1. "Integrity Pacts - Civil Control Mechanism for Safeguarding EU Funds"
DG REGIO pilot project
"Integrity Pacts - Civil Control Mechanism for Safeguarding EU Funds"
ann-kerstin myleus
Deputy Head of Unit
DG Regional and Urban Policy
Unit E1 "Competence Centre for Administrative Capacity"

2. DG Regional and Urban Policy
Outline
What is an Integrity Pact?
2. What is the REGIO pilot project about and how will it be implemented?
3. Why join in piloting an Integrity Pact?
DG Regional and Urban Policy
Unit E1 "Competence Centre for Administrative Capacity Building; Solidarity Fund"

3. What is an Integrity Pact?
2 key elements:
(1) Agreement between Contracting Authority (beneficiary, project owner) and bidders to abstain from corrupt practices and conduct a transparent procurement
(2) External independent Monitor – NGO – monitors that all parties comply with commitments
THE TOOL
An Integrity Pact is a tool developed by Transparency International to help governments, businesses and civil society fighting corruption in public contracting. It is based on an agreement between a contracting authority (beneficiary, project owner) and bidders (economic operators) competing for public contracts that they will abstain from corrupt practices and will conduct a transparent procurement process. To ensure accountability and legitimacy, an Integrity Pact includes a monitoring system led by a civil society organisation which monitors that all parties comply with their commitments.
Integrity Pacts have been around since the 1990s, and have been applied in more than 15 countries and 300 separate situations.

4. Tool developed in 1990s by Transparency International
THE TOOL
An Integrity Pact is a tool developed by Transparency International to help governments, businesses and civil society fighting corruption in public contracting. It is based on an agreement between a contracting authority and economic operators bidding for public contracts that they will abstain from corrupt practices and will conduct a transparent procurement process. To ensure accountability and legitimacy, an Integrity Pact includes a monitoring system led by a civil society organisation which monitors that all parties comply with their commitments.
Integrity Pacts have been around since the 1990s, and have been applied in more than 15 countries and 300 separate situations.
Source: Transparency International Bulgaria

5. Integrity Pact stages This scheme illustrates several points:
Ideally Integrity Pact covers the entire process of procurement from drafting ToR till the end of contract implementation.
In practice it is possible to start applying integrity Pact at a stage of call for tenders, but it is rather recommended to start earlier to make sure ToR have been reviewed.
(2) The monitor draft reports for each stage that has been monitored and can make suggestions for improvement.
Source: Transparency International Bulgaria

6. Why REGIO pilot project?
€325 billion of ESI Funds for
Stronger focus on results and zero tolerance on fraud in cohesion policy
Public procurement (PP) is a high-risk area. PP errors and related financial corrections dominate in all Funds
DG REGIO is looking for new ways of safeguarding EU funds from fraud risks, irregularities and increasing transparency in the use of funds
About PP errors
European Court of Auditors audit reports on legality and regularity of EU accounts (known as DAS - statement of assurance):
2012: PP errors 52% in all errors
2013: PP errors 39% in all errors
Reasons for promoting Integrity Pacts in some of the EU Member States are to "change the climate" and to address the issues such as corruption and other forms of collution in public procurement (tenders)

7. The objective
To explore and promote the use of Integrity Pact as civil society control mechanism for safeguarding EU funds against fraud and corruption, and as a tool to increase transparency and accountability
In this project, DG REGIO seeks to pilot Integrity Pacts in a number of projects co-financed by the EU Structural and Cohesion Funds in the Member States. To test Integrity Pacts in practice, to learn experience in different areas and to disseminate for further application.

8. What will REGIO Technical Assistance finance?
Costs of independent monitoring in the Integrity Pact led by the NGO
Overall pilot project co-ordination, development of supporting materials and sharing of lessons learned

9. 2. Implementation of a number of Integrity Pacts
Pilot project - phases
Project structured into 2 phases
1. Preparatory phase
2. Implementation of a number of Integrity Pacts
Why 2 phases?
 To mobilise potential partners
 Time is needed for preparatory work & setting up IP
Role of DG REGIO is additional and only for this pilot project: initiation, testing, learning, dissemination, promotion)

10. Phase I activities
Learning from past IP experience and development of materials adapted to the EU Funds
Targeted outreach in Member States to raise interest in piloting IPs
International Conference in Brussels on 5 May 2015
2 Calls of Expression of Interest to pilot IPs for EU co-funded projects:
(1) For public authorities = authorities managing Structural and Cohesion Funds and public beneficiaries implementing projects co-financed by the funds
(2) For NGOs willing to act as IP monitors
Deadline 25/06

11. 2 Calls for Expression of Interest More detailed proposal
Short-lists
(1) NGOs
(2) Managing Authorities +
Public beneficiaries
2 Calls for Expression of Interest
Public benefici-aries and NGOs work together to develop detailed proposals
More detailed proposal
May – June 2015
July – August 2015 (TBC)

12. Role of Managing Authorities
- Not obligatory, not necessary for setting up an IP - Welcome in the phase of expression of interest to help to identify suitable projects and potential public beneficiaries to test the concept in practice - Can participate as a contracting authority (beneficiary) with own projects (TA) to give a signal about feasibility and to promote transparency

13. Why join in piloting Integrity Pact?
 Show leadership in promoting good governance and more transparency in public contracting
 Enhance trust in a contracting authority and procurement process, contribute to better reputation
 Make use of (free) expertise provided by monitor
 Potentially improve competition and savings
It is a preventive and constructive tool (not punitive!)

14. Real examples of Integrity Pacts I
Privatisation of the National Telecommunication Company (BG)
TI BG withdrew from the monitoring!
Second attempt successful and declared by TI BG and bidders as transparent
Trakia Motorway (BG)
Procedure lasted during 3 consecutive governments, final price was reduced 6 times, toll was removed from the original proposal
National Library (LV)
Cultural infrastructure
Anti-corruption declaration for bidders
Cost decrease from EUR 15m to EUR 9.5m

15. Real examples of Integrity Pacts II
Ózd town water supply rehabilitation project (HU)
Municipal infrastructure
Modernising mechanical and electrical system of a nursery building – Budapest district (HU)
Education / school infrastructure
6 IPs, 8 bidders - obligatory participation in IP, declaration already in their tender documentation

16. More information on Integrity Pacts
 Dedicated European Commission webpage on Integrity Pacts:
 Functional mailbox: