GIACC.PACS 2.LOGO.2021


PACS STANDARD 2:

Project Selection and Design

PACS Standard 2 forms part of GIACC’s Project Anti-Corruption System (PACS), which comprises 15 PACS Standards (see links at foot of this webpage). 

[NOTE:  The webpages on PACS Standards 1 to 15 are being updated until 20th October 2021, during which time the page content may not be complete, and there may be inconsistencies on these pages.]

Requirements

  1. General management controls:  The anti-corruption measures in paragraphs 10 (conflict of interest), 11 (decisions), 12 (communication) and 13 (records) of PACS Standard 1 should apply to all Project selection and design processes.
  2. Appointment and employment of managers:  An appropriate number of managers of the Project Owner who are of appropriate skill and seniority should be appointed to manage the Project selection and design processes.  These managers should be employed in accordance with paragraph 9 (employment procedures) of PACS Standard 1.
  3. Project selection and design responsibilities:  The Project Owner’s managers should ensure that, in relation to the Project selection and design processes which they manage:
    1. relevant Anti-corruption Obligations are complied with by the managers, the Project Owner, relevant Suppliers and Sub-suppliers, and the personnel of each of these bodies
    2. they are alert to any suspicions of corruption or breach of the Anti-corruption Obligations, and they report any such suspicions, as soon as possible:
      1. to the compliance manager (paragraph 5 of PACS Standard 1), and/or
      2. under the reporting system in PACS Standard 13.
  4. Project selection:  The Project should be selected only where:
    1. it is for a legitimate purpose which is in accordance with the Project Owner’s objectives
    2. it is necessary for the Project Owner to be able to achieve that purpose
    3. it provides value for money for the Project Owner
    4. in the case of a Project with an estimated value over a prescribed threshold, it is justified by a written and objective needs assessment, technical assessment and value for money assessment provided by a suitably skilled and independent third party
    5. the corruption risk has been assessed in accordance with paragraph 7 of PACS Standard 1 and it has been determined that the Project Procedures are adequate to reduce those risks to an acceptable level. 
  5. Project design:  The design of the Project should:
    1. be based on the legitimate needs of the Project Owner
    2. be described in terms that are clear, comprehensive, objective, functional and generic
    3. not be intended to favour any particular Supplier or to artificially narrow competition.

Guidance

G1:  General management controls (paragraph 1 of PACS Standard 2)

Paragraph 1 of this PACS Standard provides that the general anti-corruption measures in paragraphs 10 (conflict of interest), 11 (decisions), 12 (communication) and 13 (records) of PACS Standard 1 should apply to all Project selection and design processes.   This means, for example, that:

  • no manager should act where s/he has a conflict of interest
  • there should be appropriate separation of functions
  • decisions should be made by an appropriate number of skilled, senior managers
  • all decisions, approvals, recommendations and outcomes should be properly communicated and recorded.

G2:  Appointment and employment of managers (paragraph 2 of PACS Standard 2) 

Paragraph 2 of this PACS Standard provides that the Project Owner’s managers who manage the Project selection and design processes should be employed in accordance with paragraph 9 (employment procedures) of PACS Standard 1.   This means, for example, that:

  • they should be obliged by their conditions of employment to comply with applicable anti-corruption laws and regulations, the Project Code of Conduct and relevant Project Procedures, and can be disciplined if they do not comply
  • if they are in a position which is exposed to more than a low corruption risk, then they should be vetted before they are employed, should be competent to undertake their role, and should declare any conflict of interest, and their performance bonuses and targets should be reviewed periodically to verify that there are reasonable safeguards to prevent these bonuses and targets from encouraging corruption.

G3:  Why is selection of the Project important from an anti-corruption perspective?

Corruption may occur in relation to the selection of the Project.  Corrupt public officials, managers of the Project Owner, and Suppliers may collude to select a Project which the Project Owner does not need, or which does not provide value for money for the Project Owner, but which will enable the corrupt persons to extract improper personal profit from the Project.  For example, a new highway or airport may be unnecessary, but may be corruptly selected by the Project Owner’s managers because it will create work for the corrupt Suppliers, and enable the Suppliers to pay bribes to the Project Owner’s managers.  

Therefore, paragraph 3 of PACS Standard 2 provides that the selection of the Project must satisfy the tests of legitimacy, necessity and value for money.

To reduce the risk that the Project Owner’s managers may corruptly make the above decisions, or may be compelled to do so by corrupt public officials, paragraph 3 of PACS Standard 2 requires that a Project with an estimated value over a prescribed threshold should be justified by a written and objective needs assessment, technical assessment and value for money assessment provided by a suitably skilled and independent third party.

G4:  Why is the design of the Project important from an anti-corruption perspective?

The whole or part of the Project may be designed with corrupt intent.  For example:

  • the design may be over-specified or be otherwise unsuitable for the Project Owner’s needs in order to enable bidding Suppliers to submit higher bids than necessary
  • the design may be deliberately incomplete so as to enable the winning Supplier to be awarded additional work during the course of the contract at an inflated price
  • the design may name the Supplier which must supply the equipment for the Project, or may specify the design in such a way that only one Supplier can provide that equipment.  In this case, there is no point in other Suppliers competing for the Project, as their equipment will be non-compliant.  Therefore, the named or compliant Supplier can materially increase its price, as there will be no competition.

The above situations may occur with no corruption (i.e. the designer of the Project may make a genuine mistake in over-specifying the design or providing an incomplete design, or may genuinely believe that the named Supplier’s equipment is the best).  However, the above situations may often occur for corrupt reasons (i.e. the potential Supplier(s) have bribed the managers responsible for the design in order that the design is over-specified or incomplete or wrongly specifies only one named Supplier). 

In order to limit the above risk, paragraph 4 of PACS Standard 2 provides that the design of the Project should: be based on the legitimate needs of the Project Owner; be described in terms that are clear, comprehensive, objective, functional and generic; and not be intended to favour any particular Supplier or to artificially narrow competition.

Updated on 18th October 2021

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