Unethical business practices to watch for
Fraud, collusion and corruption in Government of Canada contracts and real property agreements come in many forms. On this page, learn about common types of unethical business practices people should report.
On this page
Bid-rigging in procurement processes
Bid-rigging is a form of anticompetitive activity. Under the Competition Act, bid-rigging is a criminal offence. It occurs when businesses secretly rig the outcome of competitive procurement processes.
Bid-rigging schemes can cause serious economic harm to the government departments or agencies involved in the bidding process. As taxpayers or consumers, the public ultimately bears the costs of these schemes.
Visit the Competition Bureau's tools and resources for more information on bid-rigging.
Conspiracies, agreements or arrangements between competitors
Businesses can harm buyers throughout the supply chain, including the Government of Canada, when they conspire to:
- fix prices
- allocate customers or markets
- limit production or supply
Competitors may agree to raise or fix prices they will charge the government for their goods or services. They may also set a minimum price that they will not sell below. Sometimes, businesses reduce or eliminate discounts. These practices lead to inflated prices.
Market division is another example of a conspiracy, where competitors allocate markets among themselves. They then agree not to compete in each other's designated area.
Visit the Competition Bureau's tools and resources for more information on conspiracies, agreements or arrangements between competitors.
Bribery to influence business decisions
This unethical business practice involves offering, giving, receiving or soliciting anything of value to influence an official or business decision. A kickback is one example of bribery in which someone gives money or something valuable to a purchasing entity, or related entity, in return for favourable treatment.
Undisclosed conflict of interest
A "conflict of interest" occurs when a government employee has an undisclosed interest in a transaction that adversely affects their professional role. This conflict of interest may become corrupt influence in the form of:
- qualifying an unqualified or untested company to bid or be a supplier
- awarding contracts improperly or in a non-competitive way
- paying too much for goods or services
- buying too much of an item, or buying inappropriate items
- consistently accepting low-quality or non-compliant goods or services
A conflict might also occur if an employee receives "illegal gratuities," that is, money or something of value, that reward a decision after the fact, rather than influencing the decision beforehand.
Fraudulent contract performance schemes
This type of fraud occurs after the contract is awarded. Signs of fraudulent contract performance schemes could include:
- cost and/or labour overcharging through false, inflated or duplicate invoices
- providing products that are defective or substandard to the quality specified in a bid or in a quantity inferior to that specified
- a deliberate failure to deliver the number and quality of goods, works or services stipulated in the contract in order to save costs and increase profits
- unnecessary change orders or abuse of contract amendments to increase the scope or volume of work or to avoid competition
- claims or bills for fictional goods, works or services
- combining costs or invoicing for work done on other projects
- colluding with subcontractors to inflate costs
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