Procurement - Bidding and Contract Award
Red Flags
User department or technical staff insisting on using a particular brand or supplier without proper justifications.
Staff may have accepted bribes or rebates from the supplier to assist the latter in securing contracts.
Repeated use of the same supplier(s), or contract extensions over multiple years, without documented quotation exercise or price comparison, despite the supplier(s)/contractor(s) are apparently not competitive in terms of quality and price.
Procurement staff may have accepted kickbacks in exchange for awarding repeated contracts without competition.
Unfamiliar supplier names, never/seldom heard of in the trade, but either always win bids or always on the quotation invitation list but never awarded contracts.
A staff member may be colluding with supplier(s) by using shell companies to submit fictitious bids, thereby enabling certain supplier(s) to secure the contract.
Winning bids often just slightly below the next lowest bids, and/or always submitted at the last minute or late.
Staff member may have disclosed the bid prices from earlier submitters to assist a colluding supplier in securing the contract.
Staff frequently invoking exceptions or overrides to bypass standard procedures and controls, e.g. frequent use of the single quotations / direct purchase methods under claims of urgency.
Staff may be fabricating urgency to justify awarding contracts to pre‑selected suppliers in exchange for bribes or kickbacks.
Purchases show pattern of being intentionally pooled together and approved while the normal approving authority is absent, or repeated purchases of the identical goods/services from the same supplier(s) often just below the value requiring a higher approving authority.
Staff may be colluding with suppliers to split purchases and evade scrutiny of the normal approving authority.
After awarding a term contract, staff frequently issue variation orders not originally covered by the contract (with different prices or specifications), resulting in increased payments to the contractor/supplier.
Staff may have colluded with a supplier who initially secured the contract through highly competitive rates, and subsequently favored the contractor by issuing unjustified variation orders that expanded the scope and value of the contract.
Unexplained/unusual increase in cost of goods sold to sales ratio, materials costs, etc. which does not compare with the industry norm or other branches of the same business operator.
Procurement staff may be colluding with suppliers to rig bids and inflate the prices of goods, pocketing the markups as illegal rebates.
Suspicious signs in quotations or invitation lists (e.g. vendors unrelated to the business, names resembling well-known companies, identical or similar addresses, phone numbers, or quotation formats, and vendor contact details matching an employee or limited to a mobile number).
Staff may be creating fake vendors to rig bids, diverting funds to fictitious entities.
