Reduction of White-collar criminality by means of new concept of tender organizing and management - Part 2 

Reduction of White-collar criminality by means of new concept of tender organizing and management - Part 2

We insist that the following situations must be under a special State control inside the organizations:

-              The situation when a public offer is significantly lower than the loss prices, such offer would be disqualified. An offer that is significantly lower than the estimate and that indicates loss prices in many items can also invoke a suspicion of improper manipulation especially if alongside with those prices in other parts of the offer prices are included that are significantly higher than the estimate on other items. These deviations from the esti­mate can indicate an employment of a shifting tactic, the essence of which is bidding of high or low prices according to the planning of profit of a bidder and not according to the real cost of the work.

-              Manipulating prices. For example, when a bidder demands exceptionally high prices for work that is performed in the initial stages of a contract and especially low prices for work planned for the later stages.

-              Manipulation of command a tender under a „straw name” or under a „mask”. It means that it is performed through a fictive bidder that allows a bidder who does not qualify for the requirements of a tender to win it. This conduct is improper and should be disqualified.

-              Submitting two offers for a tender by a company or a subsidiary. In such a case no oppor­tunity would be extended for either to retract their bid. In accordance with the precedent law of Israel, in the basis of tender laws there is ensured the financial efficiency and the principle of equality. Submission of bids by a company and a subsidiary in a way that either of them can cancel their winning as they please, adversely affects these two prin­ciples and thus the petition should be rejected. The coordination of the companies is not denied by the petitioner and is defined as a tactical move on their part, one which according to the court caused harm to other participants of the tender who are not aware of the coordination of bids, and improves the chances of winning, and adversely affects financial efficiency as the bidder surely would retract the higher bid.

-              Coordinating tenders. The phenomenon of coordinating tenders is a source of concern not only to the authority as the regulator but also to tender owners. The phenomenon of coordination is found in all types of tenders, open and closed and in the direct applications for submission of bids. There must be investigated a possible suspicion of coordination in their tenders. A list of intelligence information indicating a possible suspicion of coordina­tion in tenders including: a) local authorities that report a suspicion of coordination in tenders in garbage removal; b) in the Public Works Authority there is a concern about coordination in tender of supplying of lighting poles and road covering, hospitals are exposed, according to the information, to coordination in a tender for supply of bread; b) in the Electricity Corporation for supplying of fire extinguishers, information on coordinating prices have been received; c) in the Israeli Lands Administration there is an extremely fertile ground for coordination of real-estate transactions; d) in the Ministry of Defense information has been received regarding a suspicion of coordination in tenders of supply of batteries and of browning of guns.

-              Closed tenders. It is recommended that a closed tender is conducted, as long as it is justified and reasonable without any need to examine the possibilities to conduct a public tender as stated in the regulations. To our opinion, a regular public tender would bring about an inflation of bidders and requires an allocation of great resources entailed in an examination and approval of suppliers, time of examination of the tender, and worst of all, it would harm the results of the tender due to a lack of effective control, as out of our experience it is not likely that many suppliers would meet the prerequisites and the ability to implement the tender, and then would begin processes of manipulation that would cause a delay and future damages to the object of the tender. Most importantly, a rotation of bidders among the potential suitable suppliers which is cyclic, equalitarian and fair, should be enacted by the organization over time, and thus the level of desire to perpetrate white-collar offences would significantly decrease that would create a commitment to the organi­zation and prevent future possible harm to the bidder. It is recommended that as part of conducting a closed tender, the tender committee is to turn to five suppliers on the list and not as determined in the regulations that if a certain list included up to 10 bidders all should be approached and if the list included more than 10 bidders, at least five should be approached.

-              Bi-essential entities. Concerning this issue, we recommend appending to the Tender Obli­ga­tion Law (Israel) which would apply to bi-essential entities, to prevent any doubts regarding its legal definition, and also to private entities, as follows. The following definition would be added to the Tender Obligation Law: Bi-essential Corporation is a corporation or a company that „two essentials, administrative and private, serve as one in it”, and that has been established following a governmental law and the character of its service is for the entirety of the public. Therefore, it is recommended to alter clause number 1 in the principles of Tender’s Regulations of 2009, as follows: “A public entity, bi-essential entity as well as private entity (as long as there is a concern of significant damage of a vital interest to the public and when the scope of possible damage, and the intensity thereof are of especially high level that justifies it) would conduct a tender or individual approach following a central tender, in an as much as possible transparent way according to circumstances, fair and equalitarian, that guarantees the majority of advantages to the public entity”. This change would allow for a „cleaner” economy and would handle those uniquely exceptional cases in which the winning of criminals in tenders should be prevented.

-              Consulting regarding the unfairness of tender results. As a public employee is immune from damage suits it is recommended to get assistance of an external consultant, while the tender committee should clearly define the scope of authority and the areas of activity of the consultant, and that is in the tender documents or in written certification. The duty of consultants is to serve like guardians in relation to the use of office funds and regarding the supervision of the tender committee.

-              Regarding the bias of tender results: from delivering information up to bribery there are numerous ways for bias in tender results. The way the researcher has chosen to focus on in the following lines is the cooperation between one participant of a tender and the authority representative. Such cooperation means „fixed” tenders, and is expressed amongst other things in delivering information and even bribery. How can bias of tenders be prevented or dealt with? It is suggest that one of the ways is reduction of judgment, meaning: selection of prospects according to a quality condition by determining a prerequisite or determining and retaining price as a principal criterion in any contest, so that its importance would be higher than any other criterion. However, we have to accept the term coined as “the mind equilibrium” that determines a balance between a proposed price and additional relevant standards for a decision regarding the preferred bid.