Ensuring Integrity and Competition in Public Procurement Markets: A Dual Challenge for Good Governance

Competition Policy and Antitrust

Article Snapshot

Author(s)

Robert D. Anderson, William E. Kovacic and Anna Caroline Müller

Source

The WTO Regime on Government Procurement: Challenge and Reform, Ch.22, S. Arrowsmith and R. Anderson, eds., Cambridge University Press, 2011

Summary

Authors argue that balancing measures to prevent corruption and promote competition are best for procurement systems.

Policy Relevance

Measures to prevent corruption are generally consistent with measures to prevent collusion, but measures to prevent corruption have received greater attention. There must be a balancing of anti-corruption and pro-competition measures in order for them to be mutually reinforcing.

Main Points

  • Corruption on the part of public officials and collusion among potential bidders are two main challenges in the public procurements process. They are interrelated but preventing corruption has received more attention.
     
  • Generally the measures for preventing corruption and collusion are consistent with each other; however, sometimes transparency measures may not promote competition in the same way they prevent corruption.
     
  • The Agreement on Government Procurement (GPA) provisionally adopted in 2006 contains substantive provisions aimed at preventing corruption.
     
  • While preventing corruption has been and is being addressed at the international level, there must also be effective enforcement of national law provisions relating to prevention of collusive tendering and advocating competition efforts by relevant agencies.
     
  • The GPA is an important tool for promoting competition but it must be complemented by: 1) adopting and enforcing effective rules to prevent collusive offers, 2) “competition advocacy” measures that promote fair public contracting methods, and 3) other aspects of competition rule enforcement such as how to treat mergers and joint ventures.
     
  • Three main areas for competition advocacy measures are: 1) general public education efforts, 2) efforts to eliminate or modify policies or regulations that suppress competition, and 3) broad efforts to modify policies that affect the scope of competition in public procurement markets.
     
  • The challenges of promoting awareness of collusion between suppliers and fostering institutional links between procurement and competition agencies are mostly consistent with promoting transparency to prevent corruption.
     

 

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