How Tendering Frauds Are Committed

Definition

Procurement fraud can be defined as dishonestly obtaining an advantage, avoiding and obligation or causing a loss to public property or various means during procurement process by public servants, contractors or any other person involved in the procurement.

Procurement Fraud can be committed:

From Inside

By Public Servants

From Outside

By Contractors & Suppliers

By Collusion

Inside collusion

By two or more Insiders

Outside collusion

By Two or more contractors

Cartels or collusion tendering

Mix collusion

Inside and outside personals working together.

Distinction between fraud and error

The basic distinction between fraud and error is that of intention. Any error is unintentional, i.e. the person committing the error does not do so knowingly. Errors are accidental and may arise due to negligence or a genuine misunderstanding on the part of the person committing then. As opposed to errors the fraud is intentional The person committing fraud does so knowingly, willfully, and with the motive of gaining advantage or benefits by cheating or causing loss or injury to another person or state, acting along or in the collusion with one and another.

Summary

A major reason why people commit procurement fraud is because they are allowed to do so. There area wide range of threats facing government agencies the threat of fraud can come from inside or outside the department, but the likelihood that a fraud will be committed will be greatly decreased if the potential fraudster believes that the rewards will be modest, that they will be detected or that the potential punishment will be unacceptably high. The main way of achieving this must to be establish a comprehensive system of control which increases the likelihood of detection and increase the cost to the fraudster.

It has been said that there are three requirements which need to be met to reduce the risk of procurement fraud; Good Ethics, Good People, Good System.