A Competitor Calls After Both Companies Receive the Same RFP. “We Can’t Both Win This — Let’s Be Smart and Not Undercut Each Other. You Take This One and We’ll Take the Next.” Is That Efficient Business Strategy or Bid Rigging?

Quick Answer

When two competing companies agree about how each will respond to an RFP — including who will submit a low bid, who will submit a high bid, or who will decline to bid — is that bid rigging under the Sherman Act?

Yes — it is the definition of bid rigging. Bid rigging is a per se violation of Section 1 of the Sherman Act that occurs when competitors coordinate their responses to a competitive bidding process. It includes bid rotation (taking turns winning), complementary bidding (submitting a deliberately losing bid to give cover to a predetermined winner), and bid suppression (agreeing not to bid). The commercial logic — “we can’t both win it anyway” — is not a defense. The fact that the coordination seems efficient does not make it legal. Bid rigging in government contracting carries criminal penalties of up to 10 years imprisonment and $1 million in fines per individual.

The Situation

A business development director at a professional services firm receives an RFP from a large healthcare system for a three-year compliance training contract. Two days after the RFP arrives, he receives a call from his counterpart at a direct competitor — a firm he has worked with on industry panels and has a collegial relationship with. The competitor says: “We both got the Healthcare System RFP. I’ve worked with that procurement team before and I’ll be honest — this one is better positioned for you. We’re going to put in a number but we’re not really trying to win it. What I’d appreciate is a reciprocal understanding that when the Regional Medical Center RFP comes out next quarter — which I know is coming because I have a relationship there — you let us have that one.”

The business development director knows the Regional Medical Center RFP is coming. The proposal team for the Healthcare System RFP is already stretched. The logic of the arrangement is genuinely appealing — both firms expend less proposal effort and both win in their stronger relationships.

He is deciding what to say.

Choice AAgree to the arrangement. Both companies compete independently on both RFPs, just with an informal understanding about effort and positioning. No prices are fixed. The client still receives two bids. This is competitive intelligence, not collusion.

Choice BEnd the call immediately — tell the competitor clearly that this is not a conversation the company can have, report the call to Legal within the hour with a written account of everything that was said, and submit a fully competitive bid on both RFPs independently.

Choice CSay nothing in response and submit a genuinely competitive bid on both RFPs — no agreement is made, and the firm’s actual bidding behavior is fully competitive. The call effectively goes nowhere.

The Right Call

Choice B — End the call immediately and report to Legal.

Choice A is bid rigging — specifically, bid rotation combined with complementary bidding. The arrangement described is the textbook definition of an illegal bid-rigging scheme, regardless of whether either company frames it as informal or competitive. Choice C is better than A in practice but leaves a legal problem unaddressed: the call happened, a bid-rigging proposal was made to a company employee, and Legal needs to know. If the competitor is later investigated and their records include a call to the business development director that went unanswered or ambiguously received, the company’s position is significantly stronger with a documented Legal escalation than without one.

The arrangement makes perfect commercial sense — which is why bid rigging persists.

Both companies expend less proposal effort, both win in their stronger relationship contexts, and the client receives bids from two firms, so the appearance of competition is maintained. The logic is so appealing that employees who encounter this type of arrangement often genuinely don’t understand why it’s illegal. The answer is that competitive bidding processes exist to give clients — particularly government clients — the benefit of genuine price and quality competition. Coordinating who wins eliminates that benefit regardless of how sensible the coordination feels from the bidder’s perspective.

Complementary bidding — submitting a genuine-looking but deliberately losing bid — is the most common and most prosecuted form of bid rigging.

The arrangement proposed in this scenario is specifically complementary bidding: the competitor submits a bid on the Healthcare System RFP that is designed to lose, giving the appearance of competition while guaranteeing the predetermined outcome. Courts have found complementary bidding violations based on email records showing competitors discussing bid amounts before submission, pricing patterns inconsistent with independent competition, and witness testimony from employees who participated. The paper trail from this type of arrangement is typically substantial.

Government contracting bid rigging carries individual criminal penalties of up to 10 years and $1 million per count.

The business development director in this scenario is considering a call that, if acted on, would expose him personally to federal criminal liability—not just civil liability for the company. The DOJ’s antitrust division has a leniency program: the first company to self-report a bid-rigging scheme receives immunity from criminal prosecution. This creates a dynamic where once a bid-rigging arrangement is discovered by one participant, there is a strong incentive to race to the DOJ. The business development director who ends the call and reports it is protecting himself from a scheme he has not yet joined.

What are the main forms of bid rigging, and how does the Sherman Act treat them?

Bid rigging takes three primary forms, all per se illegal under the Sherman Act. Bid rotation: competitors take turns winning contracts — one bids low while the others bid high, and the roles rotate over time. Complementary bidding: one or more competitors submit deliberately losing bids to give the appearance of competition while ensuring a predetermined winner. Bid suppression: competitors agree not to submit bids, or to withdraw bids already submitted, to ensure a predetermined winner. All three forms are criminal without regard to the competitive harm they cause.

Does the DOJ antitrust leniency program apply to bid rigging — and how does it work?

Yes. The DOJ’s Corporate Leniency Program provides immunity from criminal prosecution to the first company that self-reports a criminal antitrust violation — including bid rigging — that the DOJ has not yet begun investigating. Subsequent cooperating companies may receive reduced penalties but not immunity. This creates significant pressure to be first once a scheme is discovered or suspected: the company that reports first is protected, and all subsequent participants face prosecution. A company that discovers a bid-rigging scheme and delays reporting forfeits the leniency protection.

What should an employee do when a competitor proposes a bid coordination arrangement?

End the communication immediately — phone call, email, or meeting. Do not agree, do not ask for time to think, and do not suggest an alternative arrangement. State that the company cannot discuss bidding strategies with competitors. Report the contact to Legal within the hour with a complete account of the communication. Document the time, the competitor’s name and company, the exact proposal made, and the response given. Bid independently and competitively on any RFP the competitor mentioned.

How to Use This Scenario in Training

Recommended for business development, sales, proposal management, and senior leadership — particularly in organizations that compete for government contracts or formal RFP processes in regulated industries. The criminal penalty language is essential context for this scenario: employees who understand that bid rigging is a federal crime with individual prosecution risk respond very differently than employees who understand it only as a policy violation.

This scenario demonstrates the self-serving reasoning rationalization from the Decision Readiness Engine™ — “this is efficient for both of us” is the commercial logic that makes bid rigging feel like a smart strategy. Decision-ready business development professionals recognize bid coordination proposals immediately and end them before any arrangement can be established.

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