Chapter 5 - Ethics in Public Procurement

5.1.3 Collusion awareness

As procurement watchdogs and citizens of the Commonwealth, procurement professionals have a duty to prevent and report collusion between suppliers competing for the Commonwealth's business. The purpose of the antitrust laws is to promote the free market system in the economy of this Commonwealth by prohibiting restraints of trade and monopolistic practices that decrease competition. The following could be construed as collusive activity or suspected antitrust violations:

• Any agreement or mutual understanding among competing firms that restrains the natural operation among market forces is suspect;
• Existence of an "industry price list" or "price agreement" to which suppliers refer in formulating their offers;
• Sudden change from competitive bidding to identical bidding;
• Simultaneous price increases or follow-the-leader pricing;
• Rotation of bids or proposals so that each offeror takes a turn as the low bidder;
• Division of the market so that certain competitors bid low only for contracts led by certain agencies or for contracts in certain areas or on certain products;
• Establishment by competitors of collusive price estimating systems;
• Incidents suggesting direct collusion. (Assertion by employees of a supplier, etc., that an agreement to restrain trade exists.);
• Identical bids that appear to be the result of collusion.

Practices that eliminate or restrict competition usually lead to excessive prices and may warrant criminal, civil, or administrative action by the Commonwealth against the supplier. Procurement personnel are an important source of investigating leads and recognizing possible antitrust or collusion violations. As a result, procurement personnel should therefore be sensitive to indications of unlawful behavior by suppliers, supplier's contractors, and other procurement, technical, or administrative personnel. Suspected antitrust or collusive activities shall be reported to the Office of the Attorney General, or to the agency's attorney advisor including any bids or proposals that show evidence or suspicion that an antitrust law violation has occurred. (See Code of Virginia, §§ 59.1-9.1 through 59.1-9.8 and §§ 59.1-68.6 through 59.1-68.8).

NON-COLLUSION REQUIREMENT: Neither supplier nor any member, representative or employee of the supplier's organization shall enter into any combination, collusion or agreement with any person relative to any price to be bid. They shall not prevent any person from bidding nor induce anyone to refrain from biding. Bids shall be made without reference to any other bid and without any agreement, understanding or combination that would serve to restrict competition.