Public Procurement Seminar16th & 17th June 2010

Savannah Hotel

Fair Trading Commission

Detecting Bid Rigging

Warning Signs When Bids are Submitted

• same bidder may always win bid of a certain type or size

• a bidder never wins but keeps bidding• a bidder wins whenever it bids, even if it

bids rarely• one company who consistently wins bids

but always subcontracts to smaller firms • companies that tend to withdraw

unexpectedly with no clear reason for doing so

2

Bid Rigging Examples (USA)

• Two companies supplied nylon filament for paintbrushes made by prisoners at a federal prison

• 90 contracts over 7 years• Each company won 50% of the contract

each year

How detected:• Two procurement auditors happened to

discuss these contracts over lunch (Equal division over same period)3

Warning Signs in Documents Submitted

Similar anomalies in documentation• same type of paper• same misspellings• handwriting• wording• calculations and miscalculations • alterations 4

Bid Rigging Examples (USA)

Two companies submitted bids for the repair government equipment damaged by a storm.

How Detected:A procurement official noticed that

each cover letter had the same typographical error (an unnecessary word):

5

“Please give us a call us if you have any question..”

Warning Signs Related to Pricing

• Similar prices are quoted from different suppliers

the same for a long period of time,previously different from one another,increased price and it is not justified by increased costs, or

eliminated discounts, especially in a market where discounts were historically given

• A large difference between the price of a winning bid and other bids

6

Bid Rigging Examples (CANADA)

Government of Canada contracts for IT services

14 individuals and 7 companies accused of dividing contracts

Contracts worth approximately $67 million

How Detected:In 2005, Public Works and Government

Services Canada (PWGSC) contacted Competition Officials.

The Pricing of three bidders were similar to each other but completely different from other bidders.

7

Suspicious Statements of Coordination

Look for indications that the bidders have communicated with each other•Statements in the press•Statements from industry meetings “industry suggested prices”•Statements indicating that • ‘we have reached an agreement’,• ‘taken a decision’, or• ‘come up with a plan’,

8

Bid Rigging Examples (CANADA)

Alberta Canada – Bus Services Two providers submitted bids in sealed bidsVast majority of contract awarded to one.Fined $8,000 CND

How Detected:Other called saying that both had

submitted very bidsOfficial took copious notes of the telephone

conversation (Notes used for prosecution) Notified Competition Agency

9

Suspicious Behaviour

• Winning bidder chooses not to accept the award of the bid

• Winning bidder withdraws before the award is made

• Seasoned bidders submit bids W/O basic documentation

• There is an unusually small number of bidders in an otherwise robust market

10

Bid Rigging Examples (USA)Conspiring early 1980's to rig bids to supply milk

and other dairy products to public school districts and other public institutions in several states

133 milk bid-rigging cases, 80 corporations and 84 individuals.

Criminal fines over$59.8 M, Civil damages over $8 M

29 individuals have been sentenced to jailHow Detected:The small number of suppliers was a key

indicator, State procurement officials notified Antitrust

Officials11

Caution about indicators of bid rigging

Warning signs should not be taken as proof that firms are engaging in bid rigging

12

The more aware of these signs, the more likely one is able to assist in detecting bid rigging.

13

Public Procurement SeminarJune 16th & 17th 2010

Fair Trading CommissionGood Hope, Green Hill, St. Michael

info@ftc.gov.bb

246-424-0260

Detecting Bid Rigging