The Competition and Markets Authority has launched a free online bid-rigging detection tool to help public sector procurement and supply professionals detect suspicious activity and avoid becoming victims of bid-rigging.
Bid-rigging is a serious type of anti-competitive activity which can drive up the prices of contracts for vital goods or services by 30% or more from competitive levels and prevent purchasers from getting true value for money, the CMA said. Cartels are illegal, operate in secret and can be difficult to spot.
Working with contractors Spend Network, the CMA has developed a tool to help public procurers identify suspicious bid behaviour during a tender process that might indicate the presence of a cartel. The tool consists of algorithms against which procurement data, specifically tender documentation and bid prices, can be tested; a positive result on one or more test could be cause for further investigation of that tender.
The free tool will help spot unusual bidder behaviour and pricing patterns identified in past cartels and tell which (if any) of the procurement exercises show any signs of bid-rigging.
Working with Spend Network, the CMA identified indicators of cartels, prioritised the indicators and developed algorithms. The algorithms allow the tool to test for suspicious signs in 3 key areas:
- the number and pattern of bidders
- pricing patterns
- document origin and low endeavour submissions
According to the CMA, any of these, or combinations of them, could be a sign of bid-rigging. Data from over 100 tenders involving nearly 500 bids were used to refine the tests.
A freely available tool
The CMA has made the tool freely available to procuring authorities as a downloadable app to use within their own systems, reflecting the UK’s distributed procurement arrangements. The Authority said that putting the tool directly in the hands of the procurers allows the tool to take on a life of its own; authorities and e-procurement platforms will be able to absorb this sort of data analysis process into their internal systems rather than having to use a separate, centralised system.
This should in turn increase the scope for future tailoring and development of the tool.
Crucially, this also means that procurers do not need to share their data for analysis. The reluctance of authorities to share data was a key obstacle to the early stage development of the tool.
Public procurement and the detection and deterrence of cartels is an ongoing priority for the CMA who will continue to promote the tool and the various supporting materials. However, the CMA is not currently planning to do any further work on analysing data tested by the tool, or in further developing the tool itself, although this is not precluded.
Use of the tool and any significant developments will be reviewed in early 2018.
The free tool is digitally signed with Microsoft Authenticode certification and is available for download on GitHub, an open source development platform.
Click here for further information about the tool.
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