spurious or malicious complaints by unsuccessful bidders

[Napodano]

We have recieved the following question from a colleague who is working for a large bilateral cooperation agency:

'What ways have been used to reduce the number of spurious or malicious complaints or “nuisance challenges” by unsuccessful bidders for major tenders in your countries? Some bidders routinely file complaints with no merit that then have to be investigated leading to delays in sometimes major and time-sensitive procurements. We currently fund international parallel bid evaluation in road procurements that has helped somewhat, but has only reduced success of complaints rather than number. Any ideas from you or others? Some suggest paying a fee to register complaints, but then we don’t want to penalise whistleblowing.'

Please provide your views and recommendations   

[Napodano]

My idea would be a combination of these three actions:

- creating a screening process to eliminate spurious complaints at an early stage
- blacklisting an individual/company after being found responsible for repeated spurious complaints (twice, three times?), which may lead to a temporary ban on participation to future tenders
- impose a fine ex-post once the complain has proven to be spurious or maliciuos.

All three should be clearly advertised as part of the complaint process to discourage offenders.

Make sense?

[John Short]

A good starting point could be the application of PEFA indicator 19 on procurement to the agency's process or any of the drill down assessments (World Bank / OECD?).  This could expose weaknesses in the process and procedures - legal basis, method, notification and specification, independent appeals (and time frame).  Once this has been completed,  the process could be changed based on the results and then assessed after the changes have had time to bed in.  if it then continued ...................................

[FitzFord]

I would suggest a potentially simpler approach. All applications would provide a link to a bank lien with their proposals. If a proposal is not accepted  and the applicant challenges and is unsuccessful the lien is applied to pay the cost of responding to the challenge. This would discourage    frivolous challenges but not sincere applications.

[STONE]

Not much that can be done - a complaints process must exist and there should be some appeal process.

In many countries an overturned appeal can be taken to a Court.  See, for example, Tanzania and its Public Procurement Regulatory Authority and related legislation. 

A Court can decide on the quality of the complaint and could in principle determine at what point a complainant becomes a "vexatious litigant".  For a complaint to be determined spurious or malicious there needs to be some process of complaint about complaint that can only justly be heard in a Court.

Bidders who are big of ego and/or of purse will tend to act, those who are small in one or both respects will tend to shrug and move on even when they are convinced that the tender board was incompetent.

The first assessment of spuriousness or maliciousness comes at the complaint stage. The first decision on the complaint needs to be confident and robust.  Confidence depends on the quality of the procurement process and robustness depends on the experience of the person responding to the compliant.  Major procurements typically mean expensive in terms of bid costs and potential income, the time and effort taken in making and presenting clear and confident decisions should also be major.  Time-sensitivity in my experience arises from delayed or sketchy procurement planning.

Tanzania has put a lot of effort into improving its procurement procedures - they are as good as any international development agency.  Where they still lack strength is in the experience (not the training) of the procurement officers: one way to deal with a lack of experience is to be patient, another is to provide mentoring from experienced outsiders - the sort of people who can be confident and robust in first responding to a complaint that will not ultimately succeed.

But as there will always be complaints which even though ultimately unsuccessful will delay procurement timing, procurement complaints and appeals process need to be quick.  From a quick read of the Tanzania Public Procurement Act the full complaint and appeals procedure takes 101 days before either party can go to the High Court and the procurement process does not have to be stopped after 42 days.  Seems pretty quick to me at least up and until it goes into the Courts process.

[petagny]

As others have indicated this is a difficult area. I've done a quick scan of the literature and most of it is about setting up a robust complaints system and then ensuring that potential complainants feel confident enough to use it. However, overuse of the complaints mechanism does seem to be a problem in some countries/regions: Kenya comes to mind.

China operates a 3 counts and you're out system: if three complaints are made and no convincing evidence is found then the complainant is blacklisted. If false complaints are found then a complainant is blacklisted straight away and criminal proceedings may follow. If this is how it is done in China, my gut feeling is that this is probably not the way to go, since it seems like more complaining might have saved a lot of money (according to the FT, Chinese academics have recently estimated that as much as $6.8 trillion may have been wasted on public 'investment' since 2009 - http://www.ft.com/cms/s/0/002a1978-7629-11e4-9761-00144feabdc0.html).

Apparently, in Denmark there is a small charge for lodging a complaint. In the UK, there  seems to be no dedicated procurement complaints mechanism and any complaints must be pursued through the civil courts at huge expense to complainants, which is a huge deterrent. A recent example is the flawed award of the West Coast Main Line franchise, which went as far as a parliamentary select committee investigation:

http://www.theguardian.com/business/2012/oct/03/west-coast-mainline-franchise-key-dates

This is not the kind of process that small players can instigate and, as in many things PFM-related, UK practices are probably not for everyone!

In Georgia, the approach is entirely different: anyone, even parties with no involvement, can halt a procurement process at any time as described by Transparency International:

'Anybody who detects a potential violation of the law in an electronic tender process can file a direct complaint on the official procurement website, which is then reviewed by a Dispute Resolution Board, in which TI Georgia is represented, within ten working days. This online reporting mechanism is a very innovative approach that allows the public to scrutinize public contracts and to take action and stop a process, if they find violations of the law.' http://transparency.ge/en/node/3117

The Georgian system is not perfect as the TI review indicates, but paradoxically this very open and responsive complaints mechanism does not seem to have resulted in the system becoming bogged down in malicious complaints.