1. Anti-corruption measures under the new Public Procurement Directives
Riga
Marion FINKE
European Commission
Directorate General Internal Market, Industry, Entrepreneurship and SMEs
Directorate E - Public procurement

2. Introduction/Structure
Public procurement has been the subject of a Special chapter in the EU Anti-Corruption report.
Public procurement is chosen because it is
of crucial importance for the Internal market
covered by extensive EU legislation
a "Hot spot" for corruption.
Public procurement rules, besides the main aim of opening the market, contribute to
Preventing corruption
Detecting corruption
Redressing corruption.
14/01/2019

3. Public Procurement is of crucial importance for the Internal Market
1/5 of EU GDP (= 2.3 Trillion Euro) spent by European contracting entities on goods, works and services.
Total value of calls for tenders (incl. utilities) above thresholds for the application of EU rules ( EUR works, EUR most supplies and services): Billion in 2012.
Baltic data: Public procurement (excl. utilities) worth between 2.50 Billion EUR (Estonia) and 3.46 Billion EUR (Lithuania) in Public works, goods and services constituted between % (Lithuania) and % (Estonia) of GDP. Latvia: 2.60 Billion Euro, %.
14/01/2019

4. Public Procurement is covered by extensive legislation
Classic Public Procurement and Utilities (water, postal, energy, transport) Directives, revision entered into force on 17th April new Concessions Directive.
Remedies Directives for classic and utilities procurement to exercise judicial control over the procurement process.
Defence procurement Directive to regulate procurement in a high price and formerly intransparent sector.
Baltic public procurement developments:
EE – eProcurement and eTenders portal
LV - KNAB anti-corruption agency and e-procurement
LT – anti-corruption programme and e-procurement.
14/01/2019

5. Public Procurement is a "Hot spot" for corruption
High level of financial interests at stake, especially in certain sectors (health, construction, urban planning).
The costs of corruption are difficult to quantify, but they are too high, as regards the effects on
the economy,
citizens' trust.
Situation in the Baltics: According to 2013 Eurobarometer Business survey on corruption, 89 % of Lithuanian respondents think corruption is widespread (EU average: 75 %), 79 % of Latvian and 57 % of Estonian respondents
14/01/2019

6. Public Procurement rules to prevent corruption – Transparency I
Rules for public procurement are there to guarantee transparent and non-discriminatory procedures
As transparency is the worst enemy of corruption
public procurement rules, if followed, prevent corruption.
Contracting entities, to remain the master of the process, should make use of
Prior publication of tenders
Clear and unbiased technical specifications
Equal treatment of bidders in all stages of the process.
14/01/2019

7. Public Procurement rules to prevent corruption– Transparency II
Contracting entities, to get what they need at the best price, should also make use of
Objective evaluation of tenders
according to an appropriate methodology,
unbiased award criteria,
not guided by conflicts of interests;
Concluding the contract as tendered;
Executing the contract as concluded.
14/01/2019

8. Public Procurement rules to prevent corruption – Examples I
Examples how these rules could be better applied in the Baltics:
Oversight of public procurement
Transparent procedures in the construction sector
Professionalisation through training
14/01/2019

9. Public Procurement rules to prevent corruption–Transparency III
The reform of the public procurement directives and the new concessions directive should ensure
effective procedures for purchases at best price
tailored to all possible needs of contracting authorities
simpler rules because complex, bureaucratic processes extend the opportunities for corruption.
The transposition period of these new directives gives each Member State the opportunity
to raise awareness of the rules amongst all public procurement actors, including the judiciary,
to overhaul the organisation of its public sector,
to reconsider in depth the efficiency of its current public procurement and anti-corruption policy.
14/01/2019

10. Public Procurement rules to prevent corruption–Transparency IV
The new directives enhance transparency:
E-procurement is generalised and becomes mandatory.
The setting of a legal framework for concession contracts enhances transparency in this field.
A standard form self-declaration for bidders, the "European Single Procurement Document" is introduced, which makes it more difficult to exclude tenders in the selection phase.
14/01/2019

11. Public Procurement rules to prevent corruption–Transparency V
The new directives enhance transparency:
The scope of the public procurement directives is extended to the post-award phase, which is particularly vulnerable to corruption, as the modification of contracts during their term without a new tender procedure is now regulated.
Copies of 10 Mio EUR works + 1 Mio EUR supplies and services contracts must be made available on request; exceptions: commercially sensitive information.
Guidance for contracting authorities by Member States and administrative exchange of information e.g. on exclusion grounds are required.
14/01/2019

12. Public Procurement rules to prevent corruption
New Directives strengthen the anti-corruption purpose:
The exclusion grounds for bidders are strengthened and extended to situations during the procedure, where bidders:
have entered into agreements
have tried to influence or mislead the contracting authority
have tried to obtain confidential information.
The notion of "conflicts of interests" is defined on EU level and Member States and contracting authorities asked to take appropriate measures to effectively prevent, identify and remedy conflicts of interests.
Member States must monitor and report on measures to prevent and detect procurement fraud, corruption and conflicts of interest and other serious irregularities.
14/01/2019

13. Public Procurement rules to prevent corruption – Examples II
E-procurement, Portuguese portal allowing for:
downloading entire documentation free of charge,
managing all aspects of information exchange online,
monitoring of concluded contracts,
e-invoicing,
collecting statistics on the procurement process.
Prevention of conflicts of interests, Croatian database:
is run by an NGO free of charge to the public,
gathers information on public procurement procedures, companies, assets and interests of officials,
allows for cross-checks.
14/01/2019

14. Public Procurement rules to detect corruption – Monitoring
Member States need an efficient monitoring system based on relevant indicators for corruption = red flags.
In order to develop mechanisms to help Member States to better detect and address corruption, Commission services want to identify the most relevant red flags for corruption in PP.
One IT tool, which is based on such indicators, is presented in the parallel workshop on ARACHNE.
The public procurement directives are a necessary step in that direction if applied in letter and spirit.
14/01/2019

15. Public Procurement rules to redress corruption
Effective review procedures
according to the rules of the Remedies Directives
by independent and professional review bodies
which also contributes to preventing corruption.
Effective monetary follow-up of corrupt practices
by applying financial corrections to EU funds,
by annulling affected contracts ex-tunc?
Effective sanctioning of corruption in procurement
in a procedure of appropriate length
by an independent judiciary which
knows the public procurement rules and is vigilant to corruption.
14/01/2019

16. Public Procurement rules to address corruption
As all controls have limits, what is mainly needed is the right attitude: Culture of Integrity - Public service for
Better quality – procurement officers have to work with their purchases
Increased public savings – to have more budget for higher salaries
Improved business environment – local taxes ->better infrastructure
Business should have meaningful compliance programs in place.
Procurement officers should take ownership from the very beginning of the process until the very end.
Political leaders should lead by example.
14/01/2019

17. Thank you for your attention
All information can be retrieved at our website:
Contact:
14/01/2019