Saturday 3 December 2016

'Bid-rigging' is costing millions, warns chief of anti-cartel body

Even a 'small amount' of wrongdoing in public procurement could cost State €100m a year, writes Gavin McLoughlin

Published 14/08/2016 | 02:30

Isolde Goggin of the CCPC Picture: David Conachy
Isolde Goggin of the CCPC Picture: David Conachy

Fears of bid-rigging in the €12bn a year public procurement market have prompted Ireland's competition chief to seek more sophisticated data analytics to monitor potential abuses.

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Isolde Goggin, chairperson of the Competition and Consumer Protection Commission (CCPC), said the body - which is also prioritising the waste and motor sectors - is currently reliant on whistleblowers to detect wrongdoing in public procurement bids.

It is estimated that a rigged bid adds between 20pc and 30pc to public procurement costs.

"We've had various complaints over the years, and we've done various investigations, but we haven't had a successful prosecution. We need to improve the data, the evidence base for what we're looking at," Goggin told the Sunday Independent.

"International experience would tell you that [public procurement] is something that tends to be very prone to cartel activity, and particularly to bid-rigging, where people decide: 'Look, there's six of us here in the market, if we all really compete we're not necessarily all going to survive. Why don't we just have a little gentleman's agreement that this time you'll get it, the next time you get it and so on'.

"If only 5pc of procurement processes were subject to bid-rigging, the extra cost to the Irish taxpayer would be in the region of €100m a year," said Goggin, whose office has reviewed 74 allegations of competition law breaches between October 2014 and December last year.

The CCPC has written to the Department of Public Expenditure and Reform to make the case for a data analytics-based system, which would make it easier to track activity in the public procurement sector.

"At the moment in order to detect bid-rigging we'd be reliant on a whistleblower basically ... obviously we want to encourage that and we want to encourage people to come and talk to us if they know of this kind of thing going on.

"But we also know that the Irish State could use software a lot more cleverly than we do at the moment to kind of detect patterns like that, because what tends to happen is people looking at one bid. But you need to look the historical pattern in order to detect whether there's some kind of 'pass the baton' going on," Goggin said.

She was speaking ahead of the publication of the CCPC's first annual report, following the merger of the Competition Authority and the National Consumer Agency.

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