Public procurement is a high-risk sector. The OECD Foreign Bribery Report found that almost two-thirds of cases of bribes paid in international transactions involved public procurement. Governments are emphasising public integrity as a strategic and sustainable response to corruption. Safeguarding the public interest is the fundamental mission of governments and public institutions. They must ensure that public officials do not allow their private interests and affiliations to compromise their official duties. In addition to the risks of integrity breaches, many other risks are present across the public procurement cycle, including, among others: risks of waste or inefficiency in all aspects of the procurement process, from planning to tendering; contract execution and payment; risks related to failures in the information technology (IT) infrastructure, including e-procurement systems and related databases/e-registries; financial risks, and reputational risks/potential damage to the image of the contracting authority.
Risk management encompasses several steps in assessing risks (including an assessment of the nature, causes and potential consequences of risks) and mitigating them. While only 52% of OECD countries indicated that they have developed a strategy for the assessment, prevention and mitigations of public procurement risks, there may also be government-wide risk and control policies that apply. Public procurement risks need to be actively managed from an early stage, particularly in cases of procurement for large and complex projects, such as in the case of public infrastructure. Public procurement laws and regulations are at least partially applicable to the procurement of public infrastructure in all OECD countries, with 61% of countries applying it to all infrastructure projects. Building on the application of public procurement principles and frameworks, tailored tools can help identify and mitigate risks that are often associated with procurement of major infrastructure projects, like risks of inefficiency, lack of quality, cost overrun and corruption.
Countries are paying much attention to the development of integrity systems and tools to mitigate integrity risks. One major integrity risk in public procurement is conflict of interest. According to the most recent data, 90% of OECD countries have a definition of conflicts of interest for public procurement officials in their regulatory framework. However, the declaration of whether or not there are conflicts of interest is not universally applied in all OECD countries. Results from the OECD Survey on the Implementation of the 2015 OECD Recommendations on Public Procurement show that declarations by public officials as to whether or not they have a conflict of interest during a public procurement procedure were made in 81% of OECD countries. A vast majority of OECD countries also promote integrity in public procurement through the debarment of suppliers found guilty of bribery or other integrity breaches. Some countries, such as Canada, have Codes of conduct consolidating relevant regulations and policies into a concise and transparent statement of the expectations the government has of its employees and its suppliers. In around one-third of OECD countries, suppliers commit to avoiding any kind of corruption when submitting an offer (“no corruption warranty” as part of bid documents).
