11.9 Contract oversight

Oversight of contract performance and delivery of the right products can make a huge difference. This is not just because auditors can identify specific issues and problems with both performance and financial trails, but, perhaps even more importantly, because their presence signals that the contracting authority cares about how its money is spent and it will follow up on discrepancies. This in turn creates an incentive for behaving with integrity and a deterrent from fraud and corruption.

“…I go to the field to show people there is a credible threat and a chance of detection in case of wrongdoing. This sends a signal that [we] are aware of risks and prepared to take action.”

World Bank official, September 2017

Good practice for project monitoring includes:

• Monitoring project implementation and standards
• Where possible, monitoring in person and onsite
• Employing qualified technical representatives and auditors to ensure an appropriate level of expertise
• Planning for and resourcing oversight from the start of the project
• Monitoring financial flows to check whether payments to contractors make their way to corrupt networks, shell companies, or to malign actors outside the country.

Oversight in fragile and conflict-affected states poses a number of challenges:

Access and physical safety:

Especially for civilian organisations, sending personnel to conflict areas (especially remote) poses issues related to duty of care; similar challenges occur if personnel are threatened due to their work or findings.  Travel bans for staff limit the opportunities to engage personally in project monitoring.

Resources:

Staff time and finances allocated to oversight tend to be limited and investigators often only have limited time to follow up on a complaint or to analyse red flags.

Political pressure:

In some cases, leadership pressure to support particular actors makes following up on results of audits difficult.

There are few easy fixes. Some contracting authorities have attempted third-party oversight, which, however, creates the risk of the third party – which often has little to no vested interest in the project’s success – becoming part of the corrupt network. One possibility is to work with civil society, which does have an interest in projects being delivered and whose members are usually based in the area in question. Another is to oblige recipients of the funds to conduct dual reporting – both to donor officials and to an independent monitor. While not foolproof, this solution creates additional costs to corruption and may pose another barrier to overcome.

What has very rarely been attempted is cooperation between civilians and armed forces to secure access to risky project sites for oversight purposes. While it has the potential to help mitigate security risks, it does create reputational issues for organisations which wish to be seen as civilian and/or impartial. If they are to be put in place, these arrangements would need to be carefully negotiated and closely monitored.