What type of procurement fraud is indicated when two contractors alternate bids to win contracts?

The scenario described involves two contractors who are alternating bids, which is a clear indication of bid rotation fraud. In this scheme, contractors collude to take turns submitting the lowest bids on projects to share the contracts among themselves. This practice undermines competition and can inflate prices unfairly, ultimately harming the integrity of the bidding process and the clients who depend on fair market practices.

Bid rotation is generally orchestrated in such a manner that each contractor knows when it is their turn to submit a winning bid, thereby allowing them to manage contract acquisition without genuine competition. This collusion can create a false sense of market competitiveness and can also lead to issues like reduced quality of work, as the winning contractors might not have the same incentive to perform effectively if they are guaranteed contracts regardless of performance.

On the other hand, product substitution entails providing a different product than what was agreed upon, defective pricing involves misleading pricing claims, and need recognition refers to the process of identifying and specifying requirements for goods or services. While these are all types of procurement fraud, they do not involve the specific collusion pattern indicated in the question, which is central to understanding bid rotation.