Designing Tenders to Reduce Risk of Bid Rigging

1. Fair Trading Commission Designing Tenders to Reduce Risk of Bid Rigging Public Procurement Seminar 16th and 17th June 2010 Savannah Hotel

2. Develop Prior Information about the Market • Characteristics of the Market • Potential Suppliers and Number and relative strengths • Prices and criteria for competing • Nature of products Standardized, simple or complex • Barriers to entry • History of the market with respect to Bid Rigging • Several previous warning Signs behaviour • History of corruption • Rumoured cases of Bid Rigging • Market Trends • Costs of Resources • Changes in Price • Potential Mergers

3. Encourage participation in procurement process • Avoid unnecessary restrictions • Large monetary guarantees from bidders • Size of Firms • Nature or Size of Firms • 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.

4. Encourage participation in procurement process • Reduce the preparation costs of the bid • Streamline tender procedures across time and products (e.g. use the same application forms, ask for the same type of information, etc.) • Package tenders (i.e. different procurement projects) to spread the fixed costs of preparing a bid. • Keep official lists of approved contractors or certification by official certification bodies. • Allow adequate time for firms to prepare and submit a bid. • Use an electronic bidding system, if available.

5. AvoidPredictability in the Tender Process • Predictability makes it easier to devise successful schemes to influence the tender process. • Define specifications in terms of functional performance, rather than by reference to specific products • Allow for alternative or innovative sources of supply • Aggregate or disaggregate contracts • Work together with other public sector procurers and run joint procurement

6. 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 • If possible allow bidding electronically • Invite interested suppliers to dialogue with the procuring agency on the technical and administrative specifications • Open tenders enable communication and signalling between bidders. • A requirement that bids must be submitted in person provides an opportunity for last minute communication. This could be prevented, by using electronic bidding • Avoid disclosing competitively sensitive information - can facilitate the formation of future bid-rigging schemes

7. Reduce Opportunities for communication among Bidders (continued) • Consider requiring bidders to sign a Certificate of Independent Bid Determination.  • Require bidders to disclose upfront if they intend to use subcontractors • Beware of joint bids by firms that have been convicted for collusion • Indicate to bidders that any claims of increased input costs that cause the budget to be exceeded will be thoroughly investigated

8. Provide Clear Evaluating and Award Criteria • Described/weighted criteria other than price (product quality, post-sale services, etc.) carefully in order to avoid challenges. • Avoid any kind of preferential treatment for a certain class, or type, of suppliers - 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. • Educate procurement officials about strict confidentiality. • Reserve the right not to award the contract

9. Designing Tenders to Reduce Risk of Bid Rigging Public Procurement Seminar June 16th and 17th 2010 Fair Trading Commission Good Hope, Green Hill, St. Michaelinfo@ftc.gov.bb 246-424-0260