According to a report on corruption by the European Commission, bid rigging and other corrupt practices plagues the awarding of public procurement contracts in the European Union. The report found that approximately 25 percent of the value of all tendered government contracts is lost to illegal bidding processes, while one third of all European companies that bid on public tenders in the EU stated that corruption prevented them from winning a contract.
Public procurement contracts are worth about 20% of the EU’s overall GDP. In addition to the focus on public procurement, the report also highlights the broader corruption-related trends impacting member states. These range from control mechanisms and prosecution and punishment that vary between states; to the political dimension (accountability, party financing) and an assessment of risk areas which differ regionally, within industries and among types of organizations.
A response to the report by Transparency International highlighted several potential vulnerabilities that contribute to this high level of corruption, including foreign bribery, lack of transparency, lack of parliamentary ethics and political party financing.
The European Commission made several recommendations for reducing such corruption based on its findings:
- “Systematic use of corruption standards for the entire procurement cycle as well as during contract implementation;
- Implementation of transparency standards for the entire procurement cycle as well as during contract implementation;
- Strengthened internal and external control mechanisms for the entire procurement cycle as well as during contract implementation;
- A coherent overview and awareness-raising about the need to prevent and detect corrupt practices at all levels of public procurement; and
- Strengthened sanctions for the violations of procurement rules.”
CREATe.org recently issued a report addressing how government can play a role in improving practices. The report, ‘Government Procurement: Driving Responsible Business Practices’ is available for download here.