Are all tenders transparent? What about bid rigging?

You may have seen articles or reports in the media saying that tenders awards are not transparent and the public did not know how a company is awarded a certain contract. They are also insinuations that the process is riddled with corrupt practices. If only people take time to find out more information about the whole tender processes, it is actually not that easy to manipulate for fraudulent purposes – if the whole procurement process is followed to the T. For the Government, the information regarding the tender process is readily  available on the Treasury website, be it by direct purchase, by quotation, by restricted tender or by open tender – it is all very open for all to read. An article by Errol Oh in The Star today brought to light one aspect of the tender process that is not often discussed – bid rigging. Basically bid rigging is manipulation of the bidding by the bidders. The party that awards the contract may or may not know of the manipulation. Bid rigging includes bidding parties agreed among themselves to do either of these: cover bidding, bid suppression and bid rotation.  Parties bidding a tender may “collaborate” among themselves to decide who best should win the contract. Then other bidders would submit their bids higher than the intended winner’s bid. This is cover bidding. Or they may refrain from bidding, allowing only the intended winner to bid, this is bid suppression. Or the parties would rotate in taking turns to win the contract – bid rotation. One sinister possible way for this rigging to happen is that all the bidders actually came from the same master company. Sometimes the structure of the bidding parties are so well hidden it is very difficult to unravel the true nature of the people behind the bidding parties. That really defeat the sole purpose of calling for open tender – competition. With the element of fair competition missing, the whole tenet of getting the best deal out of an open  tender simply collapsed. We might as well go back to direct negotiation where at least we can negotiate for the best deal.

Bid rigging, either by one master player with many subsidiaries or by many friendly collaborating companies truly make a mockery of the intention of open tender. Errol quoted Competition Commission (My CC) Chairperson, Tan Sri Siti Norma who said that a study in the USA showed that, in the construction industry, bid rigging inflate the price as much as 36%.   I am just wondering how on earth the MyCC is going to get enough evidence to proof bid rigging. The Competition Act 2010 hopefully would put a stop to this. I just hope people would stop accusing the government servants being corrupt in awarding tenders. It takes two to tango.

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