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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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Integrity Pacts

Transparency International

  • 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

  • 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 could / should be resolved through

  • International or - where appropriate - national arbitration
  • IP would define the venue and procedure.
  • 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.
  • 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.
  • 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!
  • 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
  • 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