How do you keep cartels out of government purchasing?
Government departments are easy targets for cartels because they:
buy many outsourced goods and services though competitive tendering
use transparent tendering processes that can make it easy for cartels to predict buying cycles and gain information they need to establish and maintain a cartel.
Government purchasing can attract cartels that engage in:
Staff who work in government purchasing are in a great position to pick up valuable tips showing that something is not right with a tender application.
The warning signs may include tenders that have:
similar pricing, particularly from a market that usually displays noticeable differences
identical quotes that are not round figures, for example $1 253 312 as opposed to $1.25 million
no detailed ‘workings’ to show how the tender price has been calculated, where this was requested (this might indicate cover pricing)
an active trade association that seems to encourage use of set prices
statements by businesses that refer to ‘industry agreements’ and the like that could indicate market sharing arrangements
simultaneous price rises at time when there are no overall price rises affecting the industry
identical misspelling or miscalculations in competitors’ tender documents
uncanny similarities in the layout and language of competing tenders
a tender document in electronic form that has been prepared on a competitor’s computer – you can discover this by checking the documents metadata under the properties field in the file menu
a business representative says something indicating awareness of details in a competitor’s bid
all bids delivered by one agent, or in the same envelope.
Studying the history of bidding for a product or service can reveal signs of possible collusion between competitors.
