Public Procurement Due Diligence Tool
Corruption is a significant risk factor in public procurement. The Business Anti-Corruption Portal’s Public Procurement Due Diligence Tool aims to enable companies to better assess and avoid corruption risks in the procurement process. Bidding on public tenders is a cost-benefit analysis that is only accurately assessed after all costs and risks are considered.
Public procurement is a high-risk area companies, especially for SMEs. However, many companies place themselves at risk of extortion, blacklisting and legal prosecution by becoming wrapped up in corruption during public procurement processes, or risk losing lucrative government contracts.
The costs and likelihood of being awarded public contracts in countries with weak legislation, enforcement and institutions is extremely difficult and contributes to the risk of encountering corruption during the procurement process. To avoid corrupt practices, companies can look for indicators or red flags throughout the different procurement phases. Creating and implementing a strategy based on these indicators helps to mitigate the costs and risks of corruption during the tender process.
General Public Procurement Information
The existence of public procurement and contracting legislation is not always a clear indicator of implementation and local practices. Enforcement of legislation and procurement practices should be investigated as an initial assessment step. The Business Anti-Corruption Portal Country Profiles provide Public Procurement and Contracting sections for each county which can be used as a point of departure. The Information Network provided for each of the profiles countries offers regional and local contact points for obtaining more detailed information
Procedural characteristics of public procurement processes should include the following:
- Fairness: A fair tender process ensures that all interested and competent companies have an equal opportunity to participate. This ensures that the procurer is offered the most competitive price and quality and the participants a fair opportunity to sell goods and services.
- Transparency: A transparent tender ensures that all participating companies are treated on equal terms and that all procedural steps are based on written and known procedures. Knowing the tender criteria ensures that everyone is playing by the same rules and that no particular company is afforded special favours.
- Recourse: A public procurement system should provide a mechanism for tender awards to be challenged to ensure fairness and openness.
Corrupt practices in the procurement process range from not being awarded a contract to being subject to extortion.
The Public Procurement Due Diligence Tool
The Business Anti-Corruption Public Procurement Due Diligence Tool consists of three documents and an interactive tool. Together they function as a tool to assess the risks of corruption in specific instances of public procurement:
- Guidance Document (PDF): The guidance document describes principles for sound public procurement and the risks associated with a lack of transparency, fairness and recourse.
- Procedure Document (PDF): The Procedure Document guides companies through the questions posed in the tool and the evaluation matrix.
- Risk Assessment Document (PDF): The Risk Assessment document provides a flow chart visualisation of the questions posed in the Procurement Tool and the phases in the related procurement processes.
- Public Procurement Tool (Interactive Excel): The interactive Public Procurement Tool can be used to determine the risks arising from procedural steps in the public procurement process. Based on the given answers, a general risk profile is generated and directs a company to an evaluation matrix for a case of good or bad recourse possibilities.