Vigorous competition among suppliers helps governments to obtain the best value for money for the goods and services they procure. Conversely, when competition is curtailed – for example when suppliers engage in bid rigging – taxpayers’ money is wasted as governments pay more than a fair price.
Bid rigging occurs in all types of industries and circumstances, and in all parts of the world. When bid rigging impacts public procurement, it has the potential to cause great harm to taxpayers. One reason for this is that public procurement is often a large part of a nation’s economy. In many OECD countries, it amounts to 15 per cent of the gross domestic product, and in most developing countries it is substantially more than this. Experience also shows that bid-rigging conspiracies can last decades and impact many markets. The United States Department of Justice, for example, found that more than 18 states were impacted by conspiracies to raise the price of milk sold to public schools. The Netherlands’ government uncovered evidence that more than 600 firms had rigged bids in public construction projects.
The OECD has developed a methodology to help governments improve public procurement by fighting bid rigging. Drawing on the experience of more than 30 jurisdictions, the OECD Guidelines for Fighting Bid Rigging in Public Procurement assist procurement officials to detect bid rigging.
The Guidelines help to identify:
• markets in which bid rigging is more likely to occur so that special precautions can be taken
• practices that procurement agents can use to detect bid rigging
• suspicious pricing patterns
• suspicious statements, documents and behavior by firms.
The Guidelines provide a comprehensive strategy for detecting bid rigging. They can be applied in a decentralized manner across government at both national and local levels.
Download the Guidelines here: Detecting Bid Rigging (OECD Guidelines)