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Understanding Bid Rigging Risks

Bid rigging occurs when competitors agree not to genuinely compete for tenders, allowing one member to win. There are various forms of bid rigging, including cover bidding where competitors deliberately bid higher than needed to make the winner appear competitive. Signs of possible bid rigging include suppliers taking turns winning tenders or declining bids for no reason. Bid rigging leads to uncompetitive processes and can result in higher prices or lower quality goods and services for organizations and taxpayers.

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Engr.Iqbal Baig
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108 views2 pages

Understanding Bid Rigging Risks

Bid rigging occurs when competitors agree not to genuinely compete for tenders, allowing one member to win. There are various forms of bid rigging, including cover bidding where competitors deliberately bid higher than needed to make the winner appear competitive. Signs of possible bid rigging include suppliers taking turns winning tenders or declining bids for no reason. Bid rigging leads to uncompetitive processes and can result in higher prices or lower quality goods and services for organizations and taxpayers.

Uploaded by

Engr.Iqbal Baig
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Bid rigging

Bid rigging, also referred to as collusive tendering, occurs when two or more competitors
agree they will not compete genuinely with each other for tenders, allowing one of the cartel
members to ‘win’ the tender. Participants in a bid rigging cartel may take turns to be the
‘winner’ by agreeing about the way they submit tenders, including some competitors
agreeing not to tender.

 Types of bid rigging


 Signs of possible bid rigging
 Impacts of bid rigging

Types of bid rigging

Bid rigging can take a variety of forms. They include:

 cover bidding - where competitors choose a winner and everyone but the winner
deliberately bids above an agreed amount to establish the illusion that the winner’s quote is
competitive
 bid suppression - where a business agrees not to tender to ensure that the pre-agreed
participant will win the contract
 bid withdrawal - where a business withdraws its winning bid so that an agreed competitor
will be successful instead
 bid rotation - where competitors agree to take turns at winning business, while monitoring
their market shares to ensure they all have a predetermined slice of the pie
 non-conforming bids - where businesses deliberately include terms and conditions that they
know will not be acceptable to the client.

Signs of possible bid rigging

Some signs of possible bid rigging include:

 suppliers appear to be taking turns at winning tenders or sharing the contracts by value
 regular suppliers decline to tender for no obvious reason
 bidders appear to deliberately include unacceptable terms in their tenders
 bidders sometimes bid low and sometimes high on what appears to be the same type of
supply
 you become aware that bidders meet before the close of tender, without you being present
 the winning firm regularly subcontracts to competitors that submitted higher tenders
 one firm of professional advisers represents several of the businesses submitting tenders.

Impacts of bid rigging

Bid rigging leads to uncompetitive tender processes that can result in organisations paying
higher prices or receiving lower quality goods or services. Businesses that are the victims of
bid rigging can pass on extra costs or reduced quality to consumers and other businesses in
the supply chain.
If a government agency pays an inflated price for services provided by tender, these
additional costs or reduced quality are eventually passed on to taxpayers.

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