13 procurement integrity management and openness forum may...

UNCITRAL United Nations Commission on International Trade Law

13th Procurement Integrity Management and

Openness Forum

May 23-25, 2017

Kyiv, Ukraine

UNCITRAL Perspective on Curbing Corruption

Caroline Nicholas

UNCITRAL

Secretariat

May 2017


Enduring problems in public procurement

“[G]overnments have in the past with few

exceptions notoriously failed as

purchasers. [...] Dealers complain of red

tape which hampers them in bidding, in

delivering goods and in securing the

payment of bills. Government executives

themselves complain of delays between

the issue of purchase acquisitions and the

availability of goods for use. Citizens

generally are prone to assert that graft and

political favouritism taint a large part of

government purchasing.”



What is corruption?

“The abuse of public or private office for personal gain”



• “Corruption is one of the

most toxic impediments to

efficient and effective

investment.”

- Angel Gurría, OECD

Secretary-General, 2015

OECD Integrity Forum


Impact of corruption



Some numbers and context …

• WBI estimate: systemic corruption means 20-30% of public procurement wasted

• OECD estimate: public procurement averages 13.8% GDP

• EU estimate: EUR 120 bn p.a. (20-25%) losses

• Bandiera, Prat, and Valletti (CONSIP):

“Government spending in Italy - inefficiency vs. corruption”

• Passive waste – 80%

• Active waste – 20%

• In OECD countries: 1% saving in public spending = 43 billion EUR per year



Corruption prevention strategies

• Sound legal framework (UNCAC article 9)

• “appropriate systems of procurement, based on transparency,

competition and objective criteria in decision-making, that are

effective, inter alia, in preventing corruption”

More detailed rules are needed to implement the UNCAC principles

• UNCITRAL Model Law is fully UNCAC-compliant

• ERBD-UNCITRAL Initiative, among others, to advise national governments



A sound legal framework


http://uncitral.org/uncitral/en/uncitral_texts/procurement_infrastructure.

html



UNCITRAL safeguards

• Publicity of legal texts

• Publicity of all the ‘rules of the game’ in advance

• Rules on communications

• Award criteria and procedures• Competitive, objective processes

• Exhaustive record keeping

• Notification of award

• Standstill notice

• Publicity of award

• Notification and publicity of all other decisions



Legal “red flags”

1. Insufficient transparency

• Subjective criteria (“reputation”)

• Failure to require full disclosure of award criteria

• Sub-criteria and weightings

• Exceptions to notice requirements (“urgency”, “clarifications”)

• Many exceptions

2. Excessive transparency and collusion /bid

rigging?

• Pre-bid conferences

• Results of pre-qualification

• Details of evaluation

• Two-stage tendering

• Framework agreements



Exhaustive record requirements - UNCITRAL

• Legal requirement for a procurement record

• All major decisions to be explained

• Procurement method

• Qualification, evaluation criteria

• Socio-economic criteria

• These tools allow non-compliance and

corruption to be visible and investigated



Limitations of legal framework

• Covered: Selection process, but• Thresholds

• Exempted sectors (defence)

• Often not covered• Planning, contract management, oversight

• Sometimes not covered• Compliance programmes for suppliers (integrity pacts

etc)

• Sanctions and debarment

• Interaction with other areas: e.g. culture, workload, professionalization, training, performance appraisals, incentives for identification of corruption/collusion, etc



Using the procurement record effectively (1)

• Including planning and contract management

• Who can see the information?

• Confidentiality and timing concerns

• Facilitating challenges and oversight

• Impact on ….

• Collective action

• Include private companies, academia

• Civil society

• Whistleblowing

• “Excessive transparency”?



Ongoing reluctance in some countries to publish procurement contracts



Using the procurement record effectively (2)

• Data

• How to make data accessible?

• Example: “Open Contracting Data Standard”

• Structured, standardized, open data & documents

• Searchable (cf pdfs …)

• Can identify questionable practices

• All 3 phases of procurement cycle

• Can identify patterns across

procurements



Examples …

AND Paraguay, Mexico City, Nigeria, the UK, Colombia,

Mexico, Taiwan and Moldova



• Publish early, and iterate: improving disclosure step-by-step

• Simple and extensible JSON structure

• Publish data for each step of the contracting process

• Create summary records for an overall contracting process

• Re-useable objects: organisations, tender information, line-

items, amounts, milestones, documents etc.

• Recommended data and documents at basic, intermediate &

advanced levels

• Common open data publication patterns

• Guidance on improving data collection and data quality

• A growing community of users and range of open source tools



• Many research and practical tools available …

• ACRN - Anti-Corruption

Research Network

• http://corruptionresearch

network.org


Corruption in Public Procurement

For more information

Website:– http://www.uncitral.org/uncitral/uncitral_te

xts/procurement_infrastructure.html

Contact: [email protected]

THANK YOU

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