Why is Bid Rigging considered a significant issue?

Bid rigging is considered a significant issue primarily because it disrupts fair competition and can inflate project costs. In a typical bidding process, contractors submit their bids based on the costs they anticipate for completing a project. When bid rigging occurs, several contractors collude to manipulate the bidding process, often agreeing in advance who will win the bid or what prices will be quoted. This collusion undermines the principles of a competitive marketplace, as it removes the natural competitive pressure that would otherwise encourage lower prices and higher quality work.

As a result of bid rigging, clients may end up paying more for projects than they would in a truly competitive environment, where multiple independent bids could lead to better pricing and options. Additionally, this practice can discourage legitimate competition, harming honest contractors who may struggle to secure jobs when collusion drives prices up or restricts their opportunities. Therefore, the correct answer highlights the detrimental impact of bid rigging on competition and costs within the contracting industry.