Integrity Pacts: the European Commission perspective
In the 1990s Transparency International developed the concept of Integrity Pacts to reduce the risk of corruption in public procurement and improve trust and transparency in government. In essence, an Integrity Pact is an agreement with the public authorities that allows civil society to act as independent monitors of the procurement process.
The European Commission teamed up with Transparency International to pilot the use of Integrity Pacts for 17 projects in 11 Member States worth a total investment of EUR 900 million. (To find out more about each project click here). All selected projects receive funding from the EU to cover a part of their costs.
Why is the European Commission supporting the use of Integrity Pacts to EU-funded projects?
Preventing and fighting corrupt practices in projects funded by the EU has always been a priority for the Commission, as well as ensuring efficiency and effectiveness in public contracting. It’s a way to save taxpayers’ money and make sure projects run smoothly because the goal is to guarantee all spending on public contracting is free from corruption. This is why the Commission’s Directorate-General for Regional and Urban Policy and Transparency International joined forces in March 2015 and launched the pilot project ‘Integrity Pacts — Civil Control Mechanism for Safeguarding EU Funds’ to explore and promote the use of Integrity Pacts (IP) for safeguarding EU funds.
The initiative is part of the broader work of helping Member States improve the way EU funds are managed and invested — one of the top priorities for Corina Creţu, the commissioner for regional policy.
The commission’s expectation is that the Integrity Pact approach will show that ordinary citizens and their champions — civil society organisations — can play an important role in monitoring both the allocation of funds for projects and the way that money is spent. We want to foster public demand for accountability. Clearly, if the contracting authority has planned the tenders well, an Integrity Pact can also bring costs savings because of improved competition.
Why is public procurement a priority for the European Commission and for EU investments in general?
Around one sixth of European Union GDP (or around EUR 2 trillion) is spent on goods, works and services by different levels of government. Fifteen per cent of this spending is on contracts with a value above the thresholds set in the public procurement directives. This is public money and it must be used correctly. Better public procurement means better value for money for citizens.
Through the European Structural and Investment Funds for 2014–2020, the EU is investing EUR 454 billion overall in Europe’s Member States and regions to promote economic growth, job creation, and competitiveness and to invest more in regions that have been received less support. Almost half of this investment is channeled through public procurement. Improving the quality and transparency of public procurement will mean better results and more benefits for businesses and citizens.
The commission has adopted and is implementing an Action Plan on Public Procurement. The goal is to identify good practices and promote them among Member States as well as to help them use public tendering in a more strategic way. The commission’s objective is to make sure that public procurement helps in achieving objectives like environment protection and social inclusion, and improves the digital economy and society.
What is the value of civil society involvement in public procurement?
The role of civil society as an effective anti-corruption actor is important. It contributes to holding government to account. Transparency International’s long experience in combating corruption has shown the crucial contribution of transparency, accountability and greater efficiency, especially in the particularly sensitive area of public procurement.
Within the next five years, most likely, we will see a totally different public procurement landscape — everything will be electronic and much more data should be openly available. Trends such as open contracting are offering new opportunities to scrutinise public spending. But public procurement is a very complex matter and not necessarily understood by average citizens. Open data gives us a lot of opportunities, but if you don’t understand it, it is of no use.
Civil society organisations have the necessary skills to translate data and make the process more understandable to citizens while ensuring monitoring and civic control. Beyond this, civil society involvement is one of the best ways towards greater public engagement and understanding of public policies and, in particular, public procurement.
What is the Commission’s concrete objective with Integrity Pact pilot project?
The Commission’s goals are to promote a culture that resists fraud and corruption. It wants to increase transparency and accountability, enhance trust in authorities and government contracting, contribute to a good reputation of contracting authorities, bring cost savings and improve competition through better procurement.
Integrity Pacts promote cost efficiency as well as good governance. They also have the potential to reduce costs and increase competition, which of course is vital for business.
Integrity Pacts can encourage institutional changes, such as the increased use of e-procurement systems, simplified administrative procedures, improvements of regulatory environment.
The pilot aims to cover close to €900 million of investments spread across 17 projects, so even small improvements in the efficiency of the procurement processes can yield big results. But more specifically the Commission will count the project a success if the civil society organisations involved are able to achieve better communication between government and the public; and if they are able to make contributions that are taken seriously and improve the outcomes for society.
What about the costs of using Integrity Pacts?
The implementation of an Integrity Pact has some costs (funding of the independent monitor) but it largely depends on the size, complexity and duration of the project. At the same time, experience has shown that Integrity Pacts have the potential to reduce project costs by up to thirty per cent. They can also encourage a culture change in institutions and promote good governance beyond the monitored project itself because they encourage transparency and openness. So, if an Integrity Pact is used, it could bring substantial cost efficiency gains that outweigh the money and resources invested.
What will happen when the pilot phase ends in 2019?
Of course, as in all pilots, this is also a learning exercise. Both, the Commission and the participating partners, will be able to take lessons from the direct experience and adapt the tool — the Integrity Pact — if needed, for its successful use in future. The Commission does expect that the initiative will have a spill over effect across Member States and regions and could continue to contribute to further changes in the way procurement is done. The Commission noted positive experience in the high interest shown from both public authorities and civil society organisations to participate in this pilot project. It is really encouraging and shows that there is great interest in Member States to try new and innovative ways to improve the EU project implementation.