Fighting bid rigging in the health sector in Peru: A review of public procurement at EsSalud

PUBLICATION DATE: 25 OCTOBER 2021

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Public procurement plays a strategic role in a country's economy and the quality of services that the governments provide to citizens. In 2017, the share of procurement spending out of general government expenditure in Peru was 46.4%, the highest in Latin America and the Caribbean, according to the OECD’s Government at a Glance: Latin America and the Caribbean 2020.

If public procurement has a strong impact on all public services, this is even more so in the health sector. It is against this background that Peru sought the OECD’s support to improve the public procurement framework used by Peru’s Social Security body (Seguro Social de Salud del Peru, EsSalud) and to help its fight against bid rigging in light of the OECD Recommendation and the Guidelines for Fighting Bid Rigging in Public Procurement.

The implementation of the recommendations and EsSalud’s increased awareness of the negative impact of bid rigging, together with Indecopi’s enforcement of competition law, will help Peru combat bid rigging in public procurement and achieve better procurement outcomes for its citizens.

As part of the project, the OECD trained public sector officials in Peru, and drafted an inter-institutional co-operation agreement between EsSalud and Indecopi on the promotion of competition and the fight against bid rigging in accordance with OECD best practices.

The report was launched virtually on 25 October 2021.

The project

EsSalud was created in 1998 and is Peru’s main insurer/provider scheme for employees. It provides health services and social security benefits to the nearly 12 million persons insured in it and manages directly 415 health facilities nationwide. The magnitude of this operation requires clear spending and acquisitions based on the needs of its population and demands quality data and capable personnel.

Background

Bid rigging in public tenders involves firms conspiring to raise prices or lower the quality of their bid. It is an illegal anti-competitive practice that costs governments and taxpayers billions of dollars every year across the world, stopping the public sector from buying the right thing, at the right price. A significant share of cartel enforcement in many OECD countries concerns bids rigging cases. This shows that action is taken to stop collusive practices, but also that there is room to improve compliance with competition rules in public procurement. The OECD Recommendation and Guidelines for Fighting Bid Rigging in Public Procurement aim to reduce the risks of bid rigging through careful design of the procurement process and help detect bid rigging conspiracies.

The OECD Recommendation and Guidelines for Fighting Bid Rigging in Public Procurement were designed to reduce the risks of bid rigging through careful design of the procurement process and to help detect bid rigging conspiracies.

Project stages The OECD project team:
1	Analysed the legislation and practices applying to EsSalud’s purchases.
2	Interviewed national stakeholders to collect facts and insights.
3	Recommended legal and practical improvements, based on international good practices on fighting bid rigging.
4	Provided an action plan to implement the improvements.
5	Provided capacity building in preventing and detecting bid rigging.
6	Drafted an inter-institutional co-operation agreement between EsSalud and Indecopi.