INTEGRITY PACTS IN ECUADOR: Effective measures against corruption in Public Procurement VALERIA MERINO DIRANI

WHEN DOES CORRUPTION APPEAR? ROBERT KLITGAARD FORMULA M+D-T = C C= CORRUPTION M= MONOPOLY OR CONCENTRATION OF POWER D= DISCRECIONALITY T= TRANSPARENCY

INTEGRITY PACT “Is a tool to identify a transaction within a market and get the actors in that transaction to commit to integrity, in a coordinated manner, and to monitor in a pro-active way the transparency of the process”

INTEGRITY PACTS: Conditions for implementation High levels of systemic corruption; Need of structural reform; Severe party politics influence over public contracting system; and, Opportunity to isolate a specific procurement processes and promote transparency within it (strategic nature or amount).

WHAT IS THE LONG TERM OBJETIVE OF THE INTEGRITY PACTS? TO PROMOTE THE INSTITUTIONALIZATION OF SPECIFIC PRINCIPLES THAT ASSURE TRANSPARENCY

This includes: STRUCTURAL REFORM TO ERRADICATE THE CONDITIONS THAT PERMIT AND PROMOTE CORRUPT ACTIVITIES IN PUBLIC CONTRACTING ENABLING AN ADEQUATE ENVIRONMENT TOWARDS THE PROMOTION OF PROFOUND REFORMS IN THE PUBLIC CONTRACTING SYSTEM

SPECIFIC OBJECTIVES: Improve transparency and accountability in a particular procurement process; Improve citizen's perception of transparency regarding the public sector; and, Initiate a public discussion process about the public contracting regulations.

Integrity pacts = Efficiency The nature of the IP’s allows for the promotion of transparency and anti-corruption at a very efficient cost-benefit ratio

Implementation – Tools Cooperative Agreement Code of Conduct Confidentiality Agreement Integrity Pact

Main elements of the IP’s: Access to information Active monitoring Possibility to improve the bidding documents Inclusion of IP tools in the bidding documents Confidentiality and handling of privileged information

Main elements of the IP’s: Reduction of conflict of interest Justification of technical decisions Justification of legal interpretations and decisions Clear record keeping

Limitations: There is a difficult tension between the interest in depicting results and the necessity of dedicating the sufficient time towards adequately structuring the bidding process and discussing with experts or interested parties; The tendency to consider that all problems should be resolved through legal means; and,

Limitations: The inherent difficulties of working on ethical compromises and voluntary cultural changes, as those within the “Integrity Pacts”.

Special attention should be placed on the following issues in the procurement process: Clearly define which requirements are mandatory and if not complied with, result in automatic disqualification, avoiding discretion in the interpretation;

Special attention should be placed on the following issues: Guarantee an adequate evaluation and separation of the technical and economic aspects of the proposals in such a way that, once the technical suitability of the proposals is ensured, those participants satisfying the minimum requirements would proceed to the financial bidding competition - preferably in a public hearing;

Special attention should be placed on the following issues: Avoid the manipulation of information by public officials; Eliminate the requirement of documents, which do not add valuable or pertinent information for the proposal evaluation; Avoid subjective criteria in the evaluation (for example the qualification of the proposed methodology) which may bias the results;

Special attention should be placed on the following issues: Eliminate requirements or criteria that can be completed by only one proponent; Eliminate, as much as possible, the existence of confidential information and control its possible leakage; Advance publication or public discussion of the first draft of the contract in order to avoid later changes in the contract terms which would favour one proponent; and, Avoid ex-parte communications.

Efficiency and effectiveness; Competitiveness; Transparency; “Integrity Pacts” must certainly focus on the institutionalisation of certain elements: Efficiency and effectiveness; Competitiveness; Transparency; Publicity; and, Civic Participation.

Valeria Merino Dirani Phone; 1(202) 250 0376 E-mail: vmerinodirani@hushmail.com