What If The Bidder Is……….Your Consultant?

I worked for years in Finance for non-profit institutions. Nearly all of them had a policy to obtain competitive bids for any large projects/ equipment purchases. They also avoided doing business with companies related to the organization, unless the company was donating a product or service. However, problems can occur when one individual controls the bidding process or the project itself. A recent article touched on this issue.
A consultant in St. Louis County pleads guilty to several crimes against a religious order. “He admitted taking thousands of dollars in payoffs from at least three contractors and subcontractors…..working on a housing development”. If he controlled the bidding process, he could potentially corrupt the bids by demanding payoffs. He also “orchestrated a scheme in which he had the order sell property………..to a company that he controlled”. He “then sold the property for a higher price”. Obviously, the consultant was in a position to know that the land was undervalued. He profited from the transaction, rather than the religious order. (I’d hate to be with guy when he knocks on the “Pearly Gates”………!
The Lesson: No decision should be left to one employee or consultant- regardless of how talented the person appears to be. While it is easier and faster to have one person in control, it can lead to problems, including fraud and theft.
Your Homework: If you sell a product or service that requires a single large cash outlay, suggest that your client- particularly a non-profit- have more than one person involved in the selection process. You may lose a few sales, but you’re doing the right thing and may have the client come back to you down the road.
(Source: “Consultant admits he cheated Vincentian order”, St. Louis Post Dispatch, 5/4/07)