Back to 4. Corruption in sustainment and contracting
Risk Areas
Collusion – illegal cooperation or conspiracy aimed at distorting the tendering and procurement process – can create the appearance of competition while in fact directing resources to particular powerbrokers through a network of seemingly independent companies. Collusion can increase the risk of mission resources being used to strengthen corrupt and criminal networks, and of diversion of resources to benefit insurgent or terrorist groups.
Where collusion becomes a significant issue, it distorts the economy of the area and closes off opportunities for real competition. This means that an opportunity to support independent companies and networks that can, with time, create power centres that push for better governance for the new businesses, is lost. It can also distort operational assessments by conveying the picture of a decentralised environment that supports competition and economic development, and hiding significant underlying problems.
Companies submit bids that only win in certain geographical areas
Regular suppliers do not submit bids for contracts as would normally be expected considering their background, abilities and means
Companies submit a large number of bids without winning any, possibly creating ‘cover’ for others
Only one company offering to complete a project to the required deadline (this could indicate the timeline is unrealistic and the company might try to raise costs at a later stage)
One-off, but disqualifying flaws in bids that could otherwise win the tender (suggesting intentional failure to enable others to win)
Apparent shell companies (no employees, no offices, little or no work history) submitting bids
Bid documentation sent from the same address and/or containing identical errors, for example in calculations, addresses, or names
Concentration of power and functions in the hands of one person or group
One person or group acting as jobs gatekeeper for large communities
History of allegations and investigations against companies or individuals
Contracting relationships not only create tangible financial flows, but also result in intangible, social and political links between mission forces and local service and goods providers. They can be an important resource for local stakeholders, who can use them to build up their own political and economic position.
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Collusion – illegal cooperation or conspiracy aimed at distorting the tendering and procurement process – can create the appearance of competition while in fact directing resources to particular powerbrokers through a network of seemingly independent companies.
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The fragmentation of the supply chain to include significant numbers of subcontractors, agents and intermediaries has been identified as key a contributor to corruption risk. In 2013, more than 90 per cent of reported US Foreign Corrupt Practices Act (FCPA) cases were found to have involved third party intermediaries.
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Disposal of mission assets, usually coming at a point when international forces are winding down, transitioning or withdrawing, poses significant corruption risks. While they might no longer be significant for the mission itself, these assets, if they make their way into the hands of malign networks, can prolong conflict and strengthen spoiler groups.
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These are specific measures that can help mitigate corruption risks in sustainment and other areas of activity that include contracting, such as humanitarian aid and reconstruction.
Promoting strong integrity standards among mission personnel can help set expectations for relations with the host nation, and prevent creation of new opportunities for corrupt networks.
Ensuring that financial flows do not exceed the host nation’s absorptive capacity will diminish the risk of diversion by corrupt networks; tying funding and assistance to improvements in governance can help create momentum for reform.
Civil society organisations can be valuable allies in the fight against corruption: they can help set strategies, understand what could be improved and how, and oversee specific projects using mission funds.
Stronger oversight of mission resources will help limit opportunities for corrupt networks, and helping develop host nation or civil society oversight mechanisms will help create longer-term accountability of host nation forces.
Ensuring that the international mission is able to receive and process signals of wrongdoing from those familiar with the projects it finances increases the likelihood of detection and diminishes the appeal of corruption.