Public Monitoring: Case 3. Identifying “Favored” Suppliers of a Specific Procuring Entity and Other Risks
In the context of the previous case study, we learned how to use the analytics module for identifying direct violations of procurement legislation. We primarily focused on the improper use of sole-source justification as our foundational example.
Beyond direct violations, you can also gather data to identify risks. By “risks,” we mean instances or indicators that suggest the possibility of collusion or potential violations, without directly contradicting existing legal norms.
While identifying violations often involves straightforward legislative analysis, uncovering risks demands a more nuanced examination of underlying causes and processes.
It is essential to understand what indicators may suggest potential violations. At the same time, you should understand that not all identified facts will lead to specific cases, but they can serve as a basis for further investigation. The subject of identifying risks through “red flags” is widely covered in relevant literature. In this current case study, we will consider several potential red flags that may be of interest:
- A single supplier is fulfilling most of the procurements in a specific category for a single procuring entity, which might indicate possible collusion between them.
Similarly, it might be interesting to identify suppliers for whom a significant portion of revenue comes from a specific procuring entity. It’s possible that the supplier was established to exclusively do business with that particular customer.
2. Suppliers with a broad industry reach in the goods markets they serve are also of interest.
3. Planning of procurements may be occurring without clear need or in excessive volumes.
To work with the first red flag, you can simply open the procuring entity’s profile and select your entity of interest from the list. As a result, in the “Top 20 Supplier Ratings” chart, you will see the structure of this supplier’s procurements broken down by suppliers.
You can modify the filtering criteria and narrow down the selection to a specific industry or required period. At the same time, the method of browsing through entities is somewhat labor-intensive.
For mass analysis data extraction, you can use the “Report Builder” tool. Create a report where you select supplier name, procuring entity name, and product or service classification code (e.g., unified nomenclature directory of products, i.e., goods, services, and works) as dimensions; and contract details and amounts as measures. To further refine your analysis, choose industry-level classifications and the procurement plan’s fiscal year to collect data by year.
At the end of the process, click the “Update Layout” button. We recommend exporting the data in tabular format for further analysis in Excel, where you can highlight any cases of over-representation in customer-supplier pairs.
To work with the second flag, you can open the “Supplier Profile” and select your supplier of interest from the list. In the resulting “Procurement Items” chart, you will see the distribution of procurements in which the supplier has participated, broken down by industry. The greater the number of industries represented in the chart, the broader the industry reach and thus, the higher the suspicion level regarding the supplier’s activities.
For mass analysis data extraction, you can use the “Report Builder” tool. Create a report where you select supplier name, product or service classification code, and fiscal year in the procurement plan as dimensions; and contract details and amounts as measures.
At the end of the process, click the “Update Layout” button. We recommend exporting the data in tabular format for further analysis in Excel, where you can highlight any instances of a large number of unique product or service classification codes and various industries, and any over-representation in customer-supplier pairs.
To work with the third flag, it’s advisable to focus on a specific category of buyers. It’s best to group by functional characteristics—organizations performing similar functions. The function often reflects in the name of the buyers. You can select the necessary group by entering part of the name in the “Search in List” field under the “Buyers” filter. This will select all buyers whose names contain the specified words. For example, schools, hospitals, local government offices, or ministries.
To study the line items of procurement plans, you can open the “Plan Line Items Table.” Within this, you need to filter by a group of buyers (for example, apply a filter for the word “school” to select all buyers mentioning schools in their names). As a result, you’ll have a list of all line items in the procurement plans for this category of buyers for further analysis. Items of interest could be atypical procurements for the category (large sums and a small number of similar line items among other organizations in the category).
You can export this data for further analysis. The presence of links to the line items in the plans will allow you to review data on the quantity of products being procured to assess needs.