No legal framework to curb bid rigging
Ministry of Finance Permanent Secretary Ericah Shafudah who doubles up as the Chairperson of Tender Board has revealed that Namibia does not have THE legal framework to investigate instances of bid rigging in public the procurement system.
Bid rigging is prominent in public procurement systems of most countries in the Southern African region and entails few suppliers/ contractors colluding to fix, control or maintain prices in a manner that distorts tendering procedures.
“I would not confidently say the state of affairs when it comes to bid fixing cases in the country as we have not done any investigation in whether the bid fixing is widespread in the country. We do not have the instruments necessary to effectuate the investigations. It is something that we have been planning to look into, however we have not done any in-depth discussion on the matter at this point, but it is something we will surely look into the future,” she said.
This despite Shafudah revealing last year that government would launch a probe into the public procurement system to examine possibilities of the unearthical practise being practised in Namibia. In last year’s interview with The Villager the MoF accounting officer said there was need to take a closer look at the way major corporate deal with the public procurement in a bid to quell the practise which was detected in South Africa in the same year as well.
Last year about 20 South African construction companies were fined on charges of bid rigging. Some of those construction companies including Murray and Roberts have subsidiaries operating in Namibia and have also accessed the public procurement system in this country.
Murray and Roberts are currently constructing Auas Valley Shopping Mall, Groove Shopping Mall , Maerua mall and FNB Freedom Plaza; Kwazulu Natal based WBHO company which has done road construction work locally was also pointed out in those corruption cases.
”However, the Commission takes note that there are some cases which raises suspicion but unlike in South Africa, the Commission does not have a Corporate Leniency Programme (CLP) where information can be submitted by a party that knows of or that has engaged in such practices in exchange for some kind of immunity from prosecution by the Commission for their participation in the cartel activity in the form of collusive tendering/bid rigging,” she said.
In Namibia, the Commission has only dealt with a complaint regarding bid rigging, received in October 2012 from the Municipality of Swakopmund against 4 undertakings.
The alleged conduct was that the Respondents have submitted quotations containing similar information in of telephone and fax numbers, postal addresses, their documents were filled in by the same handwriting, and their starting and completion dates as well as history records were also all the same.
“After its investigation, the Commission in September 2013 found that there is no contravention of the Act in that “Part I of the Act does not apply to the Respondents by virtue of the provision of section 23 (8) as they are owned by the same persons and cannot be prosecuted under section 23 of the Act.” The investigation was concluded and the Commission’s file on this matter was subsequently closed,” she said.
She explained that bid rigging which involves groups of firms conspiring to raise prices or lower the quality of the goods and services offered in public tenders is also referred to as collusive tendering.
“Our Competition Act (Act 2 of 2003, “the Act”) does not refer to bid rigging but refers to it as collusive tendering. The prohibition of collusive tendering/bid rigging is provided for in sections 23(1) read together with section 23(3) (c) of the Act”.
The Act generally prohibits anticompetitive agreement which has as their object or effect the prevention or substantial lessening of competition in trade in any goods or services in Namibia ( section 23 of the Act) and the abuse of dominant position by undertakings (section 26 of the Act) and further regulates entering into combinations (consisting of mergers, amalgamations and acquisitions) with a view to ensure that there is no adverse effect on competition in Namibia (sections 42 to 51 of the Act),”she said.
As part of the anticipated reform to the Competition law of the country, she pointed out that the Commission is in the process recommending an amendment to the current Act which will introduce the granting of corporate immunity to undertakings meeting clearly defined criteria.
She stressed that bid rigging is done in secret without the awareness of the procuring agency/office etc. and for it to be detected it is imperative that procuring agencies/offices are aware of the symptoms of bid rigging.
To ensure detection, the NaCC has undertook several steps such as enhancing its co-operation with stakeholders; advocate and educate stakeholders and the general public on bid rigging through its annual competition week.
The Commission have also imposed severe fines on those who are found to be engaged in bid rigging to improve deterrence.
“With the review of the Act, the NACC will implement and roll out a corporate leniency programme to encourage whistle blowing; the commission is willing to assist procurers in designing effective procurement systems; and will issue guidelines on detecting bid rigging in public procurement,” she stressed on.
To curve the bid rigging in procurement, the Commission suggested that procurement agencies should develop guidelines such as training their staff in the detection and deterrence of cartels for all procurement staff; it will help staff to design a procurement process that is less susceptible to collusive conduct; they should get a procurement specialist to understand its market as well as include an anti-collusion clauses in tender documents amongst others.