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How to guard against bribery and corruption in the tender process

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Japan, United Kingdom

Any company caught paying bribes faces the prospect of a criminal conviction, an unlimited fine and terrible publicity.

The penalties for bribery are particularly severe for those involved in supplying goods and services to the public sector.

Any company caught paying bribes faces the prospect of a criminal conviction, an unlimited fine and terrible publicity. A further consequence for those supplying the public sector, is a discretionary ban from bidding for government contracts across the EU if the company is convicted of the offence of failing to prevent bribery under section seven of the Bribery Act 2010. The ban would be mandatory if one of the directors (or any person who has powers of representation, decision or control of the company) is involved and is convicted of bribing another person or a foreign public official under sections one or six of the Act.

The stakes are high so it is important to have policies to prevent bribes being paid on your behalf. A company can be liable for bribes paid on its behalf by anyone performing services for it anywhere in the world and in any capacity – including agents, distributors and logistics providers. What is required is a culture in which bribery is not tolerated at any level. Its policies must clearly set out what employees and agents can and cannot do.

The general offence of bribery is defined as offering, promising or giving something of value to another person with the intention to influence that person to do something improper in a business context. For example taking a procurement manager for an expensive day out shortly before they decide on a tender. This could be unlawful if the intention was to influence their decision to favour your bid for reasons other than the relative merits of your tender. Timing is everything. The closer in time the hospitality is to a contract award the greater the likelihood that there will be an inference of impropriety.

In a procurement setting you must understand the rules and stick to them. In public sector procurement you will find these in the Public Contracts Regulations 2015 and in the tender documents. In tenders using open or restricted procedures there are usually limited chances for face-to-face communications with the contracting authority. Beyond perhaps an initial supplier briefing day open to all interested suppliers and formal pitch presentation meetings, communications between bidders and the authority are likely to be conducted in writing so the questions and answers can be circulated to all bidders. In this context it would be inappropriate to take the person managing the procurement out for lunch.

The position is different if the procurement is being run under the competitive dialogue procedure or negotiated procedure. These, used for more complex and higher value contracts, inevitably involve some face-to-face contact between the contracting authority and bidders during the dialogue or negotiations. Rapport between the teams may be important to ensure clear communications to help the procedure run smoothly. In this context, some level of hospitality may be permissible but it must be transparent. It must also not breach any specific rules set by the contracting authority as a condition of tendering.

When dealing with overseas public officials there are even stricter rules such as not offering anything other than promotional items to your potential customer.

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