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2009 - Detecting Bid Rigging in Public Procurement - OECD

2009 - Detecting Bid Rigging in Public Procurement - OECD

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Published by The Russia Monitor

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Published by: The Russia Monitor on Apr 30, 2011
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04/30/2011

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COMPETITION – THE KEY TO PRODUCTIVITY AND GROWTH
DETECTING BID RIGGINGIN PUBLICPROCUREMENT
Helping governments to obtain best value for money
 
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1. HELPING GOVERNMENTSTO OBTAIN BEST VALUEFOR MONEY
 Vigorous competition among suppliers helps governments to obtain the bestvalue for money for the goods and services they procure. Conversely, whencompetition is curtailed – for example when suppliers engage in bid rigging –taxpayers’ money is wasted as governments pay more than a fair price.Bid rigging occurs in all types of industries and circumstances, and in allparts of the world. When bid rigging impacts public procurement, it has thepotential to cause great harm to taxpayers. One reason for this is that publicprocurement is often a large part of a nation’s economy. In many OECDcountries, it amounts to 15 per cent of the gross domestic product, andin most developing countries it is substantially more than this. Experiencealso shows that bid-rigging conspiracies can last decades and impact manymarkets. The United States Department of Justice, for example, found thatmore than 18 states were impacted by conspiracies to raise the price of milk sold to public schools. The Netherlands’ government uncovered evidence
that more than 600 rms had rigged bids in public construction projects.
Strict and proactive enorcement against bid  rigging has promoted air and ree competition in Japanese public procurement markets. This has saved signicant public resources and reduced contract prices by nearly 20 per cent in some cases as a result o restoring competition.
Kazuhiko Takeshima, Chairman o the Japanese Fair Trade Commission.
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