Anti-Corruption Tools

Procurement procedures

As explained in What is corruption, GIACC uses the term "corruption" in the wider sense to include bribery, extortion, fraud, deception, collusion, cartels, abuse of power, embezzlement, trading in influence and money laundering.   Consequently, the discussion in this section applies to all such criminal activity.

In the infrastructure sector, procurement can have the following meanings:

  • Procurement of an organisation: This refers to the process of selecting a contractor, consultant, supplier or sub-contractor to execute a particular contract, and determining the terms on which that contract will be executed. The selection process may involve a simple nomination, or it may involve selection from a number of organisations. In the latter case, the procurement procedure may involve only a tender stage or both a pre-qualification and tender stage. In a particular project, the project owner may procure consultants to carry out design and other advisory services, and contractors to construct various parts of the works. These consultants and contractors will then procure sub-contractors. Alternatively, a project owner may procure a management contractor which will then be responsible for procuring all other organisations.
  • Procurement of a project or product: This refers to the process whereby a whole project or product is procured or obtained. The process would, therefore, include all phases of a project as these will all play a part in providing the end-product. These phases would include: project identification, financing, tendering (or procurement in the sense described above), execution, maintenance, and operation.

In this section:

"procurement" is used in the first sense described above (i.e. procurement of an organisation to execute a contract). 

"contractor" refers to the party selected to execute a contract, and so may include construction contractors, consultants, agents, sub-contractors etc.

Anti-corruption procurement procedures

There are many different types of procurement procedures used in the infrastructure sector. Most organisations have developed their own procedures, and these may be very comprehensive. It is not, therefore, possible to summarise all these different procedures, nor to prescribe in detail how such procedures should be tailored so as to minimise corruption in the procurement process.

It is, however, recommended that the following procedures should be applied, as far as possible and appropriate, to the procurement process by the relevant procuring entity.  Some procedures may be appropriate only for public sector procuring entities and/or for large projects:

  1. Non-restricted competitive tendering: Contractors should, as far as possible, be selected using a non-restricted competitive tendering process whereby the tender is open to any tenderer. However, in many cases, it may be necessary to ensure that all tenderers have sufficient technical or financial strength to enable them to be able to undertake the contract. In these cases, it is common to require tenderers to be on an approved list of eligible tenderers before they are permitted to tender. If this system is adopted, the method by which a company can be included on this approved list should be fair and transparent, and all eligible companies should be entitled to be included on this list.
  2. Restricted competitive tendering: It may in certain circumstances be justifiable to restrict the number of tenderers who will be invited to tender. However, in this case, there should be a valid reason for imposing this restriction, the criteria on which tenderers are selected to participate should be fair and transparent, the number of tenderers selected to tender should be sufficient to provide genuine competition in the tender process, and the reason for the restriction, the selection criteria and the identity of the selected tenderers should be published to the public.
  3. Negotiated competitive tendering and competitive dialogue procedures: Some procurement procedures permit the procuring entity to invite a restricted number of tenderers to negotiate or to enter into a competitive dialogue prior to submission of tender, or prior to award. The purpose of this negotiation/competitive dialogue is respectively to attempt to adapt the tenders to the requirements of the intended contract or to identify the best means for satisfying the needs of the procuring entity. In the competitive dialogue procedure, a tenderer may be requested to fine tune its tender. After a successful tenderer has been selected, it may be requested to clarify aspects of its tender. These procedures may increase the risk of corruption in that:

    1. They allow communication between the procuring entity and selected tenderers prior to tender submission and/or award.
    2. They thereby provide opportunity for preferential treatment of a particular tenderer by, for example, the provision of information only to one tenderer, or the leaking of one tenderer's proposals to another tenderer, or in indicating to a favoured tenderer how it may "fine tune" its tender in order to win the tender.
    3. They provide opportunity for a favoured tenderer largely to determine the terms of contract and specification under the guise of purporting to "satisfy the needs of the procuring entity".
    4. They provide opportunity for a favoured tenderer to win the tender and then to "clarify" aspects of its tender which may be done so as to introduce terms of contract, such as a significant variation to the price, that corruptly favour that contractor. It, therefore, could allow the introduction of features post-tender which might have prevented the tenderer winning had those features formed part of its original tender submission.
    5. These risks place a responsibility on the procuring entity to ensure that the negotiation process and terms of contract are publicised to the public, that the tender evaluators are properly selected (as advised below) and that the process is independently assessed (as advised below).
  4. Independent assessment: There should be an independent assessor who monitors the procurement process to ensure as far as possible that the process is undertaken without corruption. "Independent" means having no connection with any party involved in the procurement process.
  5. Written, fair and transparent procedures: The pre-qualification, tender and nomination procedures:

