PACS Standard 5 forms part of GIACC’s Project Anti-Corruption System (PACS), which comprises 15 PACS Standards (see links at foot of this webpage).
The contract management process under PACS Standard 5 comprises the process by which the Project Owner manages contracts placed by it with Suppliers for the supply for the Project, as appropriate, of works, equipment, materials, products, services, or finance.
The purpose of PACS Standard 5 is to provide for measures which:
Such corruption may, for example, include the following circumstances which may take place in the performance and management of Project Contracts:
In addition, corruption may have previously taken place in relation to the procurement process for the relevant Project Contract or in relation to the agreement of contract terms. For example, a Supplier may have paid a bribe so that:
This previous corruption could impact on the carrying out of the works and services. For example:
The contract managers should be different persons to, and work in a different department from, the managers responsible for the procurement of the Project Contract. Therefore, imposing an obligation on the contract managers to take reasonable steps to verify that the Project Contract was awarded pursuant to a procurement process carried out in accordance with PACS Standard 3, and that the Project Contract is at arm’s length and on market terms and conditions, both reduces the risk of corruption taking place during the procurement and agreeing of contract terms, and increases the chance that any corruption which did previously occur will be uncovered.
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 the management of all Project Contracts. This means, for example, that:
Paragraph 2 of this PACS Standard provides that the Project Owner’s contract managers should be employed in accordance with paragraph 9 (employment procedures) of PACS Standard 1. This means, for example, that:
Modifications to or under a Project Contract are modifications which take place after the contract has been entered into between the Project Owner and the Supplier. A modification is also often called a ‘variation’.
There are two types of modification:
Modifications may include:
There is a significant risk that a Supplier may bribe the Project Owner’s contract manager to allow improper modifications to or under the contract. Alternatively, a corrupt manager of the Project Owner may extort a payment from the Supplier in order to approve a valid modification. It is therefore important that modifications to the contract are properly regulated and managed. Paragraph 4 of PACS Standard 5 recommends such measures.
A Project Owner may delegate some or all of its contract management functions in relation to Project Contracts to another individual or organisation (e.g. to a consulting engineering firm with contract management expertise). Paragraph 7 of this PACS Standard refers to this individual or organisation as the “Delegate Contract Manager”. Alternative terms used in contracts may, for example, be “Project Engineer” or “Project Manager”. This individual or organisation may be given specific responsibilities on behalf of the Project Owner to carry out certain functions such as approving work, approving payment, or agreeing modifications to the contract works and programme within pre-established parameters (e.g. authority may be given to agree contract modifications of a cumulative value of up to 10% of the contract price). The Project Owner could incur significant losses if the Delegate Contract Manager corruptly approves work which is defective, or claims which are invalid or inflated, or approves payments to the Supplier which are not due. Consequently, it is imperative that the Project Owner:
There is a risk that, even though the controls in this PACS Standard are designed to limit corruption, a corrupt public official or contract manager may ensure that these controls are by-passed. This risk is limited in PACS by:
PS 1: Anti-corruption management of the project
PS 2: Project selection, design and land acquisition
PS 5: Contract management
PS 7: Controls for Major Suppliers and Sub-suppliers
PS 13: Reporting and investigation
Updated on 1st November 2021