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Comment by ianferrel | Hacker News Reader

The bidding structure, as specified is:

1. You can only bid lower than the previous lowest bid. 2. At the end of the auction, the lowest bid will have 10 days to complete the project. If they fail, the next lowest bid will.

This appears to be a simple attempt to game the system. A low bid of $1 prevents any other bids from being registered, which guarantees that whatever the previously lowest bid was will not have to compete on price with other good-faith bidders.

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It seems like the "strategy" here would be 1.) submit a bid of $3000, and 2.) have a friend submit a bid at $1. The bidding closes, your friend intentionally sandbags the project, then you complete the project at $3k.

For this to work, your friend would need to have a company registered on SAM. Although, I can confirm that this was not the case in this bidding. I am the bidder who bid $499 - which is the next lowest bid after $1. And no, I did not ask a friend to bid $1.

Why did you bid $499 for what is clearly more than $499 of work?

I don't think that's obvious. There aren't necessarily easily interchangeable contacts available for more than that, and for many people $500 in under ten days is more than they would earn in their job. Students for example could easily be qualified to do this, perhaps be on a break and have time, and would otherwise be earning nothing. Not to mention the resume padding and connection building opportunities.

I understand the work is more, however, I recently setup my consulting business and this seemed like a great opportunity to get the name out there and expand the network.

This would work if the lowest bidder failed to perform, they would have to pay back the second lowest bidder. For example, if they bid $1, but the second lowest bid was $1000, they would have to pay back $1000 for not performing. They should probably also establish a floor to eliminate this $1 gaming mechanics.

What if the lowest bidder is nowhere to be found?

They could require a deposit to bid, I suppose.

For larger projects, the contractor is required to be bonded to cover things like this.

Is $1 a large project?

Since the amount at risk is the amount of the bid prior to yours, that should determine both the amount of any bond requirements and, if there is a sharp cutoff, the cutoff for the requirement for a bond.

the point of this process was procurement in increments less than $3,500 to avoid many regulations.

If lowest bidder is nowhere to be found, then the next lowest bidder gets the work.

You chose way of punishment. It is better to split work into 3 parts: 2/3, 2/9, and 1/9, and assign 2/3 to winner, 2/9 to second winner, and 1/9 to third winner. In this case whole ecosystem will grow around these auctions, which will produce into better market and lower prices automagically.

So you get two friends and they bid $2 and $1.

Simplest way to make this only weakly gameable is to allow bids to be entered that are higher than the current minimum so that you can bid to be the 2nd person to do work. It's still gamble because you can have people bid artificially low in order to intentionally delay work or give someone more time to do things, but it's likely a better system than failure penalties.

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