Fictitious or “Fixed" Tenders
30 Aug 2017

Author: Uladzimir Kavalkin

According to official statistics, the share of open and competitive public procurement in Belarus is scanty - less than 4% of the total number of public procurement procedures. However, even among these seemingly transparent and honest procedures, often there are fictitious tenders.

The essence of the fictitious tender is that the decision to purchase a product or service from the "right" supplier and at an "honest" price is taken long before the tender itself, and the technical specifications and all tender documentation are adjusted to a pre-determined winner.

Thus, everything that third-party observers and other bidders see is just an imitation, or, if you like, a fiction of bidding and choosing the winner, necessary to demonstrate compliance with the rule of law and to shield yourself from the attention of law enforcement agencies. The motives of officials in organizing such tricks with open purchases are obvious - this is the percentage of "kickback".

The scheme for organizing a fictitious tender is simple enough and includes several steps, accompanied by a standard set of actions, which leave behind a whole set of evidence-markers, which allows you to suspect fraud.

At first, long before the tender, a cunning sales manager meets with a representative of the procurement department who is responsible for the formation of the tender and the characteristics of the subject of procurement - price, delivery time, payment terms and other material terms of the transaction. The size of the "kickback", as well as the terms of its payment are also discussed at this stage.

As a result of the fruitful cooperation between the representatives of the supplier and the buyer, the terms of reference and the specifications are formed, which contain requirements that only the "right" supplier can fulfill. This can be a special color, size, type, compatibility with something, compliance with a special standard and other technical characteristics. Often in the bidding documents, there is a brand name or brand of the future winner of the auction.

Parameter, such as an extremely short delivery time, is also actively used, because the "right" supplier has the goods ready and dusting in the warehouse by the time of the tender, while the competitors still need to produce and deliver the goods.

If all of the above tricks are not enough and the desired product cannot be made "unique", then the supplier becomes "unique". In the tender documentation, special qualification requirements for the supplier are added, which may include the availability of the required staff, production assets or any unnecessary certificate. The main difference between inadequate technical conditions and qualification requirements is their redundancy, rigor and "rigidity" for a specific supplier.

The next step is an open tender or auction. In order for the tender to take place, there must be at least two suppliers in accordance with the law, and since at the previous stage all "unnecessary" suppliers are excluded by strict technical conditions and qualification requirements, the participant must be included in the tender. It can be an affiliated company, as in the case of the famous purchase of validators for the Minsktrans, or a third-party partner firm that never participates in such tenders, or even a real competitor.

The final step is the procedure for selecting the winner and signing the contract. If at this stage it turns out that among the proposals of the bidders, despite all the tricks, the competitor's proposal makes a stand, then they try to exclude him for far-fetched reasons.

For example, the shade is not right, the size is insignificant, the delivery time is a couple of days longer and so on - here the main thing is to prove that the competitor has problems. Well, if this does not work, then the tender is canceled and carried out on a new and with new, even more rigid requirements. Although in most cases, the "right" supplier wins the first time, and this, by the way, is due to the "professionalism" of the buyer.