In March 2017, the auditor general for the city of Toronto, Canada, issued a report titled “Detection of Warning Signs for Potential Bid Rigging Should be Strengthened.” The report sounded the alarm that many red flags of collusion were present in the city’s road paving procurements but were being ignored.
Some of those red flags were: domination of the city’s paving contracts by a small and unchanging group of contractors; last-minute alterations to bids; sharp, unexplained price increases; and losing bidders being hired as subcontractors by winning bidders.
The Toronto paving contract irregularities have been turned over to Canadian law enforcement for investigation. Regardless of the outcome, the recommendations contained in the auditor general’s report provide sound advice for every public entity. Those recommendations include:
- Maintain a robust and accurate database of bids, bidders, and subcontractors to aid in the detection of anticompetitive activity impacting the procurement process.
- Offer training on bid-rigging and other forms of collusion to all members of the procurement staff.
- Refrain from revealing the identities of prospective bidders who pick up bid packets. (Note: As reported in this edition of “Competition Matters,” recent changes to Ohio’s public records law permit Ohio public entities to take this advice.)
- Provide training and/or clear instructions to all public entity personnel on conflict-of-interest policies.
- Enhance the internal quality-control and testing processes as they relate to progress payments to contractors.
According to the auditor general’s report, Toronto has spent over $100 million annually on road paving and maintenance in recent years. If the allegations of collusion are true, that number may have been significantly higher than it would have been if competition had been allowed to work. Adopting the recommendations described above and addressed in the “
Competition Matters” newsletter can make the difference between fighting to recover illegal overcharges and never having been overcharged in the first place.