"IT'S KIND OF like violating the 55-mile-an-hour speed limit. You just don't feel you're doing anything wrong." The speaker is John Gray, president of the National Asphalt Pavement Association, and the subject is collusive bidding on highway contracts. There's a tendency among those who know about these things to shrug off violations. That kind of cynicism is now being proved wrong -- not just wrong morally, but wrong as a matter of fact.
A Justice Department investigation since 1979 has gained indictments against 186 individuals and 156 corporations on charges of bid rigging, mail fraud and perjury. Fully 131 executives and 114 corporations have entered guilty pleas, and 16 individuals and 10 corporations have been found guilty after trials; just nine individuals and six corporations have been acquitted. The government's investigation, beginning with contractors in Tennessee and Virginia, has spread into 17 states.
Justice Department sources estimate that highway contractors have made hundreds of millions of dollars in illicit profits from bid rigging. The government has collected $35 million in fines from companies in cases settled so far. A 1974 amendment to the Sherman Antitrust Act provides penalties of up to $1 million for a corporation and $100,000 and three years in jail for an individual. Appropriately, the Federal Highway Administration can debar, and in many cases has debarred, convicted companies from bidding on further contracts.
These are entirely reasonable punishments. Price-fixing has been illegal since the Sherman Act was passed in 1890. The lengths to which bid riggers have gone -- meeting clandestinely, using code language -- suggest that they knew they were doing something wrong. Aside from actual coercion, there can be no greater offense against the free market system than collusive price-fixing.
Since the federal bid-rigging investigation began to build up steam in 1980, highway construction costs have declined by 10 percent, according to Federal Highway Administration figures. That gives some indication of the magnitude of the offense. Thanks are owed to officials in Justice and elsewhere who have been working to clean up this mess. Their success should silence cynics who counsel that nothing can be done about corrupt and inefficient practices in any area of life.