What is bidders’ collusion during tendering process and how to avoid it ?

Bidders’ collusion during the tendering process refers to an illegal agreement among bidders to manipulate the outcome of a tender process, typically to inflate prices or divide the market among themselves. This is a form of anticompetitive behavior that undermines the fairness and transparency of the bidding process, often leading to suboptimal outcomes for the tender issuer, such as higher costs or reduced quality of goods or services.

Here are some strategies to avoid bidder's collusion in the tendering process:

1. Enhanced Screening and Monitoring: Implement thorough vetting procedures to understand the background of all bidders. Regular monitoring of bidding patterns can also help identify suspicious activities indicative of collusion.

2. Transparent Bidding Procedures: Design the tender process to be as transparent as possible, with clear criteria and open communication. Transparency makes it harder for bidders to engage in secretive agreements.

3. Encourage More Bidders: More competitors in a tender reduce the likelihood of successful collusion. Outreach and encouraging a larger pool of bidders can make collusion more difficult and increase competitive tension.

4. Anonymous Submissions: Keep bidder identities confidential until the completion of the tender review process. This can prevent bidders from knowing who they are competing against and thus reduce the chances of collusion.

5. Rotating Suppliers: Regularly changing the pool of suppliers or contractors can prevent long-term relationships that may become collusive. Limiting the duration that any single supplier can hold a contract also helps.

6. Use of Technology: Implementing e-tendering systems that use digital tools and data analytics can help identify unusual patterns and anomalies that might suggest collusion.

7. Strict Penalties and Legal Frameworks: Establishing severe consequences for collusion, including fines, bans from future tenders, and criminal charges, can deter such behavior. A strong legal framework needs to be in place to enforce these penalties.

8. Training and Awareness: Educate procurement officials and bidders about the signs of collusion and the importance of competition. Awareness campaigns can help foster an environment of fairness and compliance.

9. Third-Party Audits: Regular audits by independent third parties can help ensure the integrity of the bidding process and deter collusive behavior.

Implementing these measures can significantly reduce the risk of bidder's collusion, ensuring a fairer and more competitive tendering process.