4.2 Collusion in the bidding process
Explanation of risk area
Collusion – illegal cooperation or conspiracy aimed at distorting the tendering and procurement process – can create the appearance of competition while in fact directing resources to particular powerbrokers through a network of seemingly independent companies. Collusion can increase the risk of mission resources being used to strengthen corrupt and criminal networks, and of diversion of resources to benefit insurgent or terrorist groups.
Where collusion becomes a significant issue, it distorts the economy of the area and closes off opportunities for real competition. This means that an opportunity to support independent companies and networks that can, with time, create power centres that push for better governance for the new businesses, is lost. It can also distort operational assessments by conveying the picture of a decentralised environment that supports competition and economic development, and hiding significant underlying problems.
Indicators & Warnings
Companies submit bids that only win in certain geographical areas
Regular suppliers do not submit bids for contracts as would normally be expected considering their background, abilities and means
Companies submit a large number of bids without winning any, possibly creating ‘cover’ for others
Only one company offering to complete a project to the required deadline (this could indicate the timeline is unrealistic and the company might try to raise costs at a later stage)
One-off, but disqualifying flaws in bids that could otherwise win the tender (suggesting intentional failure to enable others to win)
Apparent shell companies (no employees, no offices, little or no work history) submitting bids
Bid documentation sent from the same address and/or containing identical errors, for example in calculations, addresses, or names
Concentration of power and functions in the hands of one person or group
One person or group acting as jobs gatekeeper for large communities
History of allegations and investigations against companies or individuals