Answer to Question #148379 in Management for Chlaresel

Question

You have just opened your own printing business. A large sports franchise is beginning an important advertising campaign in order to attract more fans to the sport. The purchasing officer of the company calls and asks you to make a bid on printing 5,000 high-quality posters that are to be given out to important boosters. He asks you to come by his office to talk about the job. There, he tells you that he would like to help you get started in your own business. He says that he has already asked for bids, and the lowest is P1,250,000. He continues by suggesting that you come in with a bid for P1,200,000 and give him P50,000 in cash so that you get the bid. Your immediate reaction is to be flattered because you know that this could lead to many more contracts. You go back to your office and calculate your costs. You are pleased to see that you will make about P300,000 on the project, which you really need.

Required:

Is the deal suggested by the purchasing officer fraud? Explain.

Answer 1

Bid rigging is a criminal offence in most countries of the world. The bid process is supposed to be sealed and work as a control measure by organizations to protect the integrity of the vendors bidding. However, this bid process fails to account for collusion amongest the vendors resulting in fraud.