Focus View
Include jail term for bid rigging
FocusM team | 01 Dec 2017 00:30
The Malaysia Competition Commission (MyCC) is coming down hard on bid rigging in public procurement. 

Its efforts must be supported by not only government agencies but by all Malaysians as it can save hundreds of millions or even billions of ringgit in taxpayers’ funds. 
  
The savings can be substantial. The federal government, state governments, local authorities and statutory bodies purchase goods and services worth RM150 bil through public tenders. It is estimated that bid rigging can occur in up to 25% of these tenders. That means around RM37.5 bil of the public tender exercises could be subjected to bid rigging. 

Bid rigging is a form of price fixing. It occurs when two or more bidders collude in a tender exercise. Instead of submitting the best tender, they agree among themselves who should win the tender but at a much higher price. 

Sometimes, those who collude do not make a bid to allow a certain party to win. At other times, they take turns to submit the lowest bid and rotate the winning among themselves. There are even cases where colluding parties withdraw their bids at the last minute to allow their chosen bidder to land the bid.  

The MyCC is investigating several cases of alleged bid rigging. It has also received complaints relating to this malpractice.     
    
Interestingly, the Auditor-General’s (AG) reports repeatedly highlight instances of what can be construed as bid rigging. Often, when the minimum requirement of three bids are complied with, the lowest bid is still far higher than the market price. Bidders collude to ensure that their lowest bid is higher than the market rate.

When this happens, it is usually the government department concerned that gets admonished by the AG, not the bidders, unlike under the Competition Act 2010. The staff concerned are merely transferred or, at the most, reprimanded. If there is an element of corruption, the Malaysian Anti-Corruption Commission (MACC) steps in. 

Under the Competition Act 2010, those found guilty of bid rigging can be penalised up to a maximum of 10% of their worldwide turnover. There is no custodial sentence. 

Since bid rigging is dishonest and tantamount to cheating taxpayers, the authorities should consider amending the Competition Act to include a jail term.