Guest Post: An Exercise in Underachievement–The UK’s Half-Hearted Half-Measures To Exclude Corrupt Bidders from Public Procurement

GAB is delighted to welcome back Susan Hawley, policy director of Corruption Watch, to contribute today’s guest post:

A year ago, in May 2016, the UK government gathered 43 nations around the world together at the London Anti-Corruption Summit to show their commitment to fighting corruption. The resulting declaration made a number of bold promises. One of the most important—though not one that grabbed a lot of headlines—was the announcement that corrupt bidders should not be allowed to bid for government contracts, and the associated pledge by the declaration’s signatories that they would commit to ensuring that information about final convictions would be made available to procurement bodies across borders. Seventeen signatories went further, making specific commitments to exclude corrupt bidders, while six countries pledged to establish a centralized database of convicted companies as a way of ensuring procurement bodies could access relevant information. (Three other countries committed to exploring that possibility.)

The London Anti-Corruption Summit was right to be ambitious about focus on this issue in its declaration. Research shows that the risk of losing business opportunities such as through debarment from public contracts ranks has a powerful deterrent effect—equal to that associated with individual executives facing imprisonment, and much greater than one-off penalties such as fines. Yet debarment of corrupt companies for public contracting is quite rare. The OECD Foreign Bribery report found that while 57% of the 427 foreign bribery cases it looked at spanning 15 years involved bribes to obtain government procurement contracts, only two resulted in debarment. Even the US which has a relatively advanced debarment regime and which debars or suspends around 5000 entities a year from public procurement, appears to debar very few for foreign bribery and corruption. And the UK does not appear to have ever excluded a company from public procurement, despite laws in place since 2006 that require companies convicted of corruption and other serious crimes to be excluded from public contracts.

Did the London Anti-Corruption Summit mark significant turning point in the UK’s approach to this issue? Having persuaded 43 countries to sign a declaration that included a commitment to exclude corrupt bidders, did the UK have its own bold new vision to implement that commitment domestically? Unfortunately, the answer is no.

All that the UK has done so far to implement its London Summit commitments regarding debarment of corrupt contractors is to declare that it would establish a new “conviction check” on bidders for public procurement contracts. This program, currently in preparation, would cross-check winning bidders’ self-certifications against conviction records in the Police National Computer. The new conviction check proposal, however, appears to be an attempt by the UK’s under-performing central procurement agency, the Crown Commercial Service, to get away with doing as little as possible while appearing to do something.  The proposal is laughable for a number of reasons. Procurement officials are already obliged legally to check the winning bidder’s self-certification, so there is nothing new to the proposal. Furthermore, the UK’s Police National Computer does not currently contain convictions by the Serious Fraud Office – the prosecutor of the most serious and complex corporate fraud and corruption – making any conviction check incomplete. And finally, there is no requirement under the UK’s standard bidding questionnaires to self-declare convictions under Section 7 of the Bribery Act – the UK’s main corporate bribery offense – despite the fact that the government has said that it should be a discretionary ground for exclusion from public contracts.

If the UK were serious about excluding corrupt bidders from public contracts, there are some immediate measures it could take. First, the UK could set up a national register of convicted companies for procurement officials to check, much like the system that the US already operates and that countries like Germany are looking to introduce (and that the OECD recommended that UK adopt back in 2012). Such a system would be quicker, cheaper, and more accurate than any conviction check. Second, the UK could and should ensure that require companies to declare all convictions for Section 7 style offenses on bidding forms. And it should provide centralized training and advice to procurement officials so that excluding corrupt bidders is a consistently-applied policy. Individual departments which face high corruption risks, such as the Department for International Development (DFiD) and the Ministry of Defense, should seriously consider operating their own sectoral exclusion lists (for DFID this should include those companies debarred by the Multilateral Development Banks) and developing more administrative measures for suspending and excluding companies.

Ultimately, if the UK wants to show that it is leading the way in implementing the commitments made at its own Summit a year ago, it needs to end its current exercise in under-achievement and take some bold steps towards ensuring corrupt bidders will in practice be excluded from government contracts.

One thought on “Guest Post: An Exercise in Underachievement–The UK’s Half-Hearted Half-Measures To Exclude Corrupt Bidders from Public Procurement

  1. Pingback: Guest Post: An Exercise in Underachievement–The UK’s Half-Hearted Half-Measures To Exclude Corrupt Bidders from Public Procurement | Matthews' Blog

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