Tender collusion in public contracts 'cost $117bn'

Will Green is news editor of Supply Management
18 October 2021

Bid rigging and collusion in government tenders cost US taxpayers an estimated $117bn in 2019.

Daniel Glad, director of the Procurement Collusion Strike Force (PCSF), said the federal government spent more than $586bn on goods and services in 2019 and the OECD calculated 20% was lost to bid rigging.

Speaking at the Public Contract Law Public Procurement Symposium, Glad said: “The Organization for Economic Cooperation and Development estimates that were we to successfully eliminate bid rigging from public procurement, our cost savings would be 20% or greater.

“Reducing illegal and anticompetitive collusion in procurement could save US taxpayers tens of billions of dollars per year – approximately $117bn in FY 2019 alone, based on the OECD statistic.”

Glad cited a recent PCSF investigation into San Antonio construction contracts worth around $250m intended for businesses owned by service-disabled veterans. It found the owner of several construction companies had conspired to place a disabled veteran as a “figurehead” in the company in order to win the contracts. “This is set-aside procurement fraud,” he said.

Glad mentioned tender fraud in construction contracts, including insulation contractors conspiring to rig bids on contracts for pipe and duct insulation work on projects including universities and hospitals.

He said one bid-rigging scheme involved public schools, including one serving children with special needs and another with a student body that almost entirely qualified for free lunches.

“Victims of procurement collusion are often vulnerable victims – localities beset by poverty, for which every tax dollar is precious, or those that provide critical services to vulnerable members of our society,” he said.

Glad said that “collusion and fraud erode and deplete the public’s faith in public institutions and services”.

“That is fundamentally bad for democracy.”

The PCSF was launched in 2019 to combat uncompetitive collusion.

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