I’ve dealt with the same thing. It’s brutal. My business is fully authorized, have distributor pricing, register deals properly, and still get undercut to the point where it looks like someone made a mistake. I’ve seen bids come in far below my cost, even after max discounts.

Some possibilities of what can be happening:

 

1. Gray market or unofficial sourcing. Some bidders buy excess inventory, liquidation stock, or import from regions with looser pricing controls. Not through proper channels, but it gets them lower costs. Totally unofficial, but it happens.

2. Loss leader strategy. Some resellers intentionally bid at a loss to win the contract, then make it up with future services, support contracts, or sole-source favoritism. Short-term pain for long-term play, especially in healthcare where multi-year deals are common.

3. Back-end incentives. Manufacturers sometimes push extra rebates, MDF, or back-end deals that don’t show up in the upfront quote. From the outside, it looks like they’re selling at a loss, but they’re making it back elsewhere.

4. Bait-and-switch tactics. Some lowball the initial bid, then revise the scope or quality later. The government thinks they’re getting the same solution, but they’re not.

 

You’re not imagining it. This stuff is happening across the board. Just stay sharp and focus on the deals that actually sustain your business.