The consumer watchdog has warned government agencies to be on the look out for "cartel behaviour" from companies looking to game the tender and procurement process.
The Australian Competition and Consumer Commission said on Monday it was concerned not all public servants and businesses understood the risks of breaching the so-called cartel laws during the procurement process.
It comes a few months after the ACCC launched proceedings against a Canberra company for allegedly attempting to rig a bid for a tender with the National Gallery of Australia.
Cartel conduct happens when businesses work hand-in-hand on a tender process instead of against each other.
It allows the cartel of potential suppliers to drive up profits while agencies remain none the wiser.
Watchdog chair Rod Sims said it was illegal in both the public and private sector procurement process.
"Encouraging businesses to discuss their bids with each other, or to make agreements about who will bid for a particular tender, is likely to amount to cartel conduct which is against the law," he said.
"Cartel activities may start with a small encouragement or an innocent remark, but this can create an environment that enables, condones or facilitates collusive conduct between competing firms."
During the 2019-29 financial year, there were more than 80,000 contracts, totalling $53.9 billion, published on the federal government's tender site.
Mr Sims warned the illegal conduct would also drive up the bill placed on the public purse.
"Competition to supply governments with goods and services is crucial in ensuring value for money for taxpayers," he said.
"Cartel conduct in government procurement is therefore not only against the law, but will often result in taxpayers paying considerably more for goods and services."
In May, the ACCC took action against Canberra company Delta Building Automation Pty Ltd and its sole director Timothy Davis, for allegedly attempting to create a cartel in relation to an approach to market by the National Gallery.
The watchdog alleged Mr Davis met with a competitor company in a cafe last year, where he attempted to rig the price of the bids to be submitted for the gallery tender by Delta and the competitor.
Ultimately, the competitor didn't accept the deal from Delta and Mr Davis, and an arrangement for a cartel wasn't made, the watchdog said.
It added the National Gallery was not involved in or aware of the alleged conduct, and didn't suffer any financial loss as a result of it.
