The Integrity Pact is a civil law contract that is signed for each tender by the government/ government department and the bidder. According to the voluntary agreement, parties refrain from all types of corruption and publish all possible information during the process of public procurement. An independent expert or body is entrusted with the monitoring of the processes. If the independent monitor finds that a party has violated the transparency agreement, sanctions included within will take effect immediately. The transparency agreement covers the whole cycle of the project, from the preparation of tender documents until the last phase of implementation, so the independent monitor’s role is not only limited to the supplier selection procedure.
In Hungary, public procurements are extremely vulnerable in terms of corruption - systematic corruption can increase purchase prices by an internationally estimated 20-25%. According to Transparency International’s experience, the application of integrity pacts reduces purchase prices by 30-60% (e.g. underground of Milan), increases trust in public institutions, and enhances competition in the business sector. Integrity pacts, as a cleaning method of public procurement, are also listed as best practice among the OECD’s latest recommendations on public procurement.
What is an integrity pact?
A written agreement between the government/government department and all bidders to refrain from bribery and collusion.
Bidders are required to disclose all commissions and similar expenses paid by them to anyone in connection with the contract. If the written agreement is violated then the pact describes the sanctions that shall apply. These may include:
· Loss or denial of contract;
· Forfeiture of the bid or performance bond and liability for damages;
· Exclusion from bidding on future contracts (debarment); and
· Criminal or disciplinary action against employees of the government.
A monitoring system that provides for independent oversight and increased government accountability of the public contracting process.
In most cases, monitors are members of civil society or experts appointed by (and reporting to) the TI Chapter and its civil society partners. The independent monitoring system aims to ensure that the pact is implemented and the obligations of the parties are fulfilled. The monitor performs functions such as:
· Overseeing corruption risks in the contracting process and the execution of work;
· Offering guidance on possible preventive measures;
· Responding to the concerns and/or complaints of bidders or interested external stakeholders;
· Informing the public about the contracting process’s transparency and integrity (or lack thereof).
As part of the Swiss Contribution, Switzerland is supporting the Ózd Water Supply Rehabilitation Project with more than 1.5 billion HUF (more than 7 million Swiss francs). As a pilot project, the public procurement processes are accompanied by an independent monitor expert, and the municipality and bidders sign the so called Integrity Pacts – an anti-corruption tool developed by Transparency International - in which they declare full transparency in their behavior.
On 27 November 2012 TI EU Office stirred a roundtable debate among experts from the EU institutions, the private sector and civil society working in the field to discuss the EU’s current public procurement reforms and the question ‘Can public procurement rules increase integrity and citizens’ trust in Europe?’.
As the result of a successful cooperation between the Magyar Nemzeti Bank and TI, the anti-corruption organisation monitored a public procurement procedure by the Bank for the second time. TI found that the MNB conducted the procedure in compliance with the relevant law and in accordance with the highest standards of transparency.