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Ten More Indicators of Collusive Tendering

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In the last issue of Fraud Prevention Review we considered ten indicators of possible collusion in tendering. Here we consider another ten indicators.

Collusive practices subvert the purposes of an organisation and are tantamount to fraud.  

They lead to organisations overpaying for goods and services and having to accept inferior quality. 

The list is not comprehensive and is meant to stimulate thought on other indicators of collusive tendering. 

If one or more of the indicators exists it does not necessarily mean that there is collusive tendering; it merely means that you should consider the possibility of collusive tendering.

 

1. Certain tenderers always tender against each other. When one does not tender, others do not tender either.

 

2. Failure of the original tenderers to retender.

 

3. Tenderers submit tenders in an identical ranking upon retendering.

 

4. The same company wins the tender against frequently changing other tenderers.

 

5. Tenderers submit tenders but never win contracts.

 

6. Tender prices drop when a new or infrequent tenderer submits a bid.

 

7. A tenderer submits tenders with prices substantially higher or lower than on other similar projects and there is no apparent reason to account for the price being higher or lower.

 

8. The existence of strong "industry organisations", especially those with limited memberships.

 

9. Tenderers regularly socialise, hold meetings or cooperate on other ventures.

 

10. Tenderers leave tender briefing sessions together. Representatives of one or more of the tenderers present at the briefing session do not appear to show any real interest.

 

Although the above points refer primarily to tender prices, the same principles generally apply also to tender conditions. 

Indications are that collusive practices in the tendering process are far more widespread than was previously believed.   

The cost to organisations could be immense. Managers and auditors should therefore be aware of the risks and the indicators.

 

 

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