At the recent Wales Procurement Week, organised by Bangor University’s Institute for Competition and Procurement Studies, the session from Frank Brunetta, the Procurement Ombudsman of Canada since 2011, was a highlight. His role in Canada encompasses the following:
– Review any complaint with respect to the award of a contract for the acquisition of goods below $25,000 and services below $100,000
– Review any complaint with respect to the administration of a contract, regardless of dollar value
– Review the practices of departments for acquiring goods and services to assess their fairness, openness and transparency and make recommendations to improve those practices
– Ensure that an alternative dispute resolution process is provided, if requested and agreed to by both parties
As well as talking about his job, he talked generally about corruption in public procurement, which whilst it is not central to his entire role, obviously does play a part sometimes in the issues he investigates. He started with a interesting question. Why is it that countries with a similar regulatory environment can have very different levels of corruption? He did not have a full answer to that, but it is a good topic for further debate, we feel.
He also quoted some shocking figures: the OECD believes that out of the $9.5 TRILLION public procurement expenditure, some $2 trillion is “shaved off” in bribes, corruption and the equivalent. (Although at $2 trillion I’m not sure “shaved” is the right word)! He also pointed out that procurement is one of the few government roles where staff are dealing with the “free market,” an explanation of why it is such a fruitful area for such fraud.
There are three elements to consider when we look at fraud – people, processes and procedures, and the regulatory environment. Brunetta explained that the propensity to undertake a crime is linked to risk and reward – “the higher the chance of detection, the less likely the probability of committing the offence.” Indeed, in experiments, just putting up a poster showing eyes looking at the viewer reduced the “theft” from shared fridges in an office! So in his view, any innovation that increases transparency, and makes people think “someone might be watching me,” has a positive effect on probity.
Coming on to Canada itself, there are a number of transparency tools which help to protect against fraud. eProcurement has helped, and there are “fairness monitors” who can provide opinions where issues are identified. There is mandatory reporting of lobbying – this can be a serious problem where proper processes can be tainted by special interests who lobby politicians or officials.
Perhaps most surprising to a European audience, Canada has put in place what Brunetta called “our most powerful tool against corruption” – a register of assets and income for senior civil servants. That provides close monitoring and obviously enables questions to be asked if for instance the head of defence procurement suddenly had another few million in his or her bank account (just a theoretical example there)!
Canada has also implemented more public reporting of contracts and “access to information “ laws (like our freedom of information in the UK) although as he said, that is only valuable where there is a “vibrant society and media” to use the freedom and the data. Whistleblowers are offered protection too.
Overall, the Ombudsman role provides a “neutral and independent organisation” to look into not just fraud, but allegations of bad practice and incompetence too. Some European countries have something somewhat similar (we have the Cabinet Office “Mystery Shopper” scheme in the UK, which is really a complaints service) but Brunetta’s speech did I’m sure make many in the audience wonder why more or indeed all European countries don’t do the same.
After all, with the level of public procurement spend in every country, a relatively tiny amount invested in an Ombudsman or similar is likely to offer a very good return on investment, whether that is by discouraging and uncovering fraud, or simply encouraging and communicating good practice.