FCPAméricas Blog

UNODC: Assessing Corruption Risk in Public Procurement

Author: Guest Author

UNCAC.FCPAThe following is a guest post from Francesco De Simone, an Advisor at the U4 Anti-Corruption Resource Center, part of the Christian Michelsen Institute, and former Senior Policy Director at Transparency International – USA.

Corruption is prevalent in public procurement in both developing and developed countries, despite a significant body of research and analysis that has resulted in relatively well-established procurement integrity best practices. The persistence of corruption presents challenges for procurement policy-makers trying to reduce corruption, and for participants in public procurements (i.e., private companies) seeking to assess corruption risks.

Both audiences will find help with these challenges in a guidebook recently published by The United Nations Office of Drugs and Crime (UNODC). This guide on best practices in procurement integrity and anticorruption is intended to improve public policy, but it can also be used by participants in procurement processes (i.e., bidders and their counsel) to assess the corruption risks presented by public procurement rules and procedures.

This guidebook joins a number of handbooks on the same topic, including guides published by OECD and Transparency International, as well as resource websites by OECD, IACRC and Transparency International USA. But the new UNODC guidebook makes two key contributions to the body of knowledge on this topic:

1.     The UNODC guidebook looks at corruption in public procurement from an international perspective.

The UNODC guidebook is the first publication to look at this issue from the perspective of Article 9 of the United Nations Convention Against Corruption (UNCAC), which addresses “public procurement and the management of public finances”. By doing so, the guide puts the issue in an international and multilateral perspective. This is a welcome change, since corruption in procurement is often seen through the “national system” lens, despite having significant international implications.

For policy-makers, this is a reminder that establishing a transparent procurement system is not only a domestic issue, but also part of countries’ obligations under UNCAC. For private companies, it provides a neutral basis for assessing risks presented by local rules – risks relevant to the “demand” side of the bribery equation rather than the “supply” of bribes penalized by the FCPA, the UK Bribery Act and similar laws.

2.     The UNODC guidebook provides a comprehensive checklist of corruption risks and integrity measures in public procurement.

Chapter II of the UNODC guidebook contains a clear and comprehensive summary of corruption risks and related integrity measures in the various phases of public procurement. Compared to other existing guidebooks, the UNODC document is particularly insightful in that it clearly ties corruption risks to different phases in the procurement process, and recommends specific preventive measures for each phase. The descriptions are also supported by clear examples that will be helpful for policymakers, as well as bidders and other participants seeking to assess risk. [Ed. Note: FCPAméricas previously discussed the anatomy of corruption in public procurement here.]

If a weakness can be found, it is that the guide pays significantly less attention to the post-tendering phase (implementation and administration of contracts) than to the pre-bidding and bidding phases. With the current trend – particularly among development donors – to focus on results and performance, the implementation phase could have received a more thorough treatment. It is in this phase that some of the most elusive corruption and fraud schemes occur, and where contractors too should be particularly vigilant.

The guide contains as an annex a ‘Checklist for Meeting Minimum Requirements set out by article 9 of UNCAC’, which is designed to assess the level of compliance with article 9 by signatory countries. This checklist of minimum requirements, clearly relevant for policymakers, can also double as a due diligence checklist for bidders (and their lawyers) seeking to assess corruption risk related to public procurement rules.

Implementation not addressed

The Annex II questionnaire is aimed at verifying the level to which national legislation incorporates the principles described in the report. It does not, however, address implementation. This raises the pivotal issue of implementation disconnects: What happens when implementation and procurement practice are at odds with procurement laws and regulations? For example, many countries limit the circumstances under which non-competitive or emergency procurement methods – methods that present relatively high corruption risks – can be adopted. In practice, however, the interpretation of these limits is often stretched, and abuses are widespread. Ultimately, for all actors involved in the procurement process, including bidders, it is implementation of procurement rules that determines corruption risk.

The opinions expressed in this post are those of the author in his or her individual capacity, and do not necessarily represent the views of anyone else, including the entities with which the author is affiliated, the author`s employers, other contributors, FCPAméricas, or its advertisers. The information in the FCPAméricas blog is intended for public discussion and educational purposes only. It is not intended to provide legal advice to its readers and does not create an attorney-client relationship. It does not seek to describe or convey the quality of legal services. FCPAméricas encourages readers to seek qualified legal counsel regarding anti-corruption laws or any other legal issue. FCPAméricas gives permission to link, post, distribute, or reference this article for any lawful purpose, provided attribution is made to the author and to FCPAméricas LLC.

© 2014 FCPAméricas, LLC

Post authored by Guest

Categories: Anti-Corruption Compliance, English, FCPA, OECD, Procurement, Transparency International, UNCAC

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