posted on Sep, 12 2006 @ 09:31 PM
As a local elected official, most of your job is to oversee construction and maintenance project. To give everything a veneer of legitimacy, a
bidding system is used.
The legal term to watch out for is "procurement fraud."
Supposedly, a government office, like a county road and bridge department, will list all the work it needs done on a project, and competing
contractors are supposed to send in sealed bids. The elected official throws a big party, at which the envelopes are opened, and the winner is
announced, almost like an award show on TV. The lowest bid is supposed to win.
The way you corrupt this is by screwing with the bidding process, and handing out projects as you see fit. Because there is sometimes big money
involved, competing contractors may try to muscle in on your operation, and various media may try to perform an exposee of the bidding process.
Most taxpayers assume that bid-rigging takes place by peeking in the envelopes, and telling ones buddies what the amounts are beforehand. Such
amateurish tricks almost never work; but perhaps you can frame a rival, by making it look like he's helping a rival contractor this way.
Here's how the classic deal is run:
If you have some relatives with a different last name, or people you otherwise trust to keep you out of prison, they can help you, by creating a
construction company. For everyone else, use a lawyer. You can always trust a lawyer to lie for you, since if it is ever proved that he was involved
in a criminal enterprise, he gets disbarred and his career is over, even if he is never convicted. So he will always lie for you, to keep his career
Best is to set up two construction companies; one in a different state, as well as one that serves your precinct. If you have friends in the
business, you can cut deals with two existing companies, but only if you know them well enough to go into crime with 'em. Here are the scams:
Screw the contract - You publish a request for bids, and different companies turn in valid bids. If your confederate is not the low bid, then
you have a "last minute change" in the contract specifications, along with a ridiculous deadline (5 days) to resubmit final bids. While the other
contractors are reeling, trying to recalculate all their costs, your confederate turns in a previously prepared bid, that miraculously meets the new
guidelines. As the only timely bid, he's the new winner.
Inflate the contract - Say you need 10 miles of road paved. The specs you turn list the road as 12 miles long. Amazingly your confederate's
bid is a whopping 17% below the valid offers. He wins the contract, and still makes a profit, because he knew to order less materials than the rivals
would need. This is the best method, and can be repeated for years without even other contractors noticing the deal. The varieties are endless. A
favorite is to request more culverts per mile than are actually needed. Only "your" contractor knows the true footage of drain pipe to order, and
so he can turn in a lower, but profitable, bid.
Poison the contract - This is how you get rid of rival contractors. You take bids on road work, on a stretch of road that you secretly know
has special drainage problems. But you don't publish the problems in the offer. The contract is written in terms of finished project, and not in
terms of process; meaning that the contractor is responsible for all cost over-runs. Your rival wins, and goes broke having to cover the extra costs
out of his pocket. Using the Culvert example, you request too few feet of drainpipe per mile, and the "winner" has to donate the extra footage to
your precinct, out of his own pockets.
bid rotation - your two companies divide all the coming work in your precinct between them. Company A turns in the low bid on half the
projects, and Company B turns in the low bids on the other half. This elbows out any competition.
Defective Materials - Your company turns in a lower bid than everyone else, and then substitutes a material cheaper than was specified in the
contract. This is a classic where I live. The paving contract is for 25 miles of asphalt using #4 gravel. But the contractor builds using #5, a
cheaper (larger) grade in his pricing, but puts the same "#4" on his bid as everyone else. He pockets the difference, which can be over a thousand
dollars a mile. After people complain about excessive tire wear and road noise, you get the go-head from the county to tear up the road, and lay it
right this time. Rinse and repeat as needed.
Ghost Bonds This is where the big money comes from. "Your" contractor turns in a cheaper bid, because his bond is 25% less than his rivals.
The difference can be tens of thousands of bucks. When asked, he can point to the fact that he also works in the neighboring state, and he's bonded
from there, where it’s a lot cheaper to get construction insurance. If anyone actually checked, they'd find out that his bonding company is a
letter drop and a phone answering machine located across the state line. From about 1980 until the mid 1990's, most low-bid road contracts in Texas
turned out to have been issued by non-existent Arkansas companies. As long as your contractor is never sued, you simply deposit the money intended to
for the bonding company into an offshore account, less a few thousand bucks gratuity to your friend in the neighboring state.
Your biggest problem as an elected official is how to get the all the money (from your friends in the contracting business) into your banks. They can
give out scholarships to your college-age children, or to your local charity, run by your wife. Or you can invest in the same company as the owner of
the corporation does, but you get extra "dividends" every quarter.
Hillary's system was creative: your broker opens two accounts for you; all your winning investments go into account "A," while your losers go into
account "B," which the broker claims was his all along. That's how Hillary cleared $180,000 speculating in cattle futures, her broker took the
losing bids, and balanced the books against all the money he owed Governor Clinton in kick-backs. Banks and brokerages are just the thing for that
kind of a money.
Local government is the easiest place to defraud, often for decades. As long as you are in a county where one political party is "the" local power,
you get re-elected cycle after cycle, and no questions asked. I mean, admit it; when you vote, you choose your political party's candidate
for water comissioner, without even knowing what he does. Of course by now you can guess: he writes the contracts and takes bids from various
contractors on the public water supply . . .
The reason that local politics is safer is simple: the only real oversight is from media scrutiny. And to be honest, local media are not exactly at
the top of their game anymore when it comes to investigative journalism. A journalism degree is in the liberal arts---most of them have no real idea
of how to read a spread sheet, let alone how many potential gallons are in an acre-foot of drainage, or what the real redundancy factor needs to be in
a french drain on a 4% grade in a wetland that drains under a highway easement. And if a journalist cannot figure it out, odds are a jury of your
peers wont, either.
Your only real liability is from people under you, betraying your patronage. So choose your henchmen wisely, and you'll do great. Don't write
anything down, and be sure to follow Ronald Reagan's dictum: always reward your friends---always punish your enemies.