Government procurement officials have been urged to report any suspicions that companies are colluding to push up the prices of public sector contracts, in a crackdown against bid-rigging announced by the Competition and Markets Authority (CMA).
Bid-rigging is a form of cartel, where businesses collude when tendering for contracts. This results in driving up the price for the winning bidder.
John Kirkpatrick, the competition watchdog’s senior director for advocacy, said: “Every year, billions of pounds are spent procuring goods and services in the UK, particularly by the public sector where local government alone spends around £60 billion every year.”
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In an open letter to procurement professionals, he added: “If companies collude when bidding for contracts, purchasers end up spending more than necessary.”
Officials need to remain vigilant to the dangers of bid-rigging, according to Kirkpatrick.
Some of the tell-tale signs include bids which are received at the same time, or are very similar in terms of their wording, different bids with identical prices, or the winning bidder subsequently sub-contracting work to a company that had put in a higher bid.
“Evidence suggests that cartels often result in overcharges of 10% to 20% (and more), costing taxpayers millions of pounds,” he warned.
“It is important to be alert to those who may be trying to game the system, that you take simple steps to detect and deter wrongdoing and that you report it if you think something looks suspicious,” stated his letter, posted online this week.
A new e-learning package to help stop bid-rigging, created by the CMA and the Crown Commercial Service for Whitehall procurement staff earlier this year, is now being made available to members of the Chartered Institute of Procurement & Supply (CIPS) and the Local Government Association.
“We welcome this useful tool to help anyone responsible for public money to reduce fraud and corruption in the procurement process, and our members will welcome it too,” commented David Noble, CIPS chief executive.
“This is too important an issue to allow these bad behaviours to colour the good that sound procurement and supply chain management brings to the public sector,” he added.