CADE and the OECD discuss fighting bid rigging in the launch event of the report on federal public procurement in Brazil

The Administrative Council for Economic Defense (CADE), together with the Organisation for Economic Co-operation and Development (the OECD), published on Wednesday (19 May) the report 'Fighting bid rigging in Brazil: a review of federal public procurement'. The report includes recommendations for bettering the mechanisms for the prevention and detection of bid rigging in public procurements, in accordance with the OECD recommendations and guidelines.

The report is the result of a project started in November 2019 aimed at assessing the regulatory framework related to government procurement processes and contracts in Brazil. The President of CADE, Alexandre Barreto, stated that the partnership between CADE and the OECD that has been developed throughout the years was key for the completion of the project, which includes recommendations to improve competition and, consequently, for the economic development of the country.

The Superintendent General of CADE, Alexandre Cordeiro, spoke about the work the agency has been carrying out for more than a decade to strengthen competition in Brazil. 'As of 2007, CADE has been working carefully to train civil servants and auctioneers, always producing important documents to subsidize their training. This report is to be used as a guideline and will be put into practice,' he said.

With regard to the recommendations, Diogo Thomson, CADE's Deputy Superintendent and the project's supervisor, pointed out the need to train government agents both to prevent and detect bid rigging by implementing a permanent programme for this purpose and making it accessible to all government personnel.

The OECD was represented by the Deputy Director of its Directorate for Financial and Enterprise Affairs, António Gomes, the Acting Head of its Competition Division, António Capobianco, and competition experts Iratxe Gurpegui and Jordi Calvet Bademunt.

Recommendations

Public procurement plays a strategic role in a country’s economy, and the quality of services that the government provides to its citizens. In 2020, Brazil spent around BRL 35.5 billion in the procurement of goods, services and works. In 2017, public procurement represented around 13.5% of Brazil’s total government expenditures and approximately 6.5% of the country’s GDP.

Due to the size of the involved financial flows, public procurement is exposed to risks of collusion among suppliers as well as fraud and corruption. In Brazil, bid rigging is an administrative and a criminal offence and has long been an enforcement priority for CADE. Against this background, CADE and the OECD got together to assess the Brazilian public procurement framework in light of the OECD Recommendation and the Guidelines for Fighting Bid Rigging in Public Procurement.

The report published by CADE and the OECD on Wednesday (19 May) indicates that Brazil’s federal procurement regime acknowledges and attempts to limit bid-rigging risks. Brazilian enforcement authorities have actively prosecuted and punished bid rigging.

One of the main recommendations of the report is the need to empower public procurement agents. 'Many bid-rigging cases are initiated following complaints from public-procurement officials, who are in the front line of the procurement process and are the best placed to detect suspicious conduct. Besides, public-procurement officials that are afforded knowhow and flexibility to strategically plan and design contracting procedures are more likely to adopt initiatives that increase competition and reduce the risks of bid rigging,' states the document.

The report also points out the need to maximise the participation of bidders in public procurement processes; to be informed about the market; to strengthen competition advocacy; and to improve detection and punishment mechanisms.

Checklist

During the event, CADE presented the checklist 'Bid rigging in public procurements: warning signs'. The checklist names a series of warning signs that can help identify whether bidding firms may be coordinating with each other.

The signs listed may be observed in proposals presented by bidders, in suspicious behaviours of the firms, and in bidding result patterns. At the end of the checklist, CADE makes available its complaint channel, Clique Denúncia, which anyone can use to report antitrust violations.

Access the full report 'Fighting bid rigging in Brazil: a review of federal public procurement'.

Access the highlights of the report 'Fighting bid rigging in Brazil: a review of federal public procurement'.

Access the checklist 'Bid rigging in public procurements: warning signs'.