Designing Tenders To Reduce Bid-Rigging

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The Fair Trading Commission (FTC) has outlined a list of guidelines on how tenders should be designed without creating an environment that encourages bid-rigging during the public procurement process.

In a document compiled by the department, the officials advised companies to develop prior information about the market to not only reduce the risks of bid-rigging, but to pin-point areas where special emphasis must be placed to stimulate greater competition among the players, as a means of reducing the risks of bid-rigging.

The report stated: "A large number of efficient and enthusiastic competitors will greatly restrict the ability of any new businesses to undertake a successful agreement to determine the outcome of the tender process."

The FTC also urged businesses to exercise careful judgment not to discourage qualified bidders. Additionally, bidders can also be dissuaded, if the cost of preparing their bid is too high.??

Given this scenario, the FTC has recommended that costs be kept low by: not changing bid forms unnecessarily; allowing adequate time for bids to be prepared and by using electronic bidding systems wherever possible.

In relation to avoiding predictability in the tendering process, the FTC surmised that inciting predictable purchasing patterns also facilitated bid-rigging schemes.?? In light of this, the department advised companies to "give consideration for example, to occasionally aggregating purchases with another government entity, or disaggregating purchases to avoid predictability".

In small markets where regular communication between bidders is unavoidable and can often be used as a guise for anti-competitive agreements, the FTC is calling for precise information to be provided on the bidding process, in order to reduce the need for clarification among bidders.

During the designing phase of the tendering document, it is important to have a clear evaluating and award criteria to not only make the process transparent, "but to also build confidence in the market, thereby encouraging most, if not all suppliers, to participate in the process".

Apart from setting out the parameters for the award criteria, the FTC issued a caution against preferential treatment of some suppliers. "Preferential treatment of some suppliers discourages participation by other suppliers.?? Consideration should be given to allowing a broad range of experience among potential bidders.?? This will encourage small and medium-sized firms to participate." jwilson@barbados.gov.bb

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