Bid Rigging Red Flags

business risks

Just like athletes risk injury when they enter a competition, doing business has its own risks. Not a pleasant subject to tackle, but risk identification is key to your company’s long term stability. This is why we are going to outline a few recognizable red flags for bid rigging, one of the most common fraud attempts.

Bid rigging is a threat that comes from outside your organisation: several suppliers enrolled in the bidding process collude to ensure that a predetermined bidder wins the contract. This fraudulent practice is carried out in several ways, from placing bids so high that they become unacceptable (safe for the one that is meant to win, naturally), to bidders actually pulling out and leaving only one supplier in the running. The “losers” of a rigged bid are either compensated by the winner, or bidders create a round-robin system where each supplier gets to win at one point.

Here are the red flags you should pay attention to:

New bidders

Be on guard and pay attention to any new suppliers you invite. Strong business relationships take time to develop, so doing back-up check or request the company’s credentials can help.

Similar timing

Proceed with caution if the bids have been submitted at the same time or are similar in wording. Something’s not right if you sense a copy/paste effect.

Equal bids

If the bids are relatively equal to each other and the winning bid is clearly apart from the rest, consider it a red flag. Tread carefully if prices have changed dramatically from past Requests, especially if a new supplier is involved.

Same winner(s)

Does the same supplier keep winning? Do your bidders have a previous relationship?

Does the winner of a contract later subcontract to one of the other participants to the original tender? These questions all address a bid rigging.

Prokuria is here to help with the all these red flags. For example, when inviting a supplier to a Request, you can make attaching credentials mandatory for attending – an easy way to do background check.

Added to that, having instant access to all bids helps you see the whole picture and detect misconducts. Also, control over your suppliers means you can quickly act on the attempted bid rigging, which is crucial.

Try Prokuria and see for yourself how you can downsize the risks. There’s no better time like now.

Alina

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