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Introduction to Integrity Pacts - A Tool for Countering Corruption in Public Contracting
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Introduction to Integrity Pacts - A Tool for Countering Corruption in Public Contracting


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This presentation describes Integrity Pacts (a tool to counter corruption in public contracting), that was developed by Transparency International (TI) , an international NGO, that is active in …

This presentation describes Integrity Pacts (a tool to counter corruption in public contracting), that was developed by Transparency International (TI) , an international NGO, that is active in approximately 100 countries. It describes a third-party monitoring process aimed at reducing corruption risks in public contracting. It is adapted from a presentation that was made in Rwanda in 2012.

Published in: Business

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  • Well done. I reiterate the need for 3rd party monitoring of the construction process. There is a 'revolving door' between government design/construction groups and private sector design firms. Integrity issues among vendors and contractors notwithstanding, the major corruption problems here in my region start and end at the design level, where there are too many conflicts of interest. In my region contractors are afraid of acting out against design firms, and vendors chum up with the design firms in the effort to get preferential treatment. A monitor who is outside of the circle of designers, contractors, and vendors would do much to resolve corruption problems.
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  • IP benefits to the champion, benefits to Government; and benefits to private sector
  • Transcript

    • 1. Donal O’Leary Sr. Advisor Transparency International Secretariat Berlin, GERMANY
    • 2.        Definition/Elements of Integrity Pacts (IPs) Roles and responsibilities of stakeholders, including civil society Conditions for success Benefits of Integrity Pacts Limitations of Integrity Pacts In what kinds of contracts can IPs be applied Contracting Process and Corruption Risks at Each Stage
    • 3. Objectives:  Enables companies/contractors to abstain from bribing  Others will not bribe  Government authority takes measures to prevent corruption/extortion  Enables governments to reduce high costs and distorting impact of corruption In addition, the IP seeks to contribute to  Building up public confidence in the procurement system  Improving the investment climate
    • 4.  Formal Agreement between a Government Agency and Bidders for Public Contracts  Establishes rights and obligations between parties  Provides for sanctions in case of violation  Provides for Alternative Dispute Resolution  Process occurring during all stages of procurement  Increased transparency  External, independent monitoring  Detection of risks/red flags, facilitating corrective measures  Applicable to all sectors & types of contracts  Frequently, IPs add value to other aspects of project preparation/implementation
    • 5.     Political will of authority to reduce corruption and promote integrity Maximum transparency via public access to relevant information Third party independent monitoring to verify fulfillment of obligations by the parties Multi-Stakeholder Involvement by civil society organizations (CSOs), government and private companies
    • 6.  Feasible:   Collaborative:   Built on trust and support among parties Preventative:   IPs can be implemented without the need for legal reforms within the existing ordinary authority of contracting officials and bodies Tackles corruption risks from the outset Inclusive:  Involves civil society as an active contributor and as a channel to increase legitimacy and public trust
    • 7. Project Cycle Monitoring & Evaluation Policy Making/ Project Planning Needs Assessment Identify Demand Design & Bid Documents Preparation Project Design Final Accounting, Audit Procurement Process Project Implementation Contract Execution Operation Contractor Selection, Contract Award & Signing
    • 8. Commitments Role • Not to demand/accept bribes • Disclose all relevant information • Guarantee protection of restricted information • Use of Internet and Public Hearings • Disclosure of assets • Reviews and provides expert feedback on all documents and steps in procurement process • Monitors access to information • Hears complaints by bidders, if any • Informs public & authorities • Contributes to raise overall confidence in the process Commitments Independent Monitor (CSO) • Not to pay bribes, facilitation payments, etc. • Not to collude with other bidders • Disclose information on payments to representatives • Code of conduct & compliance program Public Authority Integrity Pact Bidders/ Contractors
    • 9. Sanctions Public Authority Independent Monitor (CSO) • Civil, criminal, administrative sanctions • Loss of Contract • Loss of Bid Security/Performance Bond • Liability for Damages (to principal and competitors) • Debarment/Blacklisting Integrity Pact Dispute Resolution Bidders Contractors • Arbitration as alternative dispute resolution mechanism • Often more expeditious than Courts • Increase ownership and empowerment • Accessible to all parties
    • 10.       They cannot rule out corruption 100% Need proper monitoring and careful implementation to be effective Aimed at changing behavior during contracting processes Do not replace the role of control, oversight and regulatory agencies = complements them While increasing participation of different stakeholders, they do not release Government from its responsibility for managing the contracting process While transparency and accountability is important in the budgeting/planning process, this are not an area where IPs can contribute
    • 11.  Will I scare away bidders in requiring an IP?     OECD Anti-bribery Convention, UNCAC In many jurisdictions, corruption is a crime Good outcome, if bidders not willing to sign an IP, do not submit a bid Why is an IP valuable, if there are good anticorruption laws in place? Persistence of corruption indicates need for other mechanisms to assure compliance  Monitor’s job is to assure everybody’s commitment to the IP  Through increasing access to information and accountability and ensuring the correct implementation of procedures, increases trust in the law and Government. 
    • 12.   IPs can be applied for any kind of contract and for any kind of project Examples  The buyer/recipient of state property as part of a Government’s state asset privatization program  Engineering, architectural and other consultants  The beneficiary of a state license or concession  Management contracts for an electricity/water utility (and other service delivery contracts)  Construction and supply contracts
    • 13.  Needs Assessment  Project Preparation  Contract Selection, Award and Signature  Contract Execution  Final Accounting & Decommissioning (When Applicable)
    • 14.    Corruption is a continuing problem with contracting IPs are a ‘light ‘ effective approach towards reducing corruption in contracting However, IPs are not a panacea – we should be aware of their limitations
    • 15.  Transparency International and Water Integrity Network, 2010. Integrity Pacts in the Water Sector: An Implementation Guide for Government Officials.