    1. should be in writing, transparent, and fair;
    2. should not provide an improper benefit or advantage to any individual or organisation;
    3. should be operated in a fair and transparent manner.
  6. Due diligence: Proper due diligence should be carried out on each tenderer, and the results should be provided by the procuring entity to the independent assessor, if any, and funders, if any. The aim of this due diligence should be to establish the risk of corruption in appointing a particular tenderer. Similarly, the procuring entity should provide information about itself and the project to each tenderer so that the tenderers can form their own assessment of the risk of corruption on the project.
  7. Anti-corruption notification: The tender documentation should notify all tenderers that anti-corruption measures are being adopted for the procurement process and the contract or project, that they will be contractually bound to comply with those measures, and that any corruption may have the following results:

    1. Civil penalties:

      • Where the contract has not yet been awarded, any corruption in the award process will result in the immediate disqualification of the relevant tenderer.
      • Where the contract has been awarded, any corruption in the award process will result in that contract being terminated.
    2. Criminal penalties: Any suspected or actual corruption will be reported to the authorities. The criminal penalties for individuals and organisations in the particular jurisdiction should be specified in the tender documentation.
    3. Publication:

      • All parties who may have suffered loss or damage as a result of the corruption will be informed of the corruption. (This may apply, for example, to tenderers who may have wasted tender costs.)
      • Any corruption conviction will be disclosed to the public.
  8. Submissions should be sealed: All pre-qualification and tender submissions should be sealed and should be kept sealed in a secure place until the official opening date. (Equivalent security should be implemented in the case of electronic submissions.)
  9. Notice of opening of submissions: Reasonable notice should be provided to all tenderers, funders and the public, of the date, time and place of the opening of pre-qualification and tender submissions, and all these parties should be informed that they are entitled to be present at the opening.
  10. Public and monitored opening: At the opening of the pre-qualification and tender submissions:

    1. The independent assessor should be present.
    2. The public should be entitled to be present.
    3. All submissions should be opened in the presence of the independent assessor.
    4. The names of the tenderers, the titles of each document submitted by them, and the price of each tenderer should be read out .
  11. Careful selection of evaluators: Tender evaluators should be carefully selected so as to ensure that:

    1. They are properly qualified.
    2. They have no personal or business connections with any tenderer.
    3. They have no record of involvement in corruption.
    4. They are persons of integrity.
  12. Identity of evaluators: With regard to the disclosure of the identity of the tender evaluators:

    1. Their identity should be kept secret until after the evaluation has taken place. This then reduces the risk that they will be vulnerable to bribery by tenderers.
    2. Following publication of the evaluation, their identity should be publicly disclosed. This then enables assessment as to whether there was any corruption in their appointment.
  13. Pool of evaluators: In order to minimise the risk of evaluators being bribed, there should be a large pool of evaluators from which a computer-generated random and confidential selection can be made at relatively short notice for a particular project. The risk of a fixed evaluator, or small number of evaluators, is that tenderers will know whom to bribe or will bribe all possible evaluators, or an evaluator himself may solicit a bribe or arrange for a related company to tender for a project which he knows he will be evaluating. This is very unlikely if there is a large pool of evaluators from which an evaluator is randomly selected.
  14. Isolation of evaluators: The evaluators should have no ability to make direct or indirect contact with the tenderers during the evaluation process. In some countries, the evaluators are kept in isolated conditions during the evaluation process, rather like jurors during a trial.
  15. Fair and transparent evaluation criteria: The evaluation process should be carried out according to fair and transparent criteria. The criteria should be publicised to the tenderers and the public.
  16. Disclosure of the evaluation and the award: The evaluation and the contract award should be publicly and promptly disclosed with details as to identity of the winning tenderer and of the terms of contract.
  17. Determining the terms of contract: In order to minimise risk of corruption, the contract documentation (including contract terms and specification) should, as far as possible, be set out in the tender documentation. This will ensure that all tenderers are bidding on the same basis. It will also minimise the risk of corruption which occurs where a tenderer is able to influence the terms of contract.


Other Resources

If you have published guidance which is relevant to the above recommendations, and if you are willing to provide a link to your website, please send details to GIACC for listing on this page.  Only services and tools which are available free of charge will be listed.

Page updated on 1st May 2008

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