Detecting Red-Flag Bidding Patterns in Low-Bid Procurement for Highway Projects with Pattern Mining

Design-bid-build (DBB) is the most common project delivery method among highway projects. State Highway Agencies (SHAs) usually apply a low-bid approach to select contractors for their DBB projects. In this approach, the Federal Highway Agency suggests SHAs heighten contractors' competition to lower bid prices. However, these attempts may become ineffective due to collusive bidding arrangements among certain contractors. One common strategy is the rotation of winning bidders of a group of contractors who bid on many of the same projects. These arrangements may also be specific to a particular region or vary in time. Despite the practices' adverse effects on bidding outcomes, an effective model to detect red-flag bidding patterns is lacking. This study fills the gap by proposing a novel framework that utilizes pattern mining techniques and statistical tests for unusual pattern detection. A case study with historical data from an SHA is conducted to illustrate the proposed framework.