CCTV Beijing News on October 18 (Reporter Liu Baoqi) On April 16, 2024, the atmosphere was tense and orderly at the bidding opening of the Public Resource Trading Center of the Administrative Service Center of a city in central China. However, Xia Yu, the head of a concrete company in the city, was sitting in the crowd, holding three bidding documents in his hands. His face was not at all uneasy, but showed a confident calmness.
This calmness originated from a "whisper" a month ago. Xiong Wei, a staff member of the recruitment department of a local group, came to him and said in a firm tone: "Your house has been assigned to the second bid section. The price quoted is 41% lower than the city's information price. The other two bid sections are quoted 1 to 2 points higher. Don't make random bids to ensure you win the bid."
This private warning actually opened up the shady story of a procurement project. The reporter's investigation found that in the local area, the group has a large number of project resources, but it has reduced the bidding system into a tool for collusion in bidding, and every step has hidden traces of behind-the-scenes operations: "Starting from the initial 'selection' of suppliers, to collusive quotations, secret bidding segment ownership, tailor-made bidding documents, and finally to bidding and winning the bid."
This was supposed to be a fair and just market competition, but in the end it became just a "going through the motions".
The mystery is revealed: a WeChat message opens the door to "unofficial decision"
The incident began with a WeChat message in the early morning of March 18, 2024.
At about 8 o'clock in the morning that day, Xiong Wei, a staff member of the recruitment department of this group, sent a message to Zhao Fang of a local concrete company: "The group is going to build a labor warehouse for main material concrete. If you are interested, you can enter the warehouse. The group will then select suppliers from the warehouse."
Zhao Fang didn't think much about it at that time. Locally, the group has a large number of engineering projects at its disposal. "Xiong Wei specifically told me to sign up as soon as possible if I am interested. As long as I can enter the labor service library, I will be given priority to participate in subsequent concrete projects." He said.
"This is not an open selection. It is clearly to identify 'obedient' partners in advance to pave the way for collusive bidding later." Zhao Fang said, looking back now, there is an obvious hint hidden in that sentence.
The reporter's investigation found that this group has a fixed "selection" model. Most of the group's project projects select partners from the labor library, and the list in the library is updated every year, with people coming in and out. However, the list in the library is updated every year and is completely controlled by internal personnel.
Liang Wei, captain of the Economic Investigation Brigade of the Municipal Public Security Bureau, was responsible for investigating the case. He said that in order to undertake the projects of this group, many companies have to enter the labor pool even if they are struggling. “Only when you enter the warehouse can you have a chance to get orders from the group. This also gives people within the group the power to seek rents and manipulate bidding.” He said.
On March 25, 2024, Zhao Fang submitted the company's qualification materials as required and successfully entered the group's labor service library. Soon, the group launched the highlight, which was the concrete procurement project for the city's comprehensive water environment management and urban drainage pipe network renovation project. It was divided into three bidding sections with a total budget price of 45.28 million yuan.
Zhao Fang participated in the competition in the name of his company, and finally won the second bid with a price that was 41% lower than the city's information price, and with the promise of "guaranteed supply and quality." "The profit at this price is not much, mainly to protect expenses and increase business." Zhao Fang said that the reason why he was willing to accept this low price was that he wanted to establish a long-term cooperation with the group; second, the other party had already "confessed" and as long as he cooperated with the other party, he could get the project.
"I didn't think much about it at the time. We would cooperate with whatever the other party asked for. Anyway, we could make some money. As for whether it was compliant or not, I didn't care," Zhao Fang said.
In his view, the so-called public bidding is just a formality, because the group has already determined the suppliers through price control, and whichever bidder meets their expectations will get the project.
Since then, the core of this secret operation has officially begun from a quotation meeting that is not open to the public.
Default trading: Quotation and drawing lots are all deceptive tricks.
A few days before April 3, 2024, Xiong Wei contacted Zhao Fang again: "You come to the office of the Group's Recruitment and Procurement Contract Department. We have to discuss concrete quotation matters. You must come over."
After Zhao Fang arrived at the office, the heads of three other concrete companies were already sitting on the scene. Xiong Wei sat in the main seat and directly announced the core information of the project: "The total budget of this concrete procurement project is 45.28 million yuan, divided into three bidding sections, the first and second bidding sections are 15 million yuan each, and the third bidding section is 15.28 million yuan."
