McHenry Co. (ECWd) –
“Richard Bakken of Standard Equipment; He is believed to have knowledge of a scheme and artifice to Rig Bids in connection with a Street Sweeper sold to Algonquin Township Road District. The actions of rigging the bidding process to in essence avoid the purpose of the requirement for soliciting bids is reflected in e-mail correspondence between Robert Miller and Richard Bakken.”
That statement found in the “ANSWERS TO DEFENDANT ROBERT MILLER’S FIRST SET OF INTERROGATORIES TO PLAINTIFF ANDREW GASSER, ALGONQUIN TOWNSHIP HIGHWAY COMMISSIONER”, was one in particular that jumped out at us.
What constitutes Bid Rigging?
This is one area we have become quite familiar with as right in the small town of Paris, Illinois we saw first hand how it takes place, as shared in this article.
Key points from the Department of Justice as it relates to Bid Rigging.
- Proving such a crime does not require us to show that the conspirators entered into a formal written or express agreement.
- Collusion is more likely to occur if there are few sellers.
- The probability of collision increases if other products cannot easily be substituted for the product in question or if there are restrictive specifications for the product being procured.
Suspicious Statements or Behavior
- A bidder or salesperson makes • Any reference to industry-wide or association price schedules.
So exactly what is found in the record that provided the appearance of potential bid rigging by the past Algonquin Township Highway Commissioner?
It appears from the record there were only three bidders, which according to the Department of Justice, collusion is more likely to occur if there are few sellers.
Another prong is the product specifications and looking at the record, it is clear those involved may have a real problem if law enforcement actually does their job and investigates the matter as a potential crime of bid rigging.
- 03/15/2017 -a person named Kevin Watt of Municipal Equipment Sales and Service delivers their suggested sweeper product specifications that included a statement of interest on page 2.
“Bidders must indicate compliance for each item throughout the bid by writing “YES” or “NO“. Failure to do so may be cause to reject the bid. All “NO” answers must be fully explained on a separate sheet of paper and be attached to and submitted with bid. Failure to explain “NO” answers may be cause to reject bid.”
- 3/20/2017 – a person named Richard Bakken of Standard Equipment delivers pricing information and specifications of an Elgin Crosswind Machine to Bob Miller that contains specific discount information from the National Joint Powers Association.
- 03/31/2017 – Mr. Bakken provides what he calls a revised specification sheet that just happens to also include a column to mark Yes or No. (See first bullet point quote from competitor specification above)
- 04/04/2017 -Mr. Bakken provides another email communication with a revised specification and key question that we would look at as an indicator of direct communications of a purchaser wanting something specific in a bid specification. “Does this look better?”
We must ask, better than what? It appears a discussion took place and something was not as desired in the first try so a second attempt at fixing whatever the concern was made with a confirmation question that the specification looks better? Troubling!
The request for bid notice publication goes out 04/10/2017, which we wrote about in this article.
- 04/17/2017 – Mr. Bakken asks where he can obtain a copy of the bid package.
- 04/26/2017 – Bid received from Mr. Bakken, via email, contained the bid specifications package which amazingly is exactly the same as the one he provided to the township.
That points to the above-referenced prong of bid rigging outlined by the DOJ. “The probability of collision increases if other products cannot easily be substituted for the product in question or if there are restrictive specifications for the product being procured.”
When the manufacturer provides the bid specifications that are used for the bid package, that, in fact, creates a disadvantage to other bidders if not an outright inability to meet the specifications.
Who won the bid? The high bidder, who just happened to also be the very company that supplied the bid specifications used in the process.
- Standard Equipment, Elgin Sweeper – $307,719.25 (Richard Bakken’s Company)
- RNOW, Schwartz -$267,622.00
- Wm Nobbe Co. Regenerative Sweeper – $253,700.00
Anyone else find it odd that they chose a sweeper that was more than $30K more expensive?
- May 1st, 2017 Invoice sent reflects a discount for payment up front and elimination of tier 4 emissions on the sweeper was applied, bringing the cost down to $297,000.85, yet still making them the highest bidder by a wide margin.
The bid specification also stated: “Original manufacturer’s brochures of the proposed unit are to be submitted with the proposal.”. As you can see from the emailed bid, which was not sealed, did not contain any manfuacture’s brochure. Considering the bid was not sealed and no brochure supplied as outlined in the bid package, why did the high bidder who was not compliant with the bid requirements receive the bid?
These matters point to a real problem and potential legal matter in the event the other bidders wish to take legal steps as it appears they were cut out of any competitive process from the beginning.