What is your experience of the insider threat and impact on your procurement and supply process? There are many areas of the procurement lifecycle where insider influence can manipulate the award of a contract towards an agreed vendor, however when we consider the tender process can we use data analysis to better understand the level of corruption risk.
“Real integrity is doing the right thing, knowing that nobody’s going to know whether you did it or not.”
When assessing the integrity, transparency and accountability within your organisations procurement process, its ability to ensure compliance with procurement policy and ethical standards can be integral in ensuring corruption risk and financial loss is prevented.
There are a number of proactive checks that can be carried out to detect and mitigate procurement fraud and corruption risk that includes verifying conflicts of interest, politically exposed persons risk, financial standing and a vendor’s ability to perform a contract.
APPROACH TO RISK ASSESSMENT
Within an organisation individual risks can range from the nature of power held by an executive or officials who preside over procurement, whether there are discretionary powers or self-imposed monopoly in key decisions.
In considering areas of analysis to identify corruption and external risk within the tender process a starting point is to look at tenders where only one vendor responds and assess the route cause in the lack of response. There are legitimate occasions in which only one vendor responds within the bidding process, however when we look at the percentage of the annual tenders and corruption risk, the value and extent can be significant. Is there a root cause to this issue such as the need to broaden a supplier base or are there risks such as the internal manipulation of the bidding process or rigging of bids by vendors.
Once the tender data has been collected on sole award additional analysis can be carried out to look at the level of risk and determine whether there has been internal influence or manipulation. Key areas to look at should include:
The advertising period, has it been deliberately shortened so that legitimate companies aren’t given the opportunity to respond
Has the scoring matrix been amended or addition criteria added to ensure that technically inferior vendors meet contract requirements
Has the tender scoring been conducted correctly or has the scoring been inflated to the benefit of a vendor with an inferior product or limited technical expertise compared to their competition
Was the selection time taken to decide on submitted bids short that may indicate that the decision to award a contract had already been agreed
Is there a pattern to a request for proposals or an invitation to tender and the companies that respond including companies that are the sole submission within the tender process.
Where there are indicators of corruption risk within the tender process, an assessment of the pre-award process in each case should be considered including:
project/procurement design, and
scope and specification to determine whether there are additional areas in which insider influence can be identified.
This may give an indication of corruption within the tender process and where there is analysis of these data points it may also assist your organisation in building a profile of the corruption and bidding rigging risk and the level of insider manipulation within the pre-award stage of your procurement.
This is only one key point within an organisations procurement and supply process that can have major financial impact. Does this type of analysis work for you in preventing this type of risk and what other risks have you identified in the pre-award and onboarding process?
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