Subsequently, Xiong Wei made a request: "Each company determines the lower floating point based on the city's information price, and must ensure the quality and supply of concrete. The company with the lowest final quotation will undertake the group's concrete procurement business for the entire year of 2024."
In the first round of quotations, Zhao Fang's company quoted a price that was 38% or 39% below the city's information price. They thought this price was already very low, but Xiong Wei told them that it was "not the lowest" and asked them to make a second round of final quotations.
After two rounds of quotations, the lowest quotation was fixed at 41% below the city's information price, and all three companies agreed to supply concrete at this price. Afterwards, Xiong Wei sent a letter of commitment to Zhao Fang via WeChat, asking him to sign for confirmation. At the same time, he clearly informed: "The second bid section will be supplied by his company, and the first and third bid sections will be undertaken by two other companies respectively."
Regarding the allocation of such bids, Xiong Wei explained that the leadership requested that "one company should not be allowed to undertake such a large project alone." Three companies happened to participate in the quotation, and the ownership was determined through a lottery. But in Liang Wei's view, this lottery draw is just a cover-up.
"In fact, the internal shaking of the ball is just a cover. They want which company to win which bid, and they will keep shaking until they win. After the winning, only the video that meets their wishes will be kept and archived, and the rest will be deleted." Liang Wei said that this operation is essentially to give the pre-determined results a "fair" appearance.
What’s even more dramatic is that the day after the results of the lottery were announced, Xiong Wei suddenly called the heads of the three companies and stopped the contract drafting work. "He said that the leader has spoken. The budget for the three bidding sections is too high. According to regulations, the public bidding process must be followed. Let us hurry up and prepare to register and bid."
Zhao Fang recalled that Xiong Wei also specifically told all three companies to sign up for these three bids. The quotations for each of the predetermined bids should be strictly executed at a 41% increase. The quotations for the other two bids should be increased by 1 to 2 points on this basis. Only in this way can we ensure that we win the bid and there will be no surprises.
Black box landing: bidding and bidding, the whole process of fraud without blind spots
According to Liang Wei, there are two common ways of colluding in bidding. One is that bidders negotiate with each other and unify the quotations; the other is that the tenderer and bidders collude internally and externally to set prices in advance and tailor bidding documents to ensure that a specific company wins the bid. "This group is a typical example of the second situation." He said that from tendering to tendering, every link was fraudulent.
According to relevant regulations, projects with a single construction contract estimated price of more than 4 million yuan must invite bids. Liang Wei said that according to this regulation, the group had to launch a public bidding process, but it had already paved a "green channel" for the three companies that had been appointed. During this period, the addition of Wei Ting, the head of the bidding agency, made this secret operation more thorough and covert.
"I made it clear to Wei Ting from the beginning that the three bid sections have been assigned to three companies, including the floating point price of each winning bid section, and asked him to set the bidding documents in the direction of the default winning bidder when formulating the bidding documents." Xiong Wei said that as required, the three companies signed up for the three bid sections. The core purpose was to let them accompany each other in bidding to ensure that the default company successfully won the bid. Wei Ting was fully aware of this and actively cooperated.
Under Xiong Wei's arrangement, Wei Ting was responsible for putting the project online for bidding. At the same time, he guided the three companies step by step in preparing bidding documents, focusing on controlling the bidding quotations, and repeatedly warned "no random quotations."
"The core requirements are very clear. Each company must win the bid for its own predetermined bid section, and the quotation is strictly controlled to be 41% below the city's information price to avoid accidents." Xiong Wei said that the accompanying bid prices of the other two companies must be increased by 1 to 2 points on the basis of 41%. This can not only ensure the lowest bid from the default company, but also avoid failed bids and abandoned bids.
As for why the quotation should be set at 41% below the city's information price, Xiong Wei explained that this is "market behavior" and there are no clear industry regulations and no relevant requirements within the group. "For the three companies, there is still room for profit at this price, otherwise they would not agree." He said.
