Abuse of procurement procedures - Overview

Good procurement procedures are designed to:

• limit the risks of poor decision making, mismanagement and corruption, and
• ensure a fair, reasonable and objective process

so as to obtain best value and outcome for the purchasing organisation.

In the case of a private sector project, procurement procedures are normally the internal procedures of the project owner. 

In the case of a public sector project, the procurement procedures are normally statutory.  These statutory procedures may be supplemented by the project owner’s internal procedures.

There can be abuses of procurement procedures.  These abuses:

• may be innocent (e.g. due to mistake, or lack of knowledge of the procedures),
• or they could be due to, or could enable, a corrupt act.

The purpose of corrupt abuses is normally to ensure that a particular bidder wins a contract, and/or that the price is initially or ultimately higher than it should be.

In order to achieve these ends, the person abusing the procedures will need to:

• ensure that there is an appearance of genuine competition and/or objectivity when there is actually not, or
• give improper opportunities in the bid documents for price increases either at bid stage or during construction.

These abuses will normally be a breach of the procurement procedures, which, depending on the procedures, may:

• constitute a criminal offence; and/or
• give rise to civil penalty (e.g. termination of contract, damages, fines, or dismissal from post).

In some circumstances, these abuses may also constitute the criminal offences of fraud, bribery or a cartel.

In some cases, the abuse may be perpetrated only by the bidders, with no involvement of any procurement manager or public official (e.g. a cartel).  In other cases, there may be a conspiracy between one or more bidders and the procurement manager and/or relevant public official (e.g. the procurement manager or public official receives a bribe in order to favour a particular bidder).

Even the best procurement procedures can be abused by corrupt or negligent bidders, procurement managers, or public officials.  The following pages give examples of where there is a risk of possible corrupt abuse.