Principles for integrity in public procurement

Governments and state-owned enterprises purchase a wide variety of goods, services and public works from the private sector, from basic computer equipment to the construction of roads. Public procurement is a key economic activity of governments that represents a significant percentage of the Gross Domestic Product (GDP) generating huge financial flows, estimated on average at 10-15% of GDP across the world.

An effective procurement system plays a strategic role in governments for avoiding mismanagement and waste of
public funds. Of all government activities, public procurement is also one of the most vulnerable to fraud and corruption. Bribery by international firms in OECD countries is more frequent in public procurement than in utilities, taxation,
and judicial system, according to a survey of the World Economic Forum.
Bribery in government procurement is estimated to be adding 10-20% to totalcontract costs. Due to the fact that governments around the world spendabout USD 4 trillion each year on the procurement of goods and services, a
minimum of USD 400 billion per year is lost due to bribery (Peter Eigen, Transparency International, 2002).
Weak governance in public procurement hinders market competition and raises the price paid by the administration for goods and services, direct impacting public expenditures and therefore taxpayers’ resources. The financial interests at stake, and the close interaction between the public and private sectors, make public procurement a major risk area.

OECD (2009) Principles for integrity in public procurement. OECD Publishing.

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