PACS STANDARD 4:

Contract Provisions

PACS Standard 4 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

Each Project Contract should contain the following anti-corruption contractual commitments and entitlements in relation to the Project:

  1. The Project Owner should commit to implement the Project Procedures.
  2. Each of the Project Owner and the Supplier should commit:
    1. that neither it nor its personnel will participate in any corruption in relation to the Project
    2. that it will, in relation to the Project, comply with and ensure that its personnel comply with:
      1. anti-corruption laws and regulations
      2. the Project Procedures
      3. the Project Code of Conduct
    3. that its relevant Project personnel will be trained in accordance with PACS Standard 9.
  3. The Supplier should commit:
    1. in the case of a Major Supplier:
      1. for the duration of its participation in the Project, to maintain the implementation of an anti-corruption management system, obtain certification of such implementation, provide evidence of such certification, and appoint a compliance manager in accordance with PACS Standard 7
      2. where the Project is a public sector project, to provide to the Project Owner the information specified in PACS Standard 15 which is relevant to the Major Supplier’s contract so that such information may be disclosed to the public
    2. in the case of any Supplier (whether or not a Major Supplier):
      1. in relation to its procurement of Project Sub-contracts:
        1. to require each bidder, in order to qualify to participate in the bid process, to provide a declaration and reasonable supporting evidence to the Supplier that the bidder satisfies criteria equivalent to those in paragraph 9 of PACS Standard 3
        2. to exclude any bidder from the bid process if the Supplier has sufficient plausible evidence to conclude that the bidder falls within criteria equivalent to those in paragraph 10 of PACS Standard 3
      2. to notify the Project Owner in the event of any corruption, suspicious circumstances or difficulties surrounding the issue of permits (PACS Standard 10)
      3. to make a report, by way of the Project Owner’s reporting system (PACS Standard 13), where it believes in good faith or on reasonable grounds that there has been, in relation to the Project, any suspected or actual:
        1. corruption
        2. breach of:
          1. anti-corruption laws or regulations
          2. the Project Procedures
          3. the Project Code of Conduct
      4. to take appropriate enforcement action against any of its Sub-suppliers which are in breach of their Anti-Corruption Contractual Commitments or which are involved in corruption
      5. to take appropriate disciplinary action against any of its personnel who are in breach of anti-corruption laws and regulations, the Project Procedures, or the Project Code of Conduct, or who are involved in corruption
      6. in each of its Project Sub-contracts, to include provisions as between the Supplier and Sub-supplier which are equivalent to the provisions listed in paragraphs 2, 3, 4 and 5 of this PACS Standard.
  4. The Project Owner should be entitled to terminate the contract, or have the contract set aside or declared void, and to recover compensation for loss suffered as a result of such action, where it has obtained sufficient plausible evidence to conclude that the Supplier should have been excluded from the procurement process under paragraph 10 of PACS Standard 3.
  5. Each of the Project Owner and the Supplier should be entitled:
    1. to terminate the contract, or have the contract set aside or declared void, and to recover compensation for loss suffered as a result of such action, where it has obtained sufficient plausible evidence to conclude that there has been material corruption by, on behalf of, or for the benefit of, the other contracting party in connection with the Project
    2. to recover, from the other contracting party, compensation for loss suffered as a result of corruption, or breach of the Project Code of Conduct or of the Anti-Corruption Contractual Commitments, by the other contracting party or its personnel.

Guidance

G 1:  What is the purpose of PACS Standard 4?

The purpose of PACS Standard 4 is to:

  • specify the anti-corruption contractual commitments and entitlements that should be included in Project Contracts
  • ensure that these commitments and entitlements apply throughout the Project contractual structure by requiring that equivalent provisions are included in Project Sub-contracts, Project sub-sub-contracts and so on.

G2: Equivalent provisions

Paragraph 3 of PACS Standard 4 provides that provisions which are “equivalent” to those in the Project Contracts should be included in Project Sub-contracts.  This applies to all Project Sub-contracts, including Major Project Sub-contracts.  In order to create these equivalent provisions, the Project Contract provisions to be passed on in Project Sub-contracts should be appropriately amended so as to replace “Project Contract” with “Project Sub-contract”, “Project Owner” with “Supplier”, “Supplier” with “Sub-supplier”, and “Major Supplier” with “Major Sub-supplier”.  Similar changes should be made when including these provisions in Project sub-sub-contracts and further down the contractual chain. 

G3:  Appropriate action:

Paragraph 3 of PACS Standard 4 states that the Supplier should:

  • take appropriate enforcement action against any of its Sub-suppliers which are in breach of their Anti-Corruption Contractual Commitments or which are involved in corruption
  • take appropriate disciplinary action against any of its personnel who are in breach of anti-corruption laws and regulations, the Project Procedures, or the Project Code of Conduct, or who are involved in corruption.

Such appropriate action should be proportionate to the severity of the breach or the corruption.  For example:

  • In the case of a minor breach of the Project Procedures by an individual or organisation which does not result in any adverse outcome, it may be appropriate merely to issue a written warning against recurrence.
  • For more serious breaches, or where there has been material corruption, it may be appropriate to enforce the remedies under the sub-contract provisions equivalent to those in paragraph 5 of PACS Standard 4.

Updated on 18th October 2021

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