Bidding Process. Main Construction builds office buildings. The building generally cost between $5 million and $7 million to build, and the plumbing can cost between $300,000 and $600,00 depending on the building requirements. Therefore, Maine always sends the plumbing work out for bid before deciding on whom to use as a subcontractor. The company has had 21 projects over the last five years with $10 million dollars in plumbing contracts being sent out for bids.
Over the past five years, Maine has asked for bids from three contractors; Beltran Plumbing; Delgado Plumbing Services; Wright Contracting - Plumbing Specialists. Each vendor has been reviewed by Maine and is on Maine's approved vendor list.
For each of the following situations (each situation is independent), determine whether the auditor should be concerned about the controls over the bidding process. If yes, what control would you recommend to Maine to ensure a fair and honest bidding process?
a. Of the 21 projects sent out for bid, Wright had the winning bid on 12 of the projects.
b. Of the 21 projects sent out for bid, Wright had the winning bid on 12 of the projects. In each of these bidding processes, Wright's bid was the last bid received.
c. Of the 21 projects sent our for bid, each vendor had the winning bid on 7 of the projects.
d. Of the 21 projects sent out for bid, Delgado was awarded 5 contracts even though he did not have the lowest bid.