In yet another dubious procurement deal, the Defense Agency sounded out major oil firms on desired contract prices before accepting bids for the supply of aircraft fuel, it was learned Wednesday from a Board of Audit investigation.
The prices proposed by the agency’s Central Procurement Office were calculated to meet the expectations of the petroleum firms designated to join the bidding, sources close to the case said.
The Board of Audit has already told the agency to review the practice, the sources said. The agency reportedly responded that it will consider making the bidding process more open and transparent.
The procurement office has signed 350 deals on aircraft fuel with 11 designated petroleum firms, amounting to 48 billion yen between fiscal 1995 and fiscal 1997, it said.
When auditors checked the bidding processes used in those deals, most of them were found to have been unsuccessful in the first round due to the wide gaps between agency-proposed prices and those offered by the firms.
In those cases, the procurement office then asked the firms for desired contract prices and held a second round of bidding by proposing prices that would meet their expectations, the sources alleged.
In one example, the procurement office initially proposed 25,900 yen per kiloliter in the first round of bidding, but the deal was eventually struck at 29,000 yen per kiloliter in the second round after the agency raised its proposed price, they added.
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