public contracting/global priorities

Public contracting


	UN LAUNCHES PROCUREMENT CAPACITY DEVELOPMENT WEBSITE
	The UN Procurement Capacity Development Centre (PCDC) launches its website at www.unpcdc.org. The website aims to share knowledge on improving public procurement in the developing world by linking a broad network of individuals and organizations in both developed and developing countries. It provides a forum for the exchange of information on procurement capacity development research, analysis, approaches, tools and lessons from experience.


	Handbook: Curbing Corruption in Public Procurement Experiences from Indonesia, Malaysia and Pakistan This publication was issued as result of a project carried out by the Transparency International Regional Department for Asia and three National Chapters in the region, TI Indonesia, TI Malaysia and TI Pakistan. To read more and download the publication, please click here.	Your Feedback

Public contracting is one way in which public policy is implemented, and it is an enormous and lucrative area of business. Think of pharmaceutical companies vying to supply a government vaccination programme, the privatisation of a government-owned telecommunications company, or the awarding of contracts to reconstruct destroyed infrastructure in Iraq. Most of these contracts are meant to buy or produce goods or services that should benefit citizens directly, like the construction of a road or a sewage system. Others should benefit citizens indirectly, by contributing to a more efficient or effective delivery of a specific service or good, and prudently investing or increasing public funds. The key question is whether genuine efforts to serve the public interest motivate the contracting decisions being made.

In most countries, contracting activities are performed by all levels of government, from municipalities and towns, to provinces and national or federal governments. While federal or national level contracting can be bigger in terms of value per contract, local government contracting is also significant in terms of the number of processes and their impact.

On the pages devoted to public contracting, you can find useful and in-depth information and links regarding TI’s work. TI has strived for concrete guidelines and tools in this area, illustrated by TI's Integrity Pacts (IP) and various other Anti-Corruption Instruments. The section on Key Sectors in Contracting looks at areas in the contracting field which are especially prone to corruption: the arms industry, construction and engineering, oil, and development aid.

Under Projects & Activities, the work of TI chapters around the world is presented, as well as some selected global activities and tools. To facilitate better understanding of this topic, we have compiled a Glossary, listing a number of terms used in the field of corruption in public contracting. Selected Links and Readings lead you to TI and external sources.

We are constantly working towards providing you with the most accurate up-to-date information on corruption in public contracting. However, you should not expect this section to be exhaustive or to have included all relevant material available. We welcome your suggestions and appreciate your sharing of additional documents, information, best practices and links. Please send your input to publiccontracting@transparency.org.

Costs of Corruption in Public Contracting

An avoidable misuse and abuse of public funds results from corruption. Corruption in public contracting leads to a distortion of fair competition, the waste of scare resources and the neglect of basic needs, perpetuating poverty. Massive market inefficiencies can also arise from corruption and, in the extreme, lead to the destruction of development opportunities. If corruption in public contracting is not contained, it will grow. It is estimated that systemic corruption can add 20-25% to the costs of government procurement, and frequently results in inferior quality goods and services and unnecessary purchases.

It is argued that, on average, approximately 70% [1] of central government expenditure turns in one way or another into contracts. Contracts are sources of power to those who give them out, and targets of ambition for those who may receive them, making public contracts particularly prone to abuse at the expense of public need. The risk of corruption in public contracting exists even before the contracting process has started, perhaps even at the moment when public budgets are allocated, and it perpetuates beyond the awarding of a contract to its implementation.

For all these reasons TI has been working on alerting governments, the business community and civil society worldwide about the importance of curbing corruption in public contracting and on developing a number of anti-corruption tools. Most importantly, TI has demonstrated that corruption in public contracting can be reduced.

[1] UNPAN Statistical Databases Central Government Expenditures by Type and Function, as percentage of all central government expenditure as of 1997. Uses as source: IMF Government Finance Statistics. Calculations by TI-S. Result comes from excluding wages and interest payments