The person in charge of a concrete company bluntly said that this quotation was not profitable at all. The reason why he was willing to accept it was to improve the company's performance. Sometimes performance is more important than profit.
Xiong Wei said that this project adopts a comprehensive scoring method, and the technical scores and business scores of each company are basically the same. The only thing that can widen the gap is the price score. The lower the quotation, the higher the score.
As the supervisor at the bid opening site, Xie Fang also confirmed this. "Before the bid opening, we determined the final winning reference price by 41 points based on the city's information price." Xie Fang said that the final bidding result was fully in line with expectations.
"The bidding control price for the first and second bidding sections is both 15 million yuan, and the winning bid price is more than 9.82 million yuan; the bidding control price for the third bidding section is 15.28 million yuan, and the winning price is more than 9.83 million yuan." She said.
Not all companies are willing to cooperate with bid rigging. The group contacted five concrete companies around the city, but in the end only four companies showed up to quote. One of the four companies withdrew from the bidding after quoting. Only three companies actually participated in the bidding for the three sections, so each of these three companies won the bid.
Among the five companies mentioned above, one company outright refused to participate in collusive bidding at the outset. "Our company leaders have long made it clear that we will not do business with this group." Huang Bin, who refused to participate in collusive bidding, said that this type of business generally requires advance capital, which results in slow payment and high risks. "From Xiong Wei's tone, I felt that this project had been decided internally a long time ago. We were just there to accompany him, there was no need to waste time." He said.
The Truth Exposed: The Cost of Abuse of Power and Ignorance of the Law
With the in-depth investigation by the police, the veil of this behind-the-scenes operation led by the group and covering the entire bidding process was finally torn apart.
The police investigation found that there were many flaws in the bidding. "In the sub-item quotations of the companies that won the first and second bids, the unit prices and total prices were exactly the same, as if they came from the same template. And the response documents in the bidding documents of the three companies participating in the bidding, except for the quotations, were also highly identical and verbatim." Liang Wei said that these obvious coincidences were not accidental at all, but typical signs of collusive bidding, which was enough to prove that they negotiated in advance and operated in a unified manner.
After a concrete company successfully won the bid, Xia Yu, the person in charge of the company, did not deny the collusion in the bidding. "I know that it is illegal to accompany each other's bids and collude in quotations, but in order for the company to survive, we can only be forced to cooperate." He said.
Du Liang, then director of the recruitment and contract department of the group, as the main executor of this secret operation, revealed the truth behind it. "At that time, the chairman of the group made it clear at the meeting that the concrete procurement project had a large profit margin. It was necessary to negotiate the price in advance, lock in the supplier, and improve the bidding process to complete the 'face-saving project'," he said.
Afterwards, Du Liang confessed that he also asked the bid evaluation experts to remind the bid evaluation experts not to be too harsh during the bid evaluation process, and to turn a blind eye to the review of the bid documents to avoid invalid bids and ensure that the three default companies successfully won the bid.
In fact, the group's legal staff made it clear at the meeting that this "advance pricing and formal bidding" operation method was suspected of being illegal, but the chairman turned a deaf ear and arranged for Du Liang to be responsible for the entire implementation of the project on the spot.
"The power of the top leaders of this group is too concentrated. Even if subordinates know that it is illegal, they dare not object, and even if they object, it is of no use." Liang Wei said that this group has shown a state of out-of-control power, which is a breeding ground for illegal activities such as collusion in bidding and transfer of benefits.
Liang Wei said that this case of collusive bidding not only seriously undermined a fair and just market environment, but also created many hidden dangers. Because qualified and powerful companies are unwilling to accompany the bid and are excluded, in the end only those "obedient" companies will win the bid.
In his view, in the long run, too low a quotation may force companies to cut corners and reduce costs, thereby affecting the quality of the project. The subsequent project acceptance will also lose fairness due to the black-box operation in the early stage, ultimately harming national interests and social public interests.
"In order to get the company to participate in collusive bidding, this group also threatens the company in disguise. If you don't participate, the balance of the settlement balance of the previous project will not be settled for you." Liang Wei said.
(Xia Yu, Xiong Wei, Zhao Fang, Wei Ting, Xie Fang, Du Liang, Huang Bin and Liang Wei are pseudonyms in the article)
