The four horsemen of public procurement corruption
Public procurement corruption costs the Ugandan economy millions of dollars each year. According to a study by the World Bank Group, public procurement fraud reduces GDP growth by 2–3 per cent each year. This implies that Uganda loses an estimated $200–300 million every year due to public procurement corruption. In a poll of public procurement professionals, 85% of respondents said that public procurement corruption was a major problem in Uganda.
The most common forms of corruption were collusion between suppliers and public officials (60%), use of public office for private gain (45%), nepotism and cronyism in the award of contracts (30%), and inadequate or ineffective public procurement controls (25%).
The Four Horsemen of Corruption in Public Procurement
- Collusion between suppliers and public officials
- Use of public office for private gain
- Nepotism and bias in the award of contracts
- Inadequate or ineffective public procurement controls
Collusion between suppliers and public officials
One of the main ways public procurement corruption is carried out is through collusion between public officials and suppliers. Public officials give certain suppliers an unfair advantage by leaking critical procurement information or insider tips. As a result, only a select few suppliers can win public contracts, while the rest are left out.
This form of corruption creates an uneven playing field for businesses and undermines competition. It also means that public officials are not acting in the taxpayer’s best interests, as they are not awarding contracts to the most qualified or lowest bidder.
Use of public office for private gain
Another way that public procurement corruption manifests is through the public office for private gain. This means that public officials use their position to award contracts to friends, family members, or businesses in which they have a financial interest. Public officials can line their own pockets at the taxpayer’s expense.
This form of corruption is particularly harmful as it undermines public trust in the government and makes it more difficult for businesses to compete on a level playing field.
Nepotism and bias in the award of contracts
Nepotism and bias can also play a role in public procurement corruption. This means that public officials may give preferential treatment to specific suppliers, often those who are friends or family members. As a result, these suppliers are more likely to win public contracts, even if they are not the most qualified or lowest bidders.
This form of corruption creates an unfair playing field for businesses and can lead to sub-standard products or services being provided to the public.
Inadequate or ineffective public procurement controls
One of the main reasons public procurement corruption can flourish is inadequate or ineffective public procurement controls. When public officials are not held accountable for their actions, they are more likely to engage in corrupt activities. Furthermore, when there are no inadequate controls, it is easier for suppliers to collude with public officials and win public contracts through unethical means.
It is essential to combat public procurement corruption to have strong and effective public procurement controls in place. These controls should be designed to prevent, detect and punish corrupt activities. They should also be regularly reviewed and updated to fit their purpose.
Embracing Open Contracting as a tool against corruption in public procurement
Open contracting is a way of doing business based on openness, transparency, and accountability. It is an approach to public procurement that focuses on making information about public contracts available to all so that anyone can see who is winning public contracts and how much they are worth.
Open contracting can revolutionise public procurement and make it more resistant to corruption. By making information about public contracts available to all, open contracting makes it more difficult for public officials to engage in corrupt activities, as they will be under greater scrutiny from the public.
Furthermore, open contracting gives businesses a level playing field to compete for public contracts. This is because all companies have equal access to information about public contracts. As a result, companies are not at a disadvantage if they do not have connections to public officials.
Open contracting is still in its early stages (in Africa at least), and it will take time for it to be fully implemented. However, open contracting’s openness, transparency, and accountability principles already impact public procurement. In particular, they are making it more difficult for public procurement corruption.
The bottom line is that public procurement corruption is a worldwide issue that must be addressed. Open contracting principles can help combat public procurement corruption by providing access to information about public contracts and establishing a level playing field for businesses.
