EU residents see corruption in public contracting: What can governments do?

With people, healthcare systems and economies still shaken up by the COVID-19 pandemic, the European Union (EU) and its member states are gearing up for a better future. They've drawn up grand plans and unleashed €806 billion in recovery funds for a greener, more digital, more resilient EU, as part of the bloc's long-term budget of €2 trillion.

This means that EU governments will spend unprecedented sums of money through public contracting projects over the coming months and years. As we've said before, the extraordinary influx of funds to be invested calls for equally extraordinary measures to protect against mismanagement, fraud and corruption. So far, these have been sorely lacking.

Now, the Global Corruption Barometer – EU 2021, recently released by Transparency International, shows that the public across the bloc is concerned about the role of money and connections in the awards of public contracts. This is a critical issue that undermines confidence in the fairness and integrity of public procurement processes.

At the onset of a public health emergency, EU residents saw governments scrambling to respond to the urgent need to procure medical equipment, in most cases, without access to tools that would allow them to participate in these discussions in any meaningful way.

On the contrary, some of the measures introduced by member states deepened flaws in public contracting procedures. According to European Anti-Fraud Office, contracts were awarded with "simplified, accelerated, or restricted procedures, all of which could be open more easily to fraud". With the introduction of fast-track procedures, risks of mismanagement increased.

People watched procurement scandals unfold across the continent, revealing cases of politicians profiting from procurement deals, large contracts being awarded to companies with no known experience in health care or even alleged fraudsters.

Perhaps it is then unsurprising that the Global Corruption Barometer – EU survey reveals widespread concerns about increasing levels of corruption and irregularities in how government contracts are awarded.

Most people in the EU (52 per cent) doubt that government contracts are allocated in a competitive manner. Instead, they think that the procurement of goods and services in their countries often gets decided through bribes or personal connections.

This view is shared by at least half of people in 16 EU member states, including France (50 per cent) and Germany (57 per cent), reaching its highest rates in Bulgaria (76 per cent), Cyprus (75 per cent) and Greece (74 per cent).

*Percentage of people who think companies often use bribes or connections to secure profitable government contracts

Even in calmer times, public contracting is particularly vulnerable to corruption. In 2015, for example, a third of businesses in the EU said that corruption had prevented them from winning a public tender or a procurement contract. Additionally, more than half of companies said tailor-made specifications, unclear selection criteria and conflict of interests in the evaluation of bids were widespread practices in their country's procurement procedures.

Global Corruption Barometer – EU 2021 survey also reveals a correlation between perceptions of corruption in public contracting and trust in national governments.

Countries where people perceive procurement processes to be competitive, enjoy greater levels of trust in national government. Similarly, countries where we see lower levels of trust towards national governments, people think companies often resort to bribery and personal connections to secure public contracts.

Combined, these findings underscore the need for governments to change the status quo, and do so urgently.

These worrying trends didn't first emerge during the COVID-19 pandemic, and they won't disappear once it has subsided, unless meaningfully addressed.

While the post-pandemic influx of public money in the EU increases the risk of corruption, it can also spearhead a significant shift in public procurement processes. That is, if governments commit to putting in place tools and mechanisms that promote openness and participation.

To address these risks, governments need to improve the availability and quality of public contracting data in line with global standards and secure its timely publication to reduce the risk of corruption in contract allocation. They must also provide accessible, up-to-date, and accurate registers of companies' beneficial owners to ensure fair competition and help identify conflicts of interest and undue influence.

Furthermore, governments must promote social accountability mechanisms to enhance independent oversight of public contracting processes.

One particular tool that achieves that is an Integrity Pact, a real-time monitoring mechanism for public contracting procedures. It brings together contracting authorities, bidders and civil society to monitor a specific contracting project. This third actor monitors the process and reports its finding to authorities, suggesting action that would improve the process.

Integrity Pacts have already helped protect 18 projects in 11 countries, funded under the previous EU budget.

There's no doubt about EU residents' desire for change when it comes to corruption. The Global Corruption Barometer – EU results show that 73 per cent believe that corruption is never justified. What's more, they are ready to take action themselves and contribute, with 64 per cent believing that ordinary people can make a difference in the fight against corruption.

If governments introduced public monitoring tools in procurement processes, they would provide a space for the public to put this conviction into action.

In the past year, we saw some governments reacting to civil society concerns and taking steps towards greater transparency. The Public Procurement Office in Lithuania, for example, opened access to data on 5-months' worth of COVID-19 procurement and published an analysis of governmental purchases. This move allowed journalists and civil society to do further research and propose improvements to the public procurement process. Similarly, in Portugal, the government published all its contracts and an overview of all its COVID-19 related purchases online.

As the European Commission president recently said, "at such a crucial moment as we collectively prepare and finance our recovery, trust is our most valuable asset". According to the Global Corruption Barometer – EU results, the asset is scarce across the bloc.

EU governments must now take their commitments further and deliver long-term solutions. That would mean implementing open, data-driven and participatory oversight mechanisms throughout their public procurement processes, tackling corruption risks head-on.