Topic Guide: Public Procurement

Corruption in public procurement can affect all stages of the procurement process and take many forms. Yet, corruption is hard to detect due to the complexity of the procedures involved which often require a high level of technical expertise at all stages of the process.

At the project selection phase, needs assessments can be manipulated, inflated or artificially induced to select projects with higher contract value. Projects can also be identified to serve the interests of particular bidders or the private interests of procurement officials. In such cases, collusion and/or political corruption may influence the public procurement.

During the tendering phase, opportunities for corruption are abound. While it is generally assumed that corruption risks are especially high during the evaluation of bids, the specification phase can be designed to limit competition and favour particular bidders. Some bidders may be given an unfair advantage (for example, exclusive access to information) as a result of officials having a private interest in these companies, or in exchange for a bribe. A government official may demand a bribe or a kickback in exchange for a contract award, and the bribe payer may inflate the price of the contract to cover the bribe and preserve his profits. Bidders may also conspire to fix the outcome of a bid and inflate contract prices which are then shared between companies, sometimes with the complicity of the procurement official who may be offered a kickback for turning a blind eye to such practices. Procurement officials or his/her friends and relatives may also have an economic interest in one of the bidding companies. Other corrupt practices may involve abusing confidentiality, limiting advertisement and publicity, and manipulating the submission and evaluation of bids.

While less attention is often paid to contract implementation, there are many opportunities for abuse at this stage of the process, including false invoicing, overbilling, underperforming and failure to meet specification standards, among others. It is typically at this stage of the process that corrupt payments made in the earlier stages of the process can be recovered by means of performing less than the contractually agreed services, or by altering the contract through successive re-negotiations.