New Year's Resolution: Fight Bid Rigging Effectively (OECD Recomm of 17 July 2012)

I know it might be a bit too soon to start thinking about New Year's Resolutions. However, around these dates, well organised public procurement and competition authorities should be planning their activities and enforcement priorities for 2013. Therefore, it might be a good time to suggest that they focus and deploy a sufficient amount of resources in giving effect to the OECD's 17 July 2012 Recommendation on Fighting Bid Rigging in Public Procurement.

The OECD's Recommendation captures most of the key elements that can make a public procurement system either pro-competitive or potentially distortive of market competition, and particularly sets out that
Members assess the various features of their public procurement laws and practices and their impact on the likelihood of collusion between bidders. Members should strive for public procurement tenders at all levels of government that are designed to promote more effective competition and to reduce the risk of bid rigging while ensuring overall value for money.
To this effect, officials responsible for public procurement at all levels of government should:
1.   Understand, in co-operation with sector regulators, the general features of the market in question, the range of products and/or services available in the market that would suit the requirements of the purchaser, and the potential suppliers of these products and/or services.
2.   Promote competition by maximising participation of potential bidders by:
i)   establishing participation requirements that are transparent, non-discriminatory, and that do not unreasonably limit competition;
ii)   designing, to the extent possible, tender specifications and terms of reference focusing on functional performance, namely on what is to be achieved, rather than how it is to be done, in order to attract to the tender the highest number of bidders, including suppliers of substitute products;
iii)   allowing firms from other countries or from other regions within the country in question to participate, where appropriate; and
iv)   where possible, allowing smaller firms to participate even if they cannot bid for the entire contract.
3.   Design the tender process so as to reduce the opportunities for communication among bidders, either before or during the tender process. For example, sealed-bid tender procedures should be favoured, and the use of clarification meetings or on-site visits attended personally by bidders should be limited where possible, in favour of remote procedures where the identity of the participants can be kept confidential, such as email communications and other web-based technologies.
4.   Adopt selection criteria designed i) to improve the intensity and effectiveness of competition in the tender process, and ii) to ensure that there is always a sufficient number of potential credible bidders with a continuing interest in bidding on future projects. Qualitative selection and award criteria should be chosen in such a way that credible bidders, including small and medium-sized enterprises, are not deterred unnecessarily from participating in public tenders.
5.   Strengthen efforts to fight collusion and enhance competition in public tenders by encouraging procurement agencies to use electronic bidding systems, which may be accessible to a broader group of bidders and less expensive, and to store information about public procurement opportunities in order to allow appropriate analysis of bidding behaviour and of bid data.
6.   Require all bidders to sign a Certificate of Independent Bid Determination or equivalent attestation that the bid submitted is genuine, non-collusive, and made with the intention to accept the contract if awarded.
7.   Include in the invitation to tender a warning regarding the sanctions for bid rigging that exist in the particular jurisdiction, for example fines, prison terms and other penalties under the competition law, suspension from participating in public tenders for a certain period of time, sanctions for signing an untruthful Certificate of Independent Bid Determination, and liability for damages to the procuring agency. Sanctions should ensure sufficient deterrence, taking into account the country’s leniency policy, if applicable.
All these recommendations, which are further developed in the OECD 2009 Guidelines for fighting bid rigging in public procurement are well-designed and their proper implementation may indeed contribute to strengthen competition for public contracts and to prevent and effectively identify and sanction instances of bid rigging. 

For more detailed proposals, the reader may want to consult my normative recommendations, based on the current EU public procurement rules [Sanchez Graells, Public Procurement and the EU Competition Rules (Oxford, Hart Publishing, 2011)].