Avoiding collusion in tenders for WASH construction
This is a question that I've been asked in the field so I wanted to share it with everyone on KnowledgePoint
I’m running an open tender for a works contract to build latrines and boreholes in 4 different geographic locations. I had received bids from a number of suppliers, all of which are sufficiently detailed, accurate and are quoting prices that seem perfectly reasonable. My issue is the distribution of the bids. Looked at individually the preferred bids give no cause for concern. However, looked at across the entire requirement there’s 4 suppliers, each of whom have bid for only one location and as a result each would be awarded roughly contracts of roughly equal value. This feels like collusion. It feels like the four have agreed, amongst themselves, to split the whole requirement into four equal parcels, and have agreed who will submit the best bid so each get an equal share. What can I do to prove collusion, and what can I do to prevent a recurrence?
There may be a valid reason for this if the suppliers are each located near to one of the sites and are only interesting in work nearby. Otherwise this does indeed sound like collusion and if you wanted to tackle it head-on, you could call all four suppliers together to discuss it and explain why you find it unacceptable. If they all deny it, though, you could end with ill feeling and a possible security risk to yourself, depending on your location.
Do the suppliers belong to any professional or trade body to whom you could complain?
As I understand it what you have in effect is only one bid for each of four sets of work. This may contravene your internal procurement procedures, depending on the likely total cost, i.e. you may need three bids for the procurement process to be valid. In itself, this may need you to rerun the tender.
You could rerun the tender and specify that any supplier must bid for at least two of the locations and that preference could be given to suppliers who could build in all four places (to minimise the administrative effort). That way you will get some competitive prices, but if they collude cleverly they could still rig the bids to achieve the same result as at present. Worse still, they could all raise each bid.
More work for you, but with possibly a fairer outcome would be to issue four individual tenders, one for each location, and hope that you get enough bids for each to satisfy your procurement requirements (say, 3). It may attract additional suppliers. You should still apply the procurement procedures that relate to the overall total cost of the related work, and clear the process with senior management in the supply chain.
This thread is public, all members of KnowledgePoint can read this page.