OECD Global Forum on Public Governance

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OECD Global Forum on Public Governance

• GUIDELINES FOR FIGHTING BID RIGGING
• IN PUBLIC PROCUREMENT
• Antonio Capobianco
• Competition Division, OECD
• Paris, 4 May 2009
• Antonio.Capobianco_at_oecd.org

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OECD Guidelines for Fighting Bid Rigging

• Background
• Bid rigging project (Chile and Brazil) and policy
  roundtables
• Approved by OECD Competition Committee in
  February 2009
• The document is not binding, but is based on best
  practices in OECD countries
• Purpose
• Help procurement officials design public tenders
  to reduce bid rigging (Design Checklist)
• Help procurement officials detect bid rigging
  when it occurs (Detection Checklist)

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Guidelines are available online and in various
languages

• www.oecd.org/competition/bidrigging

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Why Worry about Bid Rigging in Public Procurement?

• Public procurement accounts for approx 15 of GDP
  in OECD countries
• Bid rigging can raise prices significantly (up to
  20 or more)
• gt POTENTIAL DAMAGES FOR TAX PAYERS CAN BE
  SIGNIFICANT !!

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Bid Rigging Cases from Around the World
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Bid Rigging Cases from Around the World

• UK (Construction) 3000 contracts potentially
  affected for approx 3 billion 112 companies
  investigated.
• Netherlands (Construction) more than 6oo
  companies investigates approx 100 million is
  fines levied.
• Brazil (Security Guard Services) 12 companies
  involved fines for 15 of 2002 gross revenues
  involvement of trade association corruption
  issues.
• United States (Milk for Public Schools)
  conspiracy extended to more than 18 states.

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Checklist for Detecting Bid Rigging

• Be alert for
• Opportunities that bidders have to communicate
  with each other
• Relationships among bidders (e.g. JVs and
  sub-contracting)
• Suspicious bidding patterns (e.g. ABC, ABC) and
  pricing patterns (e.g. unexpectedly high prices
  or unexpectedly low discounts)
• Unusual behavior (e.g. unjustified withdrawal
  from tender, submitting bid without required
  info)
• Clues in documents submitted by different bidders

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Example Clues in Documents
Please give us a call us if you have any
question.
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Checklist for Designing Tenders

• Learn about the market and your suppliers
• Maximize participation of potential bidders
• Define requirements clearly and avoid
  predictability
• Reduce communication among bidders
• Raise awareness of the risks of bid rigging,
  provide training

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Example Certificate of Independent Bid
Determination (CIBD)

• How to reduce communication among bidders? Use
  certificates of independent bid determination !
• CIBD typically require each bidder to sign a
  statement under oath that
• it has not agreed with its competitors about
  bids,
• it has not disclosed bid prices to any of its
  competitors and
• it has not attempted to convince a competitor to
  rig bids.
• Successfully used by US and Canada. Other
  jurisdictions are following.

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Advantages of CIBDs

• They inform bidders about the illegality of bid
  rigging
• They make prosecution of bid riggers easier
• They add additional penalties, including possibly
  criminal penalties, for the filing of a false
  statement by the conspirators
• They make prosecution of a firm that attempts to
  rig bids possible, even when other bidders do not
  agree to the proposed scheme

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Example U.S. CIBD

• Bid offeror must certify
• (1) The prices in this offer have been arrived at
  independently, without, for the purpose of
  restricting competition, any consultation,
  communication, or agreement with any other
  offeror or competitor relating to (i) those
  prices, (ii) the intention to submit an offer, or
  (iii) the methods or factors used to calculate
  the prices offered
• (2) The prices in this offer have not been and
  will not be knowingly disclosed by the offeror,
  directly or indirectly, to any other offeror or
  competitor before bid opening (in the case of a
  sealed bid solicitation) or contract award (in
  the case of a negotiated solicitation) unless
  otherwise required by law and
• (3) No attempt has been made or will be made by
  the offeror to induce any other concern to submit
  or not to submit an offer for the purpose of
  restricting competition.
• United States Federal Acquisition Regulation
  ("FAR"), 48 C.F.R. 52.203-2

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Where to find the OECD Guidelines?

• Material is available in the back of the room
• Web link www.oecd.org/competition/bidrigging
• Antonio Capobianco
• (Antonio.Capobianco_at_oecd.org)
• Ken Danger
• (Ken.Danger_at_oecd.org)