OECD Recommendation on Enhancing Integrity in Public Procurement European Commission October 17, 2008 Elodie Beth, Policy Advisor, Public Governance and Territorial Development Directorate

Why enhancing integrity in public procurement? A crucial economic activity of governments: 15% of GDP A major risk area for mismanagement and corruption Reforms at the international level have focused on the tendering phase, the “tip of the iceberg”

Public procurement: A major risk area

Applying elements of good governance in public procurement 2004 Global Forum on Governance: Lack of transparency and accountability recognised as a major threat to integrity in public procurement Good governance approach Apply elements of good governance – not only transparency and accountability – in public procurement Focus on policy and practice, rather than regulations when possible

Identification of good practice Network of nominated experts on integrity in public procurement Steps for the identification of elements of good practice: a)International survey b)Review by experts at the 2006 Symposium on integrity in public procurement c)Role of private sector and civil society at the Global Forum on Governance Publication Integrity in Public Procurement: Good Practice from A to Z, 2007

The Principles and Checklist Checklist for Enhancing Integrity in Public Procurement Policy guidance for preventing waste and corruption in procurement Consultation with stakeholders Governments from non-member countries, private sector, civil society such as TI and TUAC, academics, international organisations (EC, UN, WTO, WB, AfDB, ADB, IADB, etc.) ‏ + OECD bodies Approval of the OECD Recommendation on Enhancing Integrity in Public Procurement in October 2008

Could countries do more? OECD Recommendation on Enhancing Integrity in Public Procurement A pioneer policy instrument to prevent waste, fraud and corruption in public procurement Covers the whole procurement cycle, from needs assessment to contract management An instrument that builds on a multi- stakeholder perspective

Principles Addressing grey areas Transparency 1.Provide an adequate degree of transparency throughout the whole procurement cycle in order to promote fair and equitable treatment for potential suppliers 2. Maximise transparency in competitive tendering and take precautionary measures to enhance integrity, in particular for exceptions to competitive tendering

Element of good practice for transparency  Practice: Publishing a notice on the amendment and execution of the contract  By whom: The Public Procurement Council in Hungary, an autonomous body reporting to Parliament  Policy concern: Preventing risks of corruption and ensuring accountability in the contract management  Role of private sector actors and civil society to monitor contract

Principles Good management 3. Ensure that public funds are used in public procurement according to purposes intended 4. Ensure that procurement officials meet high professional standards of knowledge, skills and integrity

Element of good practice for using public funds  Practice: Parliamentary inquiry on big infrastructure projects in the Netherlands  Policy concern: High risks involved in infrastructure projects where budget planning may not be adequate (e.g. unplanned events, change of scope of project)  Findings of inquiry: 9 out of 10 decisions are misinformed about costs and benefits (e.g. cost overruns, benefits shortfalls)  Recommendations of inquiry: -Introduce explicit parliamentary agreement on the need for large infrastructure projects -Increase control on government purchasing and spending

Principles Prevention of misconduct 5. Put mechanisms in place to prevent risks to integrity in public procurement 6. Encourage close co-operation between government and the private sector to maintain high standards of integrity, in particular in contract management 7. Provide specific mechanisms to monitor public procurement as well as to detect misconduct and apply sanctions accordingly

Element of good practice for prevention of misconduct  Practice: Introduction of conflict-of-interest measures for officials in Spain  For whom: High-level and procurement officials  Policy concern: Avoiding conflict of interest and corruption  Solution developed: Law on Conflict of Interest for Members of Government and High-ranking officials -Law for Public Sector Contracts -Set up of Office of Conflict of Interest (e.g. registry) -Reinforcement of sanctions (e.g. pension, disqualification from public position)

Principles Accountability and control 8. Establish a clear chain of responsibility together with effective control mechanisms 9. Handle complaints from potential suppliers in a fair and timely manner 10. Empower civil society organisations, media and the wider public to scrutinise public procurement

Elementsof good practice for recourse  Body: The National Review Commission in Slovenia since 1999  Policy concern: Reviewing complaints in procurement in an independent and timely manner through the creation of this body under the parliament  Role: Appellate body that can: -Annul decisions of contracting authorities -Advise a contracting authority on how to implement the procedure regarding the invalidated element (advice can be binding)  Timely resolution: Automatic suspension effect of a claim submitted to the Commission, and obligation to give judgements within 15 days from receipt

Elementsof good practice for public scrutiny  Practice: Social Witnesses in Mexico  Policy concern: Prevent risk of corruption in public procurement and improve efficiency through direct social control  Solution developed: Involvement of a civil society representative who acts as an external observer in the public procurement process  Conditions: Clear criteria for participation (e.g. reputation, competency, no conflict of interest) and liability for their actions (e.g. sanctions)  Impact: Increase in number of bidders as well as improvement of procedures

How to ensure the implementation of the Recommendation? Review mechanism of progress made in 2011 in OECD countries = involvement of governments + private sector + civil society Tools for implementation -Checklist for each stage of the procurement cycle -Inventory of techniques for fraud and corruption Policy dialogue and country studies: Pilot application of the Principles in Morocco

Thank you for your attention. For further information:  OECD Checklist for Enhancing Integrity in Public Procurement, at ww.oecd.org/gov/ethics ww.oecd.org/gov/ethics  Report “Integrity in public procurement: Good practice from A to Z”, OECD, 2007