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Contract Bundling

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Organisations should assess whether there is contract bundling in their purchasing activities. Contract bundling refers to the practice of consolidating or combining a number of contracts into one large contract. 

Contract bundling often reduces the number of businesses that are capable of tendering for the contract.  

The bundling may therefore reduce the probity of the tendering process and reduce the competition, thus encouraging collusion, anti-competitive and corrupt practices.

A report to the United States Congress points out that contract bundling diminishes the opportunities of small businesses to participate in government procurements. 

The Federal Acquisition Regulation requires contracting officers to identify bundled acquisitions and prepare written explanations of why bundling is necessary. It also allows a review of such contract actions. 

A checklist that can be used to assess whether contract bundling may be occurring includes the following questions:

 

* Was a particular current or proposed contracts previously awarded as a number of contracts?

 

* Are there current or proposed contracts that other organisations usually deal with as a number of contracts?

 

* Does a particular contract combine diverse elements that would be better dealt with separately or in smaller groupings?

 

* Does a particular contract combine geographical areas that would be better dealt with separately or in smaller groupings?

 

* Is the anticipated dollar value of a particular contract so large that it is likely to rule out a significant number of potential tenderers?

 

* Does the work call for a broad range of specialised skills that excessively reduces the ability of potential tenderers to perform the work?

 

* Does a particular contract result in significantly greater administrative, delivery and other costs, than if the contract were dealt with as two or more smaller contracts?

 

* Does it appear from the tender specifications or the assessment criteria, that one or a number of tenderers are intentionally  being favoured?

 

* Does it appear from the tender specifications or the assessment criteria, that one or a number of tenderers are intentionally  being discriminated against or excluded?

 

* Have complaints or allegations been received from past contractors and potential tenderers alleging contract bundling?

 

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For more tips, advice and practical pointers see Fraudproof Your Business Manual.