The Star Tribune in Minneapolis, MN recently reported that Target Corp has filed a federal racketeering lawsuit against LCH Pavement Consultants of Pearland, TX. Target claims LCH conspired with paving contractors in California, Wisconsin, Texas and Illinois to inflate prices, rig bids, fix prices, misrepresent work being done and distribute kickbacks.

Target hired LCH in 2009 and had them oversee about $100M US in repairs. The Star Tribune reports:

The suit alleges that LCH organized the participating paving companies in a scheme to divvy up the work on a territorial basis. LCH did this by denying some contractors a chance to bid, by getting some contractors to submit bids they knew were too high, and by fraudulently inflating legitimate, lower bids when it filed reports with Target, the suit says.

It says the defendant paving companies collaborated with one another by not submitting bids that would compete with another and reflect actual market pricing. Rather than overseeing the work, the suit says, LCH let the paving companies themselves, or a subcontractor, do the job and certify completion.

Of course, I have no way of knowing if the massive bid rigging fraud took place, but I doubt Target would endure the possibility of negative publicity without some fairly strong proof. When a CM breaches the trust of their Owner, the entire construction industry suffers.

As you look at how you do business, try to set up everything with as much transparency as possible. When one CM or contractor cheats, we all need to try harder to show that we don’t. The transparent processes actually will help your firm, not just to get work, but to protect against over-zealous types who will sacrifice ethical behavior for a quick profit.

We need to guard ourselves and our employees from getting into ethical quagmires. So look at your bidding and job costing processes, see if there’s a way to make them more transparent and stronger.