Public procurement: guide to help citizens get value for their taxes

Every year an average US$9.5 trillion of public money is spent by governments on procuring goods and services, ranging from equipment for public hospitals and textbooks for schools, to large-scale construction projects, such as building roads, bridges and airports.

With so much money at stake, the contracting process, referred to as public procurement, presents a great temptation for corruption. Estimates put the money siphoned off from the worldwide public procurement budget through corruption at between 20 and 25 per cent.

Corruption doesn’t just steal public money, it distorts competition, reduces the quality, sustainability and safety of public projects and purchases, and makes it less likely that the goods and services procured really meet the public’s needs.

Here are some cases making the news recently:

• French industrial group Alstom is at the centre of a five-year probe by the UK Serious Fraud Office, which has investigated allegations that the company paid US$8.5 million in bribes to secure transport contracts in India, Poland and Tunisia. If found guilty on the charges of corruption and conspiracy to corrupt, the company’s transport business could be banned from competing for public contracts in the European Union.

• In Spain, 51 people have been arrested and some imprisoned as part of “Operation Púnica” – a major corruption investigation probing a scheme in which a number of local officials reportedly received kickbacks from companies for awarding public contracts worth around US$300 million.

• Turkey’s construction sector has come under the spotlight with allegations that companies loyal to the ruling party are being favoured when state-backed projects are handed out.

When greed clouds the appointment of the right contractor for the job, the citizens of a country pay the ultimate price.

But the risk of corruption does not only exist at the contracting phase, it can occur before that, when the project needs are assessed, or afterwards, once the contract is being implemented.

However, there are ways of protecting against corruption. Our guidelines on public procurement provide concrete recommendations and a checklist to governments. Here are some practical examples:

• Simple transparency measures: Make information related to public tenders available to the public, and allow citizens to take part in the process, and file complaints if irregularities are witnessed.
• Integrity Pacts: Governments and companies taking part in a bid should make specific commitments to avoid corruption. Commitments should then be overseen by an independent monitor.
• Appeals processes: Allow any aggrieved bidder to get their complaints examined independently.
• Open, competitive bidding: This ensures governments find the best value for the services or goods purchased.
• E-procurement: Using open web portals to publish tenders increases transparency and offers opportunities for citizens and civil society to monitor procurement processes.

Find out more about corruption and public procurement here.

Carousel image: Flickr, Kyle May