Procurement controversies -- Nepal

Curbing procurement corruption

Corruption is one of the major causes of many problems like poverty, conflict, hunger, disease, unemployment, illiteracy, socio-economic inequalities and others, sparing no misfortune that our country is facing now. So unless we take effective measures to curb corruption, we will not be able to overcome any of the above problems. So, curbing corruption requires urgent attention of all—state, private sector, and civil society.

Procurement is one basic activity of government in order to carry out its mandate. In a lucrative office, an accountant, a chief, a storekeeper and a technical staff work as an accomplice of each other to make illegal money through procurement. Procurement is one highly susceptible area for corruption. Procurement denotes acquiring goods, works or services or their combinations. The office with more funds for procurement is considered lucrative because it offers more chances to make illegal money, because public officials— ministers and elected politicians along with civil employees— find or make weak vaults from where they would find public fund ooze which they would tap. That’s the reason for manhandling senior officials by juniors as mentioned in the beginning of this piece.

There are many forms of corruption that need some generic and some specific remedies to tackle with. Not a single model will fit all. Robert Klitgaard, a well-known scholar in the field of corruption, has identified four contributing elements which engender, promote and sustain corruption; they are monopoly, discretionary power, transparency and accountability. Weak magnitude of first two elements and strong magnitude of second two elements lead to decline in corruption.

Procurement related corruption can be analyzed in the framework of above factors. Usually government offices have monopoly in giving businesses to different kinds of business people, for example, most of the businesses specializing in road, bridge and big buildings are dependent solely on government. So, government has monopoly in such areas, thus business people become desperate to get business at any cost. They bow down so much that it becomes easier for government officials exploit them.

Discretionary power to choose a vendor, engage in business and accept or discard the goods or services make public officials corrupt. Buying through quotation or direct purchase, evaluating bids on vague or indefinite criteria, and causing hassles during contract management phase let public officials to force vendors to provide illegal money or to put it bluntly, bribe them.

Since the same government office prepares requisition and calls the vendors to submit their bids, evaluate the bids, award contract and manage them, it shows no separation of crucial authorities thereby creating room for corruption by undermining the principle of internal control system. Concentration of authority at one place gives rise to corruption because it undermines transparency and accountability.

In recent years, efforts have been made to overcome corruption in procurement including enactment of Procurement Act, Regulation and establishment of Public Procurement Monitoring Office headed by a Special Class Officer. Despite these efforts, procurement related corruption has not reduced. It infers that mere reforms in laws are not enough, and more needs to be done.

Another step to undertake would be to separate authorities as much as possible and practicable. The major activities in the procurement process are: Preparation of requisition, defining scope of works or specification of goods, inviting eligible vendors to submit competitive bids (quoting price and/or conditions), evaluating bids and managing the contracts on day-to-day basis or inspecting and verifying the goods supplied. Separation of these activities would reduce the monopoly of one decision maker, reduce discretionary power, increase transparency and enhance accountability at the same time.

To adopt the proposed system, a new office with the name of Public Procurement Office to find vendor through competitive process, facilitate evaluation and signing contracts needs to be established in each district. Such office should not only be under the central or provincial government, but also under the local government. If established, it will play a significant role in curbing corruption, and also in standardization and uniformity in procurement. This will not allow two offices to buy the same photocopy papers and toners at different prices.

To establish a procurement office in each district, no extra staff cost will be required because by many existing staff at different offices can be spared to this office after providing them with training.

The UN and its sister organizations carry out procurement adopting this type of structure and process, which leaves little or no room for corruption. We can expect it will be successful also in our case. However, it will be a great shift from the existing system and it will be resisted if implemented at once. Therefore, the system should be introduced gradually after all preparations have been made.

It cannot be said with certainty that it will eradicate procurement related corruption, but it will certainly reduce it.