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:

• bid rigging
• price fixing
• market sharing
• output restrictions

Warning signs

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.