Price fixing is rampant in IT since Vendor Management Systems were introduced. Indeed, price fixing is the primary reason the systems were adopted.
Recently I had an interesting discussion with a pimp about a contract opening. They had posted the contract opening on Dice and tagged the entry as “market rate”, but when the called me, they were offering a billing rate well below half of market rate. Several other pimps had called about this same contract, all quoting a billing rate far below market, but this one tried the “chat to him a while and see if he changes his mind approach.”
During the discussion they stated the Vendor Management System didn’t allow them to present candidates outside of the quoted rate range. I informed them that is where the first crime happened. They were rather shocked to hear this, but not as shocked when I told them the second crime happened when they advertised the contract billing rate as “market”.
“What crime is that” they asked.
“Wire Fraud” I responded.
After a long silence they queried “How is that Wire Fraud?”
“I am not a lawyer, but I’ve chatted with some about this very topic. The position has been falsely advertised on the Internet. You put ‘market rate’ as the billing rate even though you know very well $42/hr you are offering is less than half of the going billing rate for qualified candidates.”
Definition of market rate
“The client is only willing to pay this much” they responded.
“I am only willing to pay 50 cents for a gallon of gasoline at the pump, is that the current ‘market rate’ for gasoline?”
“No.”
“There you go. By not allowing candidates to presented at the actual market rate, your client has engaged in price fixing. By participating in it, so have you and every other pimp advertising the opening as ‘market rate’. Had you actually put the maximum billing rate in the opening you would have been operating within the law. You would also not get a single qualified respondent.”
Price fixing
“How is that price fixing?”
“From what I’ve been told by people who actually work in the field of law, they engaged multiple companies in a single industry on a mission to cap a price. The companies willingly participated when they advertised the opening as ‘market rate’ and all agreed (by method of the Vendor Management System) to not submit any candidates above that billing rate. The company has taken the childhood action of sticking their fingers in their ears and humming really loud to avoid hearing a truth they don’t wish to hear. The method they chose of accomplishing that, while a feature of their particular Vendor Management System, isn’t legal.”
“Oh. So you won’t consider taking the contract?”
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