Integrity Pacts
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Integrity Pacts Transparency Internationa l. www.transparency. hu. Overview. Background & Objectives The Authority’s Commitment The Bidder’s or Contractor’s Commitment Sanctions Disputes Monitoring Transparency Doubts Results Why implement an IP? Conclusion.

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Transparency hu

Integrity Pacts

Transparency International

www.transparency.hu


Overview

Overview

  • Background & Objectives

  • The Authority’s Commitment

  • The Bidder’s or Contractor’s Commitment

  • Sanctions

  • Disputes

  • Monitoring

  • Transparency

  • Doubts

  • Results

  • Why implement an IP?

  • Conclusion


Background and objectives

Background and Objectives

  • Islands of Integrity developedin the 1990s by Transparency International

  • Help governments, businesses & civil society in public contracting

  • Help enhance public trust in government contracting

  • Contribute to improving credibility of government procedures & administration


Background objectives cont

Background & Objectives (cont.)

  • IP suitable for contracts with

    • One party: central / local / mun. govt., govt. subdivision or state-owned enterprise (the Authority)

    • Other party: private entities interested in obtaining contract (the Bidder / Contractor)

  • IP aims at enabling

    • Bidder / contractor to abstain from bribing

    • Authority to reduce high costs & distortionary effect of corruption


Background objectives cont1

Background & Objectives (cont.)

  • IP establishes mutual contractual rights & obligations

  • IP may cover different kind of projects

    • Construction, installation, operation of assets by Authority

    • Privatization sale of assets

    • Issuing of licenses, permits, concessions

    • Related services (consulting, other technical, financial & administrative support)

  • IP may cover different phases of projects

    • Planning, design, tendering, evaluation, selection, contracting, implementation


The authority s commitment

The Authority’s Commitment:

  • Not to demand or accept any advantage in exchange for an advantage in the contracting process,

  • To make publicly available all necessary technical, legal and administrative information on the contract,

  • Not to disclose confidential information to a bidder or contractor,

  • All officials and consultants involved in the contracting process to disclose conflicts of interest in connection with the Contract,

  • To report any attempted or completed breaches of above commitments as well as any substantiated suspicion.


Bidder s contractor s commitment

Bidder’s / Contractor’s Commitment

Pledge (on behalf of CEO or CEO of the national subsidiary):

  • Not to offer any advantages to any official in exchange for any advantage in contracting process,

  • Not to collude with other parties interested in the Contract to impair transparency and fairness of the contracting process,

  • Not to accept any advantage,

  • To disclose all payments made to agents and other intermediaries (preferably by all bidders at the time of bidding, but at least by the awardee of the Contract).

    Highly desirable: contractor provides proof of existence and application code of conduct


Sanctions

Sanctions

  • Violations by Authority: officials and consultants to suffer appropriate disciplinary, civil, criminal sanctions (e.g. removal, dismissal)

  • Violations by Bidder - some or all of the following:

    • denial or cancellation of contract,

    • forfeiture of the bid and/or performance bond,

    • predetermined indemnisation to Authority and the other bidders,

    • debarment for future bidding for appropriate time

      Debarment on the basis of what? Not only suspicion, but not necessarily criminal conviction - guilt generally on basis of a “no-contest” statement by the accused party or if there are no material doubts.


Disputes

Disputes

Disputes could / should be resolved through

  • International or - where appropriate - national arbitration

  • IP would define the venue and procedure.


Monitoring

Monitoring

  • Civil Society (Transparency International NC) should be Monitor

  • Monitoring should include all phases of the project

  • Monitor may appoint external, independent expert

  • Monitor should be independentfrom all parties

  • Cost of Monitor covered by Authority and/or bidders


Monitoring cont

Monitoring (cont.)

  • Monitor has full access to all documents and meetings

  • Monitor should take suspicion

    • first to Authority head

    • if no corrective action taken: to Public Prosecutor or the Public

  • Finally: a statement that procedure

    • was clean, did not lead to any incidents

    • what incidents, how these were dealt with, outcome.


Transparency

Transparency

  • A maximum of transparency: basis for successful design, setup and implementation of IP

  • Needed: public access to all the relevant information

  • Internet: nearly ideal platform (also allows detailed controls)

  • Access to legitimately proprietary information should remain restricted.


Doubts

Doubts

  • It´s only another piece of paper!

  • It´s only another step in the bidding process!

  • It´s only a private contract!

  • Not in my backyard!


Results

Results

  • Savings

    • Colombia reports savings ranging between 5% up to 60 % of contracts´ official budgeted price

    • Italy: Milan subway costs fell from USD 227 m per km to 97 m

  • Trust

    • Bidders interviewed said they lost fairly

    • Positive changes in local investment climates

  • Competition

    • More bidders take part in tenders


Why implement an ip

Why implement an IP?

  • Makes bidding process more transparent

  • Reduces transaction costs: corruption is not free of charge or cheap. Winning or loosing fairly is cheaper

  • Corruption almost always bites back

  • Safeguards the company´s reputation


Conclusion

Conclusion

  • IPs in operation in ~ 15 countries in Asia, Europe, LatinAm

  • Successful IPs: from Colombia to Pakistan to Germany

  • Sectors include information systems, utilities, transportation, school supplies, police supplies, tourism etc.

  • IPs are not very expensive to operate

  • IPs have been praised by governments & businesses


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