REGIONAL POLICY PAPER #1
INCREASING INTEGRITY AND EU CITIZENS’ TRUST IN PUBLIC PROCUREMENT OVERVIEW Public procurement systems across the European Union (EU) need to be robust, transparent and open to public monitoring. Only then can governments, bidders and contractors be held to account for how public money is spent, and corruption can be prevented. Corruption siphons off public funds, obstructs the functioning of the single market, and distorts fair competition. For these reasons, it is vital for the EU to ensure public procurements are sound, transparent and accountable. Public procurement at the EU-level is currently being reviewed; the inclusion of strong anti-corruption provisions is a way of increasing efficiency and creating the potential for substantial and immediate cost-savings. This is particularly urgent given the European sovereign-debt crisis, crippled economic activity across the region and national austerity measures that have made it necessary to make each Euro count. Only a strong and effective legal framework and strict enforcement practices can guarantee such a scenario. \\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\ cost of purchases, investments and services to an unnecessary extent. It reduces the quality of the works or services provided. Worst of all, it ultimately erodes people’s trust in their leaders and the state. To simplify procurement procedures, the European Commission (EC) has prioritised revising existing procurement legislation 2 , as it has outlined in the AntiFraud Strategy 3 and Single Market Act 4 of 2011. Each of these measures also presents an opportunity to mitigate the high risks of corruption in EU procurement.
II. PROCUREMENT CYCLE RISKS
Corruption in public procurement appears in different forms. These include bribery, facilitation payments and collusion, conflicts of interest, bid-rigging and trading of influence. Each of these manifestations of corruption can appear throughout the five stages of the procurement cycle: needs assessment, preparation, contract/supplier selection and contract award, contract execution and final accounting and payment. 5 For example, at the needs assessment stage, corruption, as a result of bribes or conflicts of interest among policy-makers, may lead to the approval of unnecessary projects, low quality investments or inflated costs. An effective strategy to prevent or control corruption throughout the public procurement cycle will recognise the difference in all phases and will be attentive to red flags as triggers for due diligence and/or corrective action. Corruption in public procurement often takes subtler forms that are harder to detect and which may not involve public officials in the abuses. This is evident in the use of cartels and collusion among bidders to
I. CORRUPTION AND PROCUREMENT
Few activities create greater temptations or offer more opportunities for corruption than public sector procurement. On average, the procurement of goods, works and other services by public bodies amounts to 18 per cent of the national output of EU member states. 1 When procurement processes are effective, they allow for an efficient allocation of public monies that supports a country’s economic growth and benefits the daily lives of citizens. Yet corruption can quickly undermine these outcomes. Corruption increases the
INCREASING INTEGRITY AND EU CITIZENS’ TRUST IN PUBLIC PROCUREMENT
manipulate the award decision in favour of one of the members. Cartel practices can include informal agreements to assign “turns” among the members for winning public bids, or they may agree to internal compensation payments for submitting high or other “failed” bids. 6
III. INTEGRITY GAPS IN THE EU
Public procurement is one of the areas in the EU where corruption risks are highest, according to an assessment of anti-corruption systems in 25 European countries that was carried out in 2012 by Transparency...
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