In many parts of the world especially in Africa, we constantly hear of corruption in the management of public funds through the procurement process.
Procurement in the public sector involves the use of public funds to procure goods and services that are meant for use and benefit of all citizens.
This process has often been riddled with corruption and manipulation despite all the guidelines issued usually by the ministry of finance meant to streamline the same process and the annual reviews conducted by the offices of the auditor generals.
In the risk management language, we say that corruption and manipulation are inherent risks within the procurement process. Having reviewed and audited a number of procurement and tendering processes, I feel the need to share with you some of the signs that may indicate that the procurement/tendering process may be riddled with corruption.
For us to fight the maleficence that occurs in these processes, one needs to understand how the entire process works. Corruption in these processes does not necessarily occur during the actual buying or paying for the goods or services as many may think. Corruption and manipulation can occur anywhere along the process. Tendering and procurement involve the following basic steps:
1. Determining need and planning procurements,
2. Developing specifications,
3. Selecting the appropriate procurement methods,
4. Preparing solicitation documents and calling for offers,
5. Evaluation and selection of companies or individuals,
6. Negotiating the contract, and
7. Contract administration.
The following are some of the indicators of possible corruption in the tendering/procurement process.
·Unreasonable pre-qualification requirements: When tender documents contain some pre-qualification criteria that some people may find unreasonable, in most cases this is not a mistake but a deliberate inclusion to deter some would be respondents to the tender or at the best if you tender you will be said to be disqualified because you do not fulfil that requirement. In reviewing whether the tendering process was fair and equitable, one needs to pay attention to the bids that were disqualified the same way one would pay attention to those that qualified.
·Misleading, ambiguous or incomplete tender specifications is another tactic that is meant to confuse many so that they do not tender or are eliminated in favour of the one that either had prior information or who has properly “greased the hands” of the head of procurement. Sometimes procurement officers modify the criteria in the requests for proposals to fit a particular company.
·Short or inadequate notice to bidders is used to give a very short time for the would-be bidders to respond while the favoured ones received information long before and are ready with their bids. Assessment is therefore needed to show that all respondents were awarded equal opportunity.
·Lack of transparency in bid-opening procedures small as it may seem, pauses high risk to corruption in tendering. It is not surprising for tenderers to be told that their tender missed important pages yet the tenderer remembers very well handing in full tender documents. This process needs to be as authentic as possible to avoid cases where submitted tenders miraculously disappear and are said not to have been presented or are termed incomplete and therefore non responsive.
·Winning bidder is very close to the department’s budget: Bidders whose pricing may be close to the budgeted amount sometimes have inside information and know how much they should not exceed. Where price may play a significant role in determining the winner, this needs to be looked at closely.
·Constantly cancelled request for proposals for unexplained reasons: Although it may not necessarily be corruption causing the proposal to be cancelled, the reason given for any cancellation needs to be reviewed with scepticism. It takes quite some time to prepare tender documents and there is enough time upfront to get it right. These are however sometimes cancelled from time to time in order to accommodate a predetermined candidate who may not have been ready.
·Purchase of inappropriate items is another red flag to corruption in the procurement process. In one amazing tender, the winner to supply train wagons supplied those which were too big to fit on the rails the country has and even too big to fit into the tunnels where the train rails passed. Not surprisingly, the supplier was paid in full for his supplies. How can you order for a soccer ball and when you are supplied with an air-filled balloon you do not question simply because they are both round?
Procurement in the public sector accounts for a large part of the use of public funds, it is therefore important that more attention be given to this process to make sure it the procedures are transparent, well managed and accountable.
It is not sufficient to assume that the mere fact that the tender was advertised in publicly accessible media, then it must have been transparent and equitable. The truth is far from that.
There has been development of a new breed of people called “tenderpreneurs” who are just “fat cats” developing out of bribery, corruption and manipulation of tenders and the entire public procurement process.
This does not only take away benefits meant for citizens, but lowers the levels of public trust and confidence in the government.
As one writer put it “Corruption in procurement encourages competition in bribery instead of competition for good quality or price”.
Lack of or weak oversight encourages corruption in procurement to flourish. The final accountability should be defined so that when this corruption surfaces, someone is held accountable in order to minimise and eliminate this type of evil.
Corruption and self-enrichment by stealing public funds need to be punished at the same level as treason in order for Africa to rid itself of this unfortunate activity.
The author is a specialist in risk management and auditing based in Johannesburg South Africa