In many countries firms pay bribes to win government contracts. This paper looks the effect of corruption during the bidding process on competition for these contracts. The empirical results, using data from Afghanistan, suggests that corruption might discourage firms from bidding on government contracts. Firms that do not bid on government contracts are far more likely to say that corruption is a serious problem than firms that do. One plausible explanation for this is that corruption discourages firms that are particularly averse to bribing from bidding. Corruption also appears to affect the outcome of the bidding. Firms that win contracts with international organizations—where corruption is lower—appear to be better performing than the losers. The same was not true for firms that win government contracts, suggesting that corruption might lower the quality of firms winning government contracts.