Certificate of Independent Bid Determination (SBD 9)
The Certificate of Independent Bid Determination (SBD 9) serves as a certificate of declaration that is used by institutions to ensure that when bids are considered reasonable steps are taken to prevent any form of bid rigging.
What is bid rigging?
Bid rigging (or collusive bidding) occurs when businesses, that would otherwise be expected to compete, secretly conspire to raise prices or lower the quality of goods and / or services for purchasers who wish to acquire goods and / or services through a bidding process.
Why is it required? What law governs this requirement?
Section 4 (1) (b) (iii) of the Competition Act No. 89 of 1998, as amended, prohibits an agreement between, or concerted practice by, firms, or a decision by an association of firms, if it is between parties in a horizontal relationship and if it involves collusive bidding (or bid rigging). Collusive bidding is a per se prohibition meaning that it cannot be justified under any grounds.
Paragraph 16A9 of the National Treasury Regulations, prescribes that Accounting Officers and Accounting Authorities must take all reasonable steps to prevent abuse of the Supply Chain Management (hereafter referred to as SCM) system and authorizes Accounting Officers and Accounting Authorities to:
- Disregard the bid of any bidder if that bidder or any of its directors have abused the institutions SCM system and/ or committed fraud or any other improper conduct in relation to such system.
- Cancel a contract awarded to a supplier of goods and services if the supplier committed any corrupt or fraudulent act during the bidding process or the execution of that contract.
Bid rigging is increasing rapidly within the SCM environment at the expense of great cost and efficiency to government.Given that bid rigging is essentially a form of bid fraud, it follows that where bid fraud exists, the likelihood of uncovering bid rigging also increases.
The National Treasury in consultation with the Competition Commission South Africa has introduced SBD 9 in an endeavor to counter bid rigging, which is also intended to inform bidders about the illegality of bid rigging, the penalties applicable to enterprises found to have engaged in such practices and the possible investigations and imposition of administrative penalties by the Competition Commission South Africa as contemplated in the Competition Commission Act No 89 of 1998.
Is SBD 9 applicable to all methods of procurement?
Accounting Officers and Accounting Authorities are required to incorporate SBD 9 in the documentation issued when inviting price quotations, advertised competitive bids, limited bids and proposals.
Why price quotations?
The inclusion of the form as part of price quotations was deliberated between the National Treasury and the Competition Commission. The main purpose of the initiative is to root out SCM corruption at all levels.
In view of the fact that in terms of National Treasury Practice Note Number 8 of 2007/2008 it is a requirement that written price quotations and / or competitive bids be invited for requirements above R10 000, all institutions must utilize the SBD 9 form for all procurement above R10 000.
Completion of the form and invalidation of the bid
Bidders are required to complete, sign and submit the certificate with the bid documentation at the closing date and time of the bid.
If a bidder has failed to submit the certificate, the bidder will be requested in writing to submit the signed form within seven (7) working days of notification. Failure to submit the signed form within seven (7) working days of notification may result in the invalidation of the bid.
Augmentation of the General Conditions of Contract (hereafter referred to as GCC)
The GCC has been augmented to provide for the prohibition of restrictive practices with the inclusion of paragraph 34. The revised GCC must be incorporated in the documentation issued when inviting price quotations, advertised competitive bids, limited bids or proposals.
Effective date of these requirements
The effective date of the above-mentioned requirements is from the date of issue of National Treasury Practice Note: Prohibition of Restrictive Practices: Certificate of Independent Bid Determination: SBD 9, which is 21 July 2010.