Tilting at Windmills

March/April 2012 The Bain con

By Charles Peters

One of the most common tactics employed by defense and other contractors is called “lowballing.” They win government contracts by making the lowest bid and then, once the work has begun and it is too late for the government to change contractors, they suddenly discover additional “unforeseen” costs that result in their having to raise prices, often well above the highest bid made by their competitors.

It turns out that Mitt Romney’s firm, Bain Capital, practiced a clever variation on this con when bidding for companies it wished to acquire. Bain lodged the highest bids, and then, after winning exclusive rights to negotiate, would suddenly find “all sorts of warts, bruises and faults with the company being [acquired],” writes William D. Cohan, a Wall Street veteran and columnist for Bloomberg News. “Soon enough,” he adds, “that near-final Bain bid … would begin to fall, often significantly,” and the company would have to “accept the lower price,” or begin seeking a best bidder all over again.

Charles Peters is the founding editor of the Washington Monthly and the author of a new book on Lyndon B. Johnson published by Times Books.

Comments

  • Achtman on March 27, 2012 12:19 PM:

    It's called bait and switch.

  • Neil Bates on May 27, 2012 1:14 PM:

    Why didn't Cory Booker appreciate things like this? I see from checking his background, he's worked with Equity Firms, he can't be objective. Yes, many of whom *do* some good, but that isn't the point - the point is, what happened when Romney was involved with Bain Capital in particular. The first online comment to WaPo's execrable recent editorial making that mistake of generic reference, filleted them nicely.

  • Pat on August 22, 2012 10:33 AM:

    If Bain is the master of bait and switch, and has consulted with most of the business community corporations for the last 20 years, wouldn't winning the Presidency be the pinnacle of Romney's planned career if bait and switch was the name of his game?

    Few Presidents can afford to ignore poor people even if he does hate them because they are not useful, and may drain the economy. Only Hitler attempted to get rid of them by genocide, and Romney doesn't appear to be the Hitler type unless he has more to hide than his tax returns.

    How then can he live up to the promise of GOP privilege to coddle their interests without resorting to his old bait and switch tactics?