‘Spend what you can but keep the receipts’, IMF Director Kristalina Georgieva told governments at the start of the COVID-19 pandemic. The IMF’s message was clear – governments must spend to save lives and to save livelihoods but as they spend, commitments to transparency and accountability must not be brushed aside.
That sentiment echoes the findings from ACCA’s recent report on New Models of Public Procurement: A Tool for Sustainable Recovery. The report was based on the survey responses of over 1100 global ACCA members and affiliates working in the public and private sectors in over 90 countries, setting out the major challenges and objectives of public procurement, both generally as well as in the context of the pandemic.
The message from respondents was clear: retain transparency safeguards and fight against bribery and corruption even in the most difficult circumstances.
Over 60% of respondents said increasing transparency in the bid selection process should be a key government objective post-COVID-19 and over 70% said transparency to the public should be a policy objective in all public procurement practices. In some regions, this figure was as high as 85%.
As the report discusses, reducing bribery and corruption is important not only for retaining trust between government and citizen, it is also a financial imperative. Bribery and corruption can cost between 10 to 50% of a public contract’s value (Transparency International 2020 and UNODC 2013) and it erodes the trust that should be found between the public buyer and private supplier. This trust deficit is in fact, already a reality – as evidenced by our survey findings where the difference between public and private sector trust was 20 percentage points –and it has real implications for the procurement process. The relationship between the public and private sector can help ensure value for money and has been shown to improve the overall performance of the contract. During the pandemic, we have seen widespread incidences of fraud and corruption during public procurement processes and this will likely further undermine the trust and confidence between public buyer, private supplier and taxpayer.
Extent to which public sector buyers and private sector suppliers trust each other to fulfil agreements.
Transparency International found that during the pandemic, governments purchased some goods at 25 times the original price and our respondents told us a similar story – regular procurement processes have been bypassed and we are already seeing the implications of this relaxation. Specifically, evidence of fraud, corruption and mismanaged public money at a time when public resources are increasingly scarce. However, as the report emphasizes – there are practical steps governments can take to prevent the problem worsening and to better prepare for crises in the future.
Firstly, while emergency contracting procedures are important to provide governments with the flexibility they need to respond to the crisis – transparency safeguards must not be sacrificed. Emergency contracting must be done on a case-by-case basis. Procurement contract managers should be trained to know when to employ these emergency measures and must ensure all aspects of the process are documented so swift auditing can occur to help detect and prevent corruption and mismanagement.
Secondly, governments should work to centralize their purchasing. This is particularly important during this crisis, as a central procurement process creates a clearer audit trail and will allow for better scrutiny over public spending that took place during the pandemic. A centralized procurement process also carries other benefits such as preventing government-to-government competition and reducing prices.
Finally, all procurement activity should be transparent and available to finance professionals and auditors in real time so they can monitor spending to prevent cost inefficiencies and corruption. Having open and transparent data throughout the process can serve various functions. For example, the data can be used as a tool for tracking and comparing processes for essential goods to avoid unnecessary spending as shown by Ukraine’s Dozorro tool. By having this data, it becomes possible to detect cases of overcharging and potential fraud. In times of crisis, the amount of data needed to be input into data fields can be reduced to meet the time-sensitive nature of the crisis but the most important aspects of procurement, such as the price of goods, should still be captured. Tagging COVID-19 related items will help scrutinize spending during and after the crisis and can also create comparable data of prices paid nationally for certain goods as a way to prevent price gouging by suppliers.
By enacting these reforms into emergency procurement processes, governments stand to generate not only financial savings as a result of reduced attempts at fraud and corruption, but also maintain the trust of both private sector partners and taxpayers. All governments are learning lessons from this crisis and the need to act at speed has posed challenges for all countries. However, most governments will soon need to face the inevitable challenges around public sector finances after the crisis. Finding and generating financial savings will be essential to the post-COVID-19 recovery. By working to detect and prevent bribery and corruption, governments can fill part of that financial hole, while ensuring they are trusted to spend significant, and often lifesaving, amounts of public money.