My own state of Illinois has banned the use of reverse auctions in the telecom and construction industries because of the good-old-boy supplier system of graft and corruption. Incidentally, if you want to read a hilarious spoof piece from The Onion on how my home state is dealing with its budget deficits, click here. (WARNING: DO NOT READ THIS IN THE OFFICE OR IF YOU ARE EASILY OFFENDED). On a more serious note, at least some governments are leveraging tools to cut procurement fraud. Consider how in India, government has turned to online procurement tools to reduce fraud in the tendering process. However, as you’ll read below, there’s been pushback from parties who previously benefited at the expense of taxpayers.
According to the above-linked story, “The electronic system for tendering and handling projects … of the Bruhat Bangalore Mahanagara Palike (BBMP) has not gone down too well with our city councilors.” Yet this is “Not surprising, considering the fact that they are no longer ‘in touch’ with the contractors and stand to lose the ‘cuts’ from projects tendered by the BBMP.” According to the article, all projects above a certain price point, roughly $22,500, must go through the system to ensure “transparency and accountability” and to specifically avoid “interference from councilors or officials during the bidding process.”
As anyone who has spent much time in India knows, corruption is even more rampant in government contracting than it is in my home state (and that’s a difficult distinction to obtain, mind you). It’s also rampant in the private sector…
