Beware of unfair strategic tenders

Press release

Clearer requirements in respect of the obligation to supply services or products at the price specified should counteract unfair strategic tendering in public procurement. This has been shown by a research report conducted on behalf of the Swedish Competition Authority.

Just recently a new form of manipulation of tenders (bid-rigging) in public procurement has become more common. This occurs particularly in the following sectors: office supplies, food products and technology and IT consultancy services.

We aim to ensure fair competition

The aim of public procurement is usually to get the lowest and the most advantageous tenders, which is generally a sign of fair competition.
However, the Swedish Competition Authority has noted that bid-rigging increasingly results in unfair strategic tenders. For this reason the Swedish Competition Authority commissioned Karl Lundvall (Ph D) of Copenhagen Economics, and Kristian Pedersen (Attorney) at Advokatfirman Delphi to analyse a number of tenders. Their findings have now been presented in a report entitled Osund strategisk anbudsgivning i offentlig upphandling [Unfair strategic tendering in public procurement].

Tender evaluations manipulated

The authors have identified what they consider to be three typical cases of unfair strategic tendering: that tenderers do not keep to what they have promised; group-strategic tenders where tenders are adapted between various suppliers within the same group; and the manipulation of relative evaluation models.

Pedersen and Lundvall emphasise that these kinds of manipulation may create a problem that is worth monitoring in the future and taking action against. In order to avoid unfair strategic tenders resulting in less advantageous business deals for the government, the authors propose that the contracting authorities use better evaluation models and that the follow-up of contracts is improved. Furthermore, they propose that the contracting authorities impose requirements concerning an obligation to supply products or services (and replacements) at the prices specified in the tender. They also propose a statutory amendment whereby the supplier holds the burden of proof for a tender not being abnormally low.

Taxpayers lose out

“It is useful to have this analysis of the phenomenon of unfair strategic tendering and above all how the government can reduce the risk of being exposed to such practices. Bid-rigging may otherwise mean that the public – us as taxpayers – lose out. Consequently this new information increases the opportunities for better public business in the future,” says Dan Sjöblom, Director-General of the Swedish Competition Authority.

For more information, please contact:
Jimmy Dominius, Press Officer, tel +46 (0)8-700 15 80, or +46 (0)76-542 15 80
Joakim Wallenklint, Analyst, tel +46 (0)8-700 16 03

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