Unethical practices can occur in all phases of the public procurement cycle (pre-tendering, tendering and post-award phases). However, each phase may be prone to specific kinds of integrity risks, from loss of public money through corruption (including bribery, cartelism, nepotism, etc.), fraud and theft for example through product substitution, conflicts of interest leading to undue influence, and unnecessary contracts.
Integrity in public procurement
Public procurement is the government activity most vulnerable to waste, mismanagement and corruption. The financial interests at stake, the volume of transactions and the close interaction between public and private sectors in the award of public contracts all pose risks to integrity.
Key messages
Especially in the case of medical supplies and infrastructure works, unethical behavior in public procurement can put people’s lives at risk. As a tangible government activity, public procurement can have an impact on trust in government, for example when citizens witness poorly managed infrastructure projects or wasted public money on useless products.
The OECD recommendation on public procurement underlines a number of actions from training programmes for the procurement workforce, internal control measures, to integrity frameworks, that can help combat corruption.
Context
More than half of foreign bribery cases occurred to obtain a public procurement contract .
It has also been estimated that 10-30% of the investment in a publicly funded construction project may be lost through mismanagement and corruption (CoST, 2014) and more than 3 out of 10 companies that have participated in a public tender say corruption prevented them from winning (Flash Eurobarometer 428, 2015).
Infrastructure management has a high risk of integrity failures due to the large sums involved, the complexity of the transactions,
Integrity risks can arise at every stage of the infrastructure life cycle, resulting in inappropriate use of resources or improper behaviour. During crises, when rapid responses are needed and some safeguards lifted, these risks may increase and require adequate firewalls. The OECD recommends (OECD, 2020, 2017) a risk-based approach to identify, mitigate, and address integrity risks such as fraud, collusion, corruption, undue influence or other unethical practices at each stage of the infrastructure life cycle and develop tailored control mechanisms.
Related policy issues
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Public procurement represents a large share of public spending. Governments can use it to achieve their policy objectives such as a greener economy, stimulating innovation or promoting responsible business conduct. This makes public procurement a complex function requiring a specific skillset for public procurement officials. This is why professionalising the public procurement workforce has become a priority in countries’ public procurement reforms.Learn more
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Large sum of public resources--thus taxpayers' money--spent on public procurement requires not only sound stewardship but also that it be carried out in an efficient way. To this end, governments continuously develop, implement, and revise their procurement systems and various mechanisms and tools. And to assess whether their systems meet their objectives.Learn more
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Used strategically, public procurement can contribute to the 2030 Agenda for Sustainable Development by supporting a more resource-efficient economy, stimulating innovation, supporting small and medium-sized enterprises (SMEs) and promoting social values. In recent years, citizens’ expectations have risen, with calls for greater accountability in government purchasing decisions, increasing the need to consider broader outcomes and multi-dimensional risks, including in global supply chains.Learn more