1. Center for Good Governance Studies
Red Flags and Effective Tools for Fighting Corruption In Public Procurement
Dacian C. Dragos
Center for Good Governance Studies
Bucharest
2017

2. Public procurement in the EU
TOOLS against CORRUPTION in Procurement
Public procurement in the EU
Public procurement - (one of) the driving force(s) of economic development and innovation
Corruption
5 % of global GDP,
adds up to 10 % of the total cost of doing business on a global basis
adds up to 25 % of the cost of procurement contracts in developing countries.
Sustainable PP: necessary condition: INTEGRITY

3. Corruption in PP Public procurement Specifics of PP in CEE countries
TOOLS against CORRUPTION in Procurement
Corruption in PP
Public procurement
the government activity most vulnerable to waste, fraud and corruption
corruption may occur in all of its phases:
preparation or planning,
tendering
execution
Specifics of PP in CEE countries
complex, unstable and unclear regulations
large number of institutions overseeing the management
excessive bureaucracy
delayed payments
Systemic/endemic character . Causes/explanations:
communist legacy; cultural values; lack of genuine political will; lack of leadership and consistent, targeted action against corruption, as well as ongoing political changes; the implementation process.

4. Forms of corruption Specifications tailor-made for certain companies
TOOLS against CORRUPTION in Procurement
Forms of corruption
Specifications tailor-made for certain companies
Conflict of interests in the evaluation of bids
Collusive bidding
Unclear selection or evaluation criteria
Involvement of bidders in the design of specifications
Abuse of negotiated procedures
Abuse of emergency grounds to justify use of non-competitive or fast-track procedures
Amendments of the contract terms after conclusion of the contract

5. Issues: Comparative perspective:
TOOLS against CORRUPTION in Procurement
Issues:
Comparative perspective:
main red flags of corruption in public procurement
stages where they occur
the most effective anti-corruption tools
challenges and best practices
the experience of various EU jurisdictions and the US
specific challenges faced by CEE countries

6. Anti-corruption tools – effectiveness?
TOOLS against CORRUPTION in Procurement
Anti-corruption tools – effectiveness?
Incentives for public officials to resist corruption?
Ethics regulations for officers and employees of procuring entities?
Conflicts of interest
Whistleblowers
Self-reporting by highly motivated organizations?
External pressures: social witnesses - NGOs, the press, citizens?
Monitoring by the unsuccessful tenderers?
Electronic procurement
Institutionalized controlling mechanisms
ex ante AGENCIES
ex post - “blacklisting”, or debarment
Overarching: TRANSPARENCY
Ineffectiveness of the contract?

7. 1st dimension: risks/red flags
TOOLS against CORRUPTION in Procurement
1st dimension: risks/red flags
Data base : invitation/participation notices, their publication, number of bids received, award of the contract (same tenderers), etc.
A sample of public procurement contracts
Stratification criteria:
financing (EU financed contracts and nationally financed ones),
types of contracts and domains (goods, services, and works/infrastructure),
types of contracting authorities (central and local), etc.
Corruption indicators
Ratio of contracts which are affected by one or more corruption red flags
Types of corruption practices
Links between the value of the contract and red flags

8. 2nd dimension: effective tools
TOOLS against CORRUPTION in Procurement
2nd dimension: effective tools
Ex ante control/ ex post control
aspects monitored
any indications that control is curbing corruption?
costs associated with control? Do the benefits justify the costs?
Ex ante – Ex post control - controversies
Conflicts of interest
significant form of corruption?
broad or narrow concept?
types of sanctions
Electronic procurement
which stages of the public procurement process are carried out online
electronic procurement increase transparency? Perception
Quotas of public procurement to be carried out online?

9. 2nd dimension: effective tools (2)
TOOLS against CORRUPTION in Procurement
2nd dimension: effective tools (2)
4. Debarment/blacklisting
Effective?
Drawbacks?
More red tape?
Self-cleaning?
5. Ineffectiveness of contract?
1. ”sacred cow” policy
2. extension of grounds for ineffectiveness?
6. Transparency
1. ex ante – ex post? Contracts?
2. commercial sensitive information

10. DACIAN C. DRAGOS
Center for Good Governance Studies