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Public Procurement “Corruption” Can Cost the EU Billions

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It has been revealed that corruption in the EU costs nearly £4bn each year, according to new research by RAND Europe.

The World Bank definition of corruption in public procurement includes acts such as:

  • Unjustified sole sourcing or direct contracting of awards
  • Tailoring specifications to a favoured bidder
  • Sharing inside information.

Therefore, it is no surprise that the 2015 EU procurement directives focus heavily on improving transparency and fairness within the public procurement bidding process, in an attempt both to minimise corruption and encourage SMEs to bid.

Favoured bidders

Favoured bidders and allegedly tailored specifications can deter SMEs in particular from bidding for contracts, as they can feel they are entering the process with a disadvantage and are unlikely to be considered appropriately for the contract.

Even though a contract should be awarded to the most suitable company, bidders can question whether a contracting body would prefer to keep the existing provider, simply because it is the easier option. The downside to this is that although it means less administration and bureaucracy for the contracting authority, the ‘competition’ element of the tender is lost — and it is important to remember the overall point of a bidding exercise is that the most economically advantageous tender should be awarded the contract.

Transparency in bidding and why it is necessary

Corruption, or at the lower level, dishonesty, in the public procurement process in the UK can result in extra costs, where bids may need to be revaluated and reissued. In addition, the unfair allocation of goods and services can lower trust in public institutions.

Regulations such as the following are in place to ensure all interested suppliers are not only aware of the opportunities available to them, but are then able to bid successfully:

  • The open advertisement of all public sector contract opportunities over the threshold of £10,000
  • The introduction of the standardised PQQ, and at times, a one-stage tender process
  • Reducing the turnover requirement to bid
  • The increase in frameworks and smaller value contracts
  • E-procurement — contract and bidding information available to all parties in one place.

If levels of corruption in the EU continue, this undermines the measures put in place to adhere to the EU procurement directives focusing on transparency and encouraging firms to bid.

It is vital that contracting bodies remain impartial when writing contract specifications, evaluating bids and tenders and sharing information so that the correct supplier is awarded a contract based on the evaluation criteria and the quality of their tender submission.

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