Anti-corruption measures under the new EU Public Procurement Directives Naples 25 June 2014 Silvio GRIECO European Commission Directorate General Internal Market and Services Directorate C - Public procurement

Presentation outline Public procurement was the subject of a special chapter in the first EU Anti-Corruption report, published on 3 February 2014. Public procurement was chosen because it is: of crucial importance for the Internal market covered by extensive EU legislation a "Hot spot" for corruption. Public procurement rules, besides the main aim of opening the market, contribute to: Preventing corruption Detecting corruption Redressing corruption. 19/09/2018

Public Procurement is of crucial importance for the Internal Market 1/5 of EU GDP (= 2.3 Trillion Euro) spent by European contracting entities on goods, works and services. Total value of calls for tenders above thresholds for the application of EU rules (5 186 000 EUR works, 207 000 EUR most supplies and services): approx. 425 Billion in 2011. Italian data: Public procurement worth about 251.56 Billion in 2011. Public works, goods and services constituted 15,9 % of Italian GDP. 19/09/2018

Public Procurement is covered by extensive EU legislation Revised Classic Public Procurement and Utilities (water, postal, energy, transport) Directives entered into force on 17th April 2014. New Concessions Directive. Remedies Directives to exercise judicial control over the procurement process. Defence procurement Directive to regulate procurement in a high price and formerly intransparent sector. 19/09/2018

Public Procurement: a "hot spot" for corruption High level of financial interests at stake, especially in certain sectors (e.g. infrastructure). The costs of corruption are difficult to quantify, but they are too high, as regards the effects on the economy, citizens' trust. Situation in Italy: According to the 2013 Eurobarometer Business survey on corruption, 70 % of Italian respondents consider corruption widespread in national public procurement (EU average: 56 %). 19/09/2018

Public Procurement rules to prevent corruption 19/09/2018

General principles for transparent procedures Rules for public procurement are there to guarantee transparent and non-discriminatory procedures As transparency is the worst enemy of corruption, public procurement rules, if followed, prevent corruption. Contracting entities, to remain the master of the process, should make use of: Prior publication of tenders Clear and unbiased technical specifications Equal treatment of bidders in all stages of the process. 19/09/2018

General principles for transparent procedures Contracting entities, to get what they need at the best price, should also make use of: Objective evaluation of tenders according to an appropriate methodology, unbiased award criteria, not guided by conflicts of interests; Concluding the contract as tendered; Executing the contract as concluded. 19/09/2018

The EU Reform of Public Procurement The reform of the public procurement directives and the new concessions directive should ensure effective procedures for purchases at best price tailored procedures to all possible needs of contracting authorities simpler rules because complex, bureaucratic processes extend the opportunities for corruption. The transposition period of these new directives gives each Member State the opportunity to raise awareness of the rules amongst all public procurement actors, including the judiciary, to overhaul the organisation of its public sector, to reconsider in depth the efficiency of its current public procurement and anti-corruption policy. 19/09/2018

The EU Reform of Public Procurement The new directives enhance transparency: E-procurement is generalised and becomes mandatory. The setting of a legal framework for concession contracts enhances transparency in this field. A standard form self-declaration for bidders, the "European Single Procurement Document" is introduced, which makes it more difficult to exclude tenders in the selection phase. 19/09/2018

The EU Reform of Public Procurement The new directives enhance transparency: The scope of the public procurement directives is extended to the post-award phase, which is particularly vulnerable to corruption, as the modification of contracts during their term without a new tender procedure is now regulated. Copies of high value contracts must be made available on request with exceptions for commercially sensitive information. Guidance for contracting authorities by Member States and administrative exchange of information are required by the Directives. 19/09/2018

The EU Reform of Public Procurement The new Directives strengthen the anti-corruption purpose: The exclusion grounds for bidders are strengthened and extended to situations where bidders: have entered into agreements have tried to influence or mislead the contracting authority have tried to obtain confidential information. The notion of "conflicts of interests" is defined on EU level and Member States and contracting authorities are asked to take appropriate measures to effectively prevent, identify and remedy conflicts of interests. Member States must monitor and report on measures to prevent and detect procurement fraud, corruption and conflicts of interest and other serious irregularities. 19/09/2018

Public Procurement rules to prevent corruption: good practices E-procurement, Portuguese portal allowing for: downloading entire documentation free of charge, managing all aspects of information exchange online, monitoring of concluded contracts, e-invoicing, collecting statistics on the procurement process. Prevention of conflicts of interests, Croatian database: is run by an NGO free of charge to the public, gathers information on public procurement procedures, companies, assets and interests of officials, allows for cross-checks. 19/09/2018

Public Procurement rules to detect corruption 19/09/2018

Monitoring Member States need an efficient monitoring system based on relevant indicators for corruption = red flags. The colleague from OLAF already talked about red flags. In order to develop mechanisms to better detect and address corruption, Commission services want to identify the most relevant red flags for corruption in PP. One IT tool, which is based on such indicators, is presented in the parallel workshop on ARACHNE. It is to be seen what can be the consequences of ignoring relevant red flags for procuring and supervisory authorities. Likewise, it is to be seen how the monitoring of public procurement can be further developed on EU and MS level. 19/09/2018

Public Procurement rules to redress corruption 19/09/2018

Redress corruption Effective review procedures according to the rules of the Remedies Directives by independent and professional review bodies Effective monetary follow-up of corrupt practices by applying financial corrections to EU funds, by annulling affected contracts ex-tunc? Effective sanctioning of corruption in procurement by an independent judiciary which knows the public procurement rules and is vigilant to corruption. in a procedure of appropriate length 19/09/2018

Redress corruption As all controls have limits, what is mainly needed, is a change of attitude: Culture of Integrity - Public service for Better quality – procurement officers have to work with their purchases Increased public savings – to have more budget for higher salaries Improved business environment – local taxes ->better infrastructure Procurement officers should take responsibility from the very beginning of the process until the very end. Political leaders should lead by example. 19/09/2018

Public procurement and corruption in Italy: recent developments Anti-corruption law 2012 (online-publication by all administrations of annual accounts, broken-down costs of public contracts, ongoing and past tender procedures) Anti-corruption Authority – control powers over public contracts? Legislation on traceability of funds and transactions 19/09/2018

Public procurement and corruption in Italy: need for a systemic reform? Simplification of the Code of Public Contracts and its execution Regulation Improving the administrative capacity of contracting and supervisory authorities Closer monitoring the post-award phase Mechanisms to reduce litigation 19/09/2018

Thank you for your attention All information can be retrieved on our website: http://ec.europa.eu/internal_market/publicprocurement/index_en.htm Contact: silvio.grieco@ec.europa.eu 19/09/2018