for sure, however illegal...I don't think. That being said, I'm no lawyer, just some idiot who majored in CM
Posted on 8/8/16 at 10:24 pm to Kujo
If found out on local, state or federal level you can be debarred from competition for public contracts.
Posted on 8/8/16 at 10:28 pm to Kujo
Your professor is a total a-hole, if this example is indicative of a wider philosophy.
Public projects, yes. Financially, yes, but I'm not sure if that's the same thing as what you're specifically asking here.
Public projects, yes. Financially, yes, but I'm not sure if that's the same thing as what you're specifically asking here.
Posted on 8/8/16 at 10:31 pm to SouthboundTiger
It does sound a lot like he does.
Posted on 8/8/16 at 10:33 pm to AlonsoWDC
There's nothing criminally negligent about it. Its actually the Entity's fault for not correcting the error and setting up the bid to preclude these issues from occurring. Still, doesn't excuse the action of the Bidder and can lead to debarment.
Debarment is the result of action either ethically, criminally negligent or a failure to perform.
Debarment is the result of action either ethically, criminally negligent or a failure to perform.
This post was edited on 8/8/16 at 10:35 pm
Posted on 8/9/16 at 9:21 am to DupontsCircle
Finally a topic I know a little about, but not an expert. I assume you mean a public works unit price contract and not a lump sum with a schedule of values. I also assume your professor was a JAG, contracting officer, or AUSA to have that attitude, but here are my somewhat verbose thoughts.
Unbalancing can affect acceptance of what is the true low bid considering the time value of the price if it it front loaded. Federal Acquisition regulations make the distinction between a mathematically unbalanced bid and a materially unbalanced bid for rejection of the lowest bid. 48 CFR 14.404-2(g), 15.404-1(g)(1)-(3), 52.214-10(e), FAR 52.214-19(d). If the owner doesn't catch front loading, there may not be enough money left to finish the job in case of default or the surety may even try to claim a pro tanto discharge.
That materially unbalanced definition also addresses insuring that the contractor can't take advantage of a bust in the estimated quantities. All public unit price contracts I have seen also include an affirmative duty, which is probably tacitly covered by good faith/clean hands or "fraud by silence" vitiating consent, to notify the owner of any error in the estimated quantities that the bidder knew or should have known of. Otherwise, all bidders aren't bidding on the same scope and an owner might allege the letting/contract was a nullity and it becomes quantum meruit. If it is a serious overrun of a major item, it may cause the item to be deleted and then paid by force account, to be renegotiated at a certain threshold (usually 125% of the estimated quantity), or cause a rescission/termination due to error/lack of consent/nullity. If the public owner could prove the bidder knew of the error, stayed silent, and intended to take advantage of it, I guess it could possibly get to a false claims act/mail fraud/wire fraud criminal level. Usually it's just an estoppel/rescission claim situation as the contractor isn't usually a design professional or retains possession of take-offs showing they knew of the bust and intended to take advantage of it. The owners in my experience are reluctant to make it criminal because if the contractor unbalances it the wrong way through negligence or bad luck, the owner never offers any relief, nor really has any authority to do so.
There is a big difference between proving civil fraud under the Civil Code and criminal intent. Also, that whole "contract is the law between the parties" thing makes it tough and, honestly, I find design professionals hate to admit that a lowly contractor found an error in 30 days or less looking at plans they took months or years to develop.
Unbalancing can affect acceptance of what is the true low bid considering the time value of the price if it it front loaded. Federal Acquisition regulations make the distinction between a mathematically unbalanced bid and a materially unbalanced bid for rejection of the lowest bid. 48 CFR 14.404-2(g), 15.404-1(g)(1)-(3), 52.214-10(e), FAR 52.214-19(d). If the owner doesn't catch front loading, there may not be enough money left to finish the job in case of default or the surety may even try to claim a pro tanto discharge.
That materially unbalanced definition also addresses insuring that the contractor can't take advantage of a bust in the estimated quantities. All public unit price contracts I have seen also include an affirmative duty, which is probably tacitly covered by good faith/clean hands or "fraud by silence" vitiating consent, to notify the owner of any error in the estimated quantities that the bidder knew or should have known of. Otherwise, all bidders aren't bidding on the same scope and an owner might allege the letting/contract was a nullity and it becomes quantum meruit. If it is a serious overrun of a major item, it may cause the item to be deleted and then paid by force account, to be renegotiated at a certain threshold (usually 125% of the estimated quantity), or cause a rescission/termination due to error/lack of consent/nullity. If the public owner could prove the bidder knew of the error, stayed silent, and intended to take advantage of it, I guess it could possibly get to a false claims act/mail fraud/wire fraud criminal level. Usually it's just an estoppel/rescission claim situation as the contractor isn't usually a design professional or retains possession of take-offs showing they knew of the bust and intended to take advantage of it. The owners in my experience are reluctant to make it criminal because if the contractor unbalances it the wrong way through negligence or bad luck, the owner never offers any relief, nor really has any authority to do so.
There is a big difference between proving civil fraud under the Civil Code and criminal intent. Also, that whole "contract is the law between the parties" thing makes it tough and, honestly, I find design professionals hate to admit that a lowly contractor found an error in 30 days or less looking at plans they took months or years to develop.
Posted on 8/9/16 at 9:27 am to Kujo
quote:
part A $5, part B $5...you bid $10 to do both parts but make Part A $8, and Part B$2....so that you get paid more upfront when you do Part A first.
Were the parts bid separately or just a line to bid on all parts? If only a line to bid on all parts as 1 price, then nothing is wrong here.
quote:
Bid docs have a Typo that they meant 1000 units, but they asked for only 100 units....and you don't say anything about their error, and lower cost on things that they have right, and increase it on the things that they have wrong...so that after the fact when they realize they are 900 short, you are getting the higher price on the things they incorrectly wrote down.
It's also called "buying in" and the bidders have a legal duty to inform about the error if the error "should have been reasonably known".
Posted on 8/9/16 at 9:29 am to Wtodd
I always front load like a mug. No fair? Don't care
Posted on 8/9/16 at 9:38 am to rasczak
quote:
I find design professionals hate to admit that a lowly contractor found an error in 30 days or less looking at plans they took months or years to develop.
I find that on a weekly basis, but there are zero electrical engineers that know squat about designing low voltage systems outside of fire alarms and they usually make the contractor design those for them.
Posted on 8/9/16 at 9:40 am to Kujo
in my commercial experience, front loading happens. but definitely not to that extent. I also very rarely do unit price work so take that fwiw
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