Abuse of procurement procedures - Overview

Good procurement procedures are designed to obtain best value and outcome for the purchasing organisation by:

• limiting the risks of poor decision making, mismanagement and corruption when obtaining works, services, equipment or materials, and
• ensuring a fair, reasonable and objective process.

In the case of a private sector infrastructure project, procurement procedures are normally the internal procedures of the purchasing organisation. 

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

There can be breaches of procurement procedures.  These breaches:

• may be innocent breaches (e.g. due to mistake, or lack of knowledge of the procedures),
• or they could be an abuse of the procedures; i.e. a deliberate breach of the procedures as part of a corrupt act.

The purpose of corrupt abuses of procedures 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, and/or
• give improper opportunities in the bid documents for price increases either at bid stage or during construction.

Abuse of procurement procedures may:

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

In some cases, the abuse of procurement procedures 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 bidders, procurement managers, or public officials.  The following pages give examples of corrupt abuse of procurement procedures.