Home arrow Fair Competition arrow Articles arrow Designing Tenders to Reduce the Risk of Bid-Rigging

Did You Know?

  • The FTC must consult the public before making decisions on utility regulation matters.
  • The FTC has the power to stop a merger.
  • If you have been misled about the price or nature of goods or services, you must first let the business try to resolve it before contacting the FTC.
Designing Tenders to Reduce the Risk of Bid-Rigging PDF Print

Printed in the Business Monday newspaper on June 28th, 2010

The Fair Trading Commission recently conducted a training workshop on Detecting, Mitigating and Fighting Bid Rigging in Public Procurement which brought together senior public sector officials from government departments and agencies.

The aim of the workshop was to sensitise all agencies involved on how to detect and prevent bid-rigging in the procurement process which occurs when businesses who submit tenders collude or collaborate to influence the tendering process.

This anti-competitive practice is expressly forbidden under Section 35 of the Fair Competition Act CAP. 326C. In general, when more suppliers compete for the tender, this reduces the potential for bid-rigging. Following is a checklist for designing tenders, which formed part of the Commission’s presentation at the workshop.

Develop prior information about the market

  • Note the characteristics of the market from which you will purchase including any recent industry activities or trends that may affect competition for the tender

(a) Collect information on potential suppliers, their products, their prices and their costs

(b) Collect information about recent price changes, prices in neighbouring geographic areas and prices of possible alternative products

  • Collect information about past tenders for the same or similar products
  • Interface with other procurers and clients who have recently purchased similar products or services

Encourage participation in the procurement process

  • Avoid unnecessary restrictions
  • Avoid large monetary guarantees from bidders
  • Allow bids on certain lots or objects
  • Look for areas in the tender that would be attractive and appropriate for small and medium sized enterprises
  • Do not disqualify bidders from future competitions for failing to submit a bid on a recent tender
  • Reduce the preparation costs of the bids. This can be accomplished in a number of ways:

(a) Streamline tender procedures across time and products (e.g. use the same application forms; ask for the same type of information, etc.)

(b) Package tenders (i.e. different procurement projects) to spread the fixed costs of preparing a bid

(c) Keep official lists of approved contractors or certification by official certification bodies

(d) Allow adequate time for firms to prepare and submit a bid

Avoid predictability in the tender process

  • Define your requirements as clearly as possible in the tender offer Specifications should be independently checked before final issue to ensure they can be clearly understood
  • Use performance specifications and state what is actually required
  • Avoid going to tender while a contract is still in the early stages of specification: a comprehensive definition of the need is a key to good procurement
  • Define your specifications allowing for substitute products
  • Avoid predictability in your contract requirements: consider aggregating or disaggregating contracts so as to vary the size and timing of tenders
  • Work together with other public sector procurers and run joint procurement

Reduce opportunities for communication among bidders

  • Avoid bringing potential bidders together in face-to-face pre-bid meetings
  • Keep the identity of bidders secret - use numbers, rather than names
  • Invite interested suppliers to dialogue directly with the procuring agency on the technical and administrative specifications
  • Open tenders enable communication and signalling between bidders.
  • Avoid disclosing competitively sensitive information - can facilitate the formation of future bid-rigging schemes
  • Consider requiring bidders to sign a Certificate of Independent Bid Determination
  • Require bidders to disclose upfront if they intend to use subcontractors
  • Indicate to bidders that any claims of increased input costs that cause the submitted budget to be exceeded will be thoroughly investigated

Provide Clear Evaluating and Award Criteria

  • Describe or weigh criteria other than price (product quality, post-sale services, etc.) carefully to avoid challenges
  • Avoid any kind of preferential treatment for a certain class or type of supplier - Do not favour incumbents
  • Ensure as much anonymity as possible to counteract incumbent advantages
  • Do not over-emphasise the importance of performance records
  • Whenever possible, consider other relevant experience
  • Keep the terms and conditions of each firm’s bid confidential.
  • Reserve the right not to award the contract

For more information visit our website www.ftc.gov.bb, email us at This e-mail address is being protected from spam bots, you need JavaScript enabled to view it , or call us at 424-0260. You may also visit our offices at ‘Good Hope’, Green Hill, St. Michael.

< Prev   Next >