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Construction Law question: Criminal Charges for Unbalanced bidding?

Posted on 8/8/16 at 8:53 pm
Posted by Kujo
225-911-5736
Member since Dec 2015
6015 posts
Posted on 8/8/16 at 8:53 pm
Professor dinged me on an exam answer regarding unbalanced bidding.

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 by LSUSilverfox
Member since Jun 2007
2690 posts
Posted on 8/8/16 at 8:56 pm to
In your example sounds like the owner has a shitty purchasing agent.
Posted by 13SaintTiger
Isle of Capri
Member since Sep 2011
18315 posts
Posted on 8/8/16 at 8:59 pm to
Bout tree fiddy or 288
Posted by junkfunky
Member since Jan 2011
33891 posts
Posted on 8/8/16 at 9:07 pm to
quote:

Bout tree fiddy or 288


That or because op touches himself.
Posted by poochie
Houma, la
Member since Apr 2007
6211 posts
Posted on 8/8/16 at 9:13 pm to
Per plans and specs. Engineers and architects want to talk the talk, they better walk the walk.
Posted by boosiebadazz
Member since Feb 2008
80227 posts
Posted on 8/8/16 at 9:14 pm to
Why is it not fraud?
Posted by Martini
Near Athens
Member since Mar 2005
48838 posts
Posted on 8/8/16 at 9:14 pm to
And we have a winner in Poochie.
Posted by shotcaller1
Member since Oct 2014
7501 posts
Posted on 8/8/16 at 9:40 pm to
Perhaps bid rigging could be illegal on public projects.
Posted by Halftrack
The Wild Blue Yonder
Member since Apr 2015
2763 posts
Posted on 8/8/16 at 9:47 pm to
Buncha kids in law school might could figure this out for like $50.

Buncha lawyers on TV all desperate and shite. Call them.
Posted by Evolved Simian
Bushwood Country Club
Member since Sep 2010
20497 posts
Posted on 8/8/16 at 10:15 pm to
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 by SouthboundTiger
Baton Rouge
Member since Dec 2014
1069 posts
Posted on 8/8/16 at 10:19 pm to
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 by DupontsCircle
Dupont Circle
Member since Jun 2016
5823 posts
Posted on 8/8/16 at 10:24 pm to
If found out on local, state or federal level you can be debarred from competition for public contracts.
Posted by AlonsoWDC
Memphis, where it ain't Ten-a-Key
Member since Aug 2014
8763 posts
Posted on 8/8/16 at 10:28 pm to
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.
Posted by Kujo
225-911-5736
Member since Dec 2015
6015 posts
Posted on 8/8/16 at 10:31 pm to
It does sound a lot like he does.
Posted by DupontsCircle
Dupont Circle
Member since Jun 2016
5823 posts
Posted on 8/8/16 at 10:33 pm to
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.
This post was edited on 8/8/16 at 10:35 pm
Posted by rasczak
Member since Feb 2013
41 posts
Posted on 8/9/16 at 9:21 am to
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.
Posted by Wtodd
Tampa, FL
Member since Oct 2013
67482 posts
Posted on 8/9/16 at 9:27 am to
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 by jamboybarry
Member since Feb 2011
32647 posts
Posted on 8/9/16 at 9:29 am to
I always front load like a mug. No fair? Don't care
Posted by shawnlsu
Member since Nov 2011
23682 posts
Posted on 8/9/16 at 9:38 am to
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 by baseballmind1212
Missouri City
Member since Feb 2011
3255 posts
Posted on 8/9/16 at 9:40 am to
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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