Tuesday, 4 February 2014

Don't mention you're in public procurement on your holidays - European Commission Anti-corruption report

The European Commission has just published its report on anti-corruption which aggregates various pieces of research and sadly highlights public procurement under the 'plenty of room for improvement' category.  

Research from 2008 is cited suggesting between 20%-25% of contract price and sometimes as much as 50% (p.21) can be included in some contract costs as a result of corruption. 

Looking across EU, 32% of companies which participated in public procurement said corruption prevented them from winning a contract (p.24). 

Areas of abuse were perceived to be ( p.25): 
  • specifications tailor-made for specific companies (57%), 
  • conflict of interest in bid evaluation (54%), 
  • collusive bidding (52%), 
  • unclear selection or evaluation criteria (51%), 
  • involvement of bidders in the design of specifications (48 %), 
  • abuse of negotiated procedures (47 %), 
  • abuse of emergency grounds to justify the use of non-competitive or fast-track procedure (46%), 
  • amendments to the contract terms after conclusion of the contract (44%).
I don't actually find the areas of perceived abuse remotely surprising but was initially slightly cynical of the research approach, for example, if you give someone a list of areas of abuse and asked them merely to guess were corruption is most prevalent, I think you'd get the same answers.

I had hoped an absence of reported instances of abuse through the legal system may have called into question the reliability of the statistics. However
A 2013 study on identifying and reducing corruption in public procurement in the EU identified four main types irregular practices concerning 96 cases in which corruption allegations have already been confirmed through final court decisions, or where there are strong indications of corrupt practices. These practices concern: (1) bid rigging (in the form of bid suppression, complementary offers, bid rotation and sub-contracting) when the contract is ‘promised’ to one contractor with or without the consent of public officials; (2) kickbacks, when the public official requests or accepts a bribe which will be accounted for in the tendering process, including administrative processes; (3) conflict of interest; (4) other irregularities including deliberate mismanagement/ignorance when public officials do not carry out proper checks or follow the required procedures and/or tolerate or ignore overt deliberate mismanagement by contractors.
Particularly depressing, allegedly 45% of the Europeans interviewed believe bribery and the abuse of positions of power for personal gain are widespread among officials awarding public tenders (p.25).

So when on your holidays it may not be such a clever boast that you're in public procurement.  

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