SMEs and the Bribery Act

The Bribery Act

Earlier this month, the government released its findings following an extensive survey of SMEs in relation to their awareness of the Bribery Act, and any impact on them.

• 66% of SMEs had heard of the Bribery Act, or were aware of their corporate liability
• 42% of SMEs had some anti-bribery procedures in place

It is now a full 5 years since the UK Bribery Act (2010) came into force, introducing four new categories of offence:

• Offering, promising or giving a bribe to another person
• Requesting, agreeing to receive or accepting a bribe from another person
• Bribing a foreign public official
• A corporate offence of failing to prevent

Amongst the plethora of policies and procedures already burdening businesses, more weight had been added with the introduction of the fourth of these offences, that of failing to prevent bribery. It was no longer enough to simply run a clean operation and avoid engaging in any unscrupulous practices. Now, effective procedures must be in place to demonstrate that your business is actively preventing the practice of bribery.

Faced with the threat of severe financial penalties and the risk of prosecution under this new legislation, the UK business communities took action. Corporate giants tweaked their existing anti-corruption policies and re-launched them amid much fanfare. Large businesses stirred themselves, diverting resources to amending existing procedures. Yet another email landed with each employee, and perhaps a full copy of the new policy was issued to largely uninterested employees who wondered what all the fuss was about. As for SMEs, thankfully the Ministry of Justice had given them some flexibility by expressly clarifying that the adequate procedures defence was founded on a notion of proportionality. Adequate procedures required to prevent bribery need only be proportionate to the risks faced and the size or structure of the business.

At the time, the evidence of widespread corruption and actual bribery seemed at best to be anecdotal, always taking place ‘somewhere else’.

Bribery and transparency in the bidding process

Tender losses and failed contract negotiations are more easily explained away by the alleged ‘brown envelope’ of a competitor than by admission of personal failings or an inadequate proposal. Although transparency in tendering is key, it is often believed that authorities have a ‘favoured bidder’ in mind a when entering into the procurement process for a contract, and as such, some companies can be deterred from the bidding process entirely.

The sparsity of prosecutions of UK companies in the last 5 years for bribery offences suggests that either the 2010 act was highly effective, or that in reality nothing has changed. For SMEs, the requirements of complying with the legislation have come at a mean cost to implement of £2,730. With every hard earned pound of income being crucial to most SMEs this is not an insignificant sum.

Amongst the SMEs surveyed, 6% reported that they or their employees had on occasion been asked for a payment or gift that could possibly be described as a bribe. The government report shares this information under the heading Small Scale Solicitation, which perhaps aptly describes the extent of the real issue.

In an attempt to regulate transparency and prevent bribery from entering the public sector procurement process, directions such as the following are in place to ensure all suppliers are not only aware of the opportunities available to them, but are then able to bid successfully:

• The open advertisement of all public sector contract opportunities over the threshold of £10,000
• The introduction of the standardised PQQ, and at times, a one-stage tender process
• Reducing the turnover requirement to bid
• The increase in frameworks and smaller value contracts
• E-procurement — contract and bidding information available to all parties in one place.

The Bribery Act in your tender response

PQQ and ITT documents will contain questions on your company’s understanding and adherence to the Bribery Act. Your policies and procedures in this area will need to be robust and abide by the current legislation, otherwise you may be excluded from the bidding process as you can be seen as ‘risky’ to the authority.

At Executive Compass, we assist our clients to ensure that this non-negotiable area is one where they can have total confidence, and therefore ultimately submit a compliant and high quality bid. We work with organisations to ensure the tender proposals they submit exceed all requirements and successfully secure contracts.