Tiffany Asher, [email protected]
SWEETWATER COUNTY, WYOMING — On July 1, 2021, Orginal House Bill No. HB0033, Enrolled Act No. 22 (Interference with public contracting from 2021) explains that bid rigging would be a federal crime in the State of Wyoming. House District 48 Representative Clark Stith, Speaker Pro Tempore, explained that he was part of the Judiciary Committee during that time, taking the lead on the bill.
Stith explained why he wanted to head this bill. “It wasn’t just the experience in 2020 with former Rock Springs mayor Kaumo and the difficulties surrounding the engineering contracts with the Phase One Bitter Creek Project, but also when I served on the Rock Springs City Council from 2013-2017, there were, in my view, irregularities with some of the public works contracts that were awarded. This bill arose out of a desire to clean things up.” Stith was not on the city council while Kaumo was mayor.
During his time discussing the bill, Stith mentioned that not many other municipals seemed to have an issue with bid rigging. “It’s hard for me to believe that Rock Springs is that unique. But it was a case with the Contractor’s Association which was initially not in favor of this bill because they thought it wasn’t a problem. That was a surprise to me.”
The bill is primarily directed at the activities of private contractors when they are bidding on public works projects. “The biggest thing the bill did was make it a crime for bid-rigging (collusive bidding).” Essentially, companies cannot discuss the bids prior to the contract being awarded by the municipal.
Before this bill was passed in July of 2021, bid rigging was not a crime in the State of Wyoming, which is why during Kaumo’s bench trial, he was only charged with misdemeanors. Stith explained that if you were a bidder on the city project, “You could get together with the other bidders and decide who was going to win the bid, and then submit the bid collusively so you could get a higher price than what you normally would have got. It’s not a fair competition.”
Bidders are required to attend a mandatory pre-bid conference (which can be useful and help bidders understand the scope of the project) but the problem it creates is when those bidders walk out of that room after the meeting, they all know who the other bidders are and know there can be no other bidders.
“There was an incident here in Rock Springs for a project where the city engineer had privately estimated the project would cost $4.2 million. There were three bidders at the mandatory pre-bid conference. What happened was that two of the bidders decide not to make a bid and the winning bidder comes in at $5 million. Then the winning bidder now hires the other two bidders as sub-contractors. That happened here in Rock Springs.” Stith explained that he voted against it. “What I believe did happen was that they negotiated a different contract for 4.5 million.”
This was part of the reason why Stith pushed to make bid rigging a state crime. Bid rigging is a federal crime under the Sherman Anti-Trust Act. “Our local county attorney or state prosecutors don’t prosecute federal crimes,” Stith explained.
Part of the bill, 6-5-404 was partially inspired by the events with Kaumo. One bidder gave information to another bidder. This act now makes that a felony. It states:
6-5-404. Acquisition or disclosure of bidding information by a public servant.
(a) A public servant who knowingly opens a sealed bid at a time or place other than that designated in the invitation to bid or as otherwise provided for by state law or local ordinance, or who knowingly opens a bid outside of the presence of witnesses if required by state law or local ordinance, is guilty of a felony punishable by imprisonment for not more than five (5) years, a fine of not more than ten thousand dollars ($10,000.00), or both.
(b) Any public servant who knowingly discloses to any interested person any information related to the terms of a sealed bid, except when the information is obtained as provided by law or if the disclosure is necessary to the public servant’s responsibilities relating to the bid, is guilty of a felony punishable by imprisonment for not more than five (5) years, a fine of not more than ten thousand dollars ($10,000.00), or both. This subsection shall not apply to any public servant who makes any disclosure of information related to a sealed bid when that disclosure would otherwise be made available to the public upon request.
(c) This section shall apply only to public contracts for which sealed bids are submitted.
“The bill is not perfect. There were two other issues that were struck from the original bill. One relates to uneven bidding, or frontloading of your profit into the first few activities of the job.” In Wyoming, it’s permissible to allocate the project price however they want.
Another thing Stith wanted in the bill, which was taken out, would’ve been ‘pre-qualification of bidders’. “It’s a complicated area. I wanted to restrict the ability to blackball a contractor. If it’s done in good faith, it can be useful. It can be a legitimate thing to use, but can also be used for advantage. If you reduce the bidders, then the taxpayers will pay more since there will be less competition.”
Stith explained, “I want to make a few things clear. I was not a lawyer for Tim Kaumo, and I was not the prosecutor, so I don’t have any personal knowledge or details of the case. I am not trying to give an opinion of the case, whether he committed a crime or not, but it explains why his crime was under this generic misconduct. It was really unclear at the time whether it was even a crime or not.” The law did not come into effect until after Kaumo was charged. Kaumo was charged in 2020.
Stith stated that it was good to work on the bill and was a great experience with the committee. He was able to draft it based on an Illinois agreement which was redrafted for Wyoming. The full bill can be found here.