North Carolina Drainage Investigation Leads to Grand Jury Indictment for Bid Rigging and Fraud

In October 2020, engineering firm Contech Engineered Solutions LLC and its former executive were indicted on charges of conspiring to rig bids, conspiring to commit mail fraud, and committing mail and wire fraud in connection with a nearly decade-long scheme affecting aluminum structure projects for the North Carolina Department of Transportation (NCDOT).

Throughout the alleged conspiracy, Contech, a manufacturer of aluminum pipe and fittings and other products, and its co-conspirator, a dealer of Contech’s products, bid on numerous NCDOT aluminum structure projects. Aluminum structures control the flow of water underneath and around roads, bridges, and overpasses, providing water drainage, erosion control, and sewage management. During the time period alleged in the indictment, NCDOT increasingly used aluminum structures, as opposed to steel or concrete, for its drainage projects.

According to the indictment, the former executive obtained—or directed another to obtain—bid prices from Contech’s competitor on the aluminum structure projects in advance, and then intentionally inflated Contech’s bids to be higher than its co-conspirator’s bid, while falsely certifying that the bids were submitted free of collusion. He allegedly manipulated Contech bids by increasing the price by a certain percentage above its competitor’s, in order to give the appearance of submitting a good faith, competitive bid to NCDOT. Upon submitting the intentionally inflated bid prices and subsequently losing the projects to its co-conspirator, Contech then supplied all of the aluminum pieces for those projects.

The indictment alleges that the conspiracy primarily involved Contech soliciting bid prices over the phone. The parties also occasionally met in person, or exchanged emails and text messages, to share pricing information used to create cover bids. According to the indictment, the co-conspirators used the mails and wires in furtherance of the scheme.

On March 15, 2021, the court denied Contech’s motion to apply the rule of reason to the case. The case will be tried in the Eastern District of North Carolina as a horizontal bid-rigging case under the per se rule, as alleged in the indictment. A trial date has not yet been set.

This indictment is part of a criminal investigation into the aluminum structures industry, conducted by the Division’s Washington Criminal I Section, with the assistance of the USPS Office of Inspector General, the U.S. Department of Transportation Office of Inspector General, and the U.S. Attorney’s Office for the Eastern District of North Carolina.

This prosecution emphasizes the Division’s commitment to combatting collusion in government contracting, which raises the prices and diminishes the quality of the goods and services paid for by U.S. taxpayers. The Division, whether working with longstanding law enforcement partners or as part of the Procurement Collusion Strike Force, including the use of data analytics, will continue its efforts to detect, investigate, and prosecute these crimes.