According to the International Budget Partnership, developing countries spend $820 billion a year on procurement-related transactions. These expenditures are critical for the delivery of goods and services but they are also extremely vulnerable to corruption. Transparency International estimates that $400 Billion is lost to bribery and corruption in public procurement internationally (2006). Procurement monitoring is an emerging area, where citizens’ involvement has been experimented to address the impending waste and corruption in public procurement.
The procurement process typically consists of identifying what is needed; determining who the best person or organization to supply this need is; and ensuring what is needed is delivered to the right place at the right time and for the best price and quality. Some loop holes that offer room for manipulation and fraud in procurement consist of:
- Planning stage: Absence of clear criteria for project selection; stimulating demand for personal benefits; short cutting bidding process by misrepresenting urgency
- Preparation Stage: Weak technical specifications leading to favored bidders; lack of public participation in project design/bidding specifications, tailor fitting favored bidders
- Advertisement Stage: Limited/insufficient advertising; published in paper with limited circulation
- Pre-qualifications: Bias requirement to a favored bidder or contractor, lengthy process leading to opportunities for bribe solicitation, contract sharing among the bribing companies
Integrity Pacts and Public Hearings are some tools that have been used to engage civil society in procurement monitoring. In a public hearing, the responsible authority convenes a meeting with citizens and subject experts to discuss the planned terms of a contract and citizens in turn express their objections and suggestions for improvements. In Integrity Pact, the responsible authority and business agencies competing in the bidding share a contract of reciprocal control to prevent the payment of bribes between the bidders and the authorities. This allows control mechanisms for the citizens and also the losing bidders to monitor how the winning bidder addresses the terms of the contract. Citizens are also able to make use of the grievance redress provision in the contract to report cases of complaints and dissatisfaction during the implementation phase.
In IT efficient countries, e-procurement is gaining popularity in its approach to greater transparency and efficiency in public procurement. The public can use the system to compare prices offered by different suppliers and the government agencies can compare prices offered by various sellers, resulting in cost-effective, transparent and timely contract.
For meaningful participation of citizens in procurement monitoring, it is important to first identify key stages of procurement where civil society and government can collaborate. Equally important is to make information on procurement processes accessible to the general public. This will help avoid hand-picking of individuals and organizations in the formation of monitoring committees or participation in public hearings. Also, civil society needs proper incentives, including trained manpower and sufficient budget to participate in procurement monitoring. Given the entrenched corruption in procurement handling and the association among stakeholders involved in the process, civilians are not always in a position to resist threats and manipulation. However, there are some cases, where civil societies have cultivated home-grown solutions to effectively engage in procurement monitoring and influence policy changes. In my upcoming posts, I hope to share such examples.
Photo Credit: Flickr User Korean Resource Center