What If? A Look at Integrity Pacts

This note examines the Integrity Pact (IP) methodology proposed by Transparency International to confront the problem of corruption in public procurement. The examination draws from a decision model for participants developed elsewhere, in which the critical elements are shown to be the vulnerability of the conditions under which the tender is conducted and the risk of bribing. The IP methodology intends to interfere with the central elements in individual tender instantiations by a process of discussion leading to mutual trust; participants and public officials sign a pledge of honesty. Disputes are to be resolved by private arbitration and allegedly enforcement is attained by force of a private contract between participants. Preferably, a civil society organization stimulates and monitors the process and acts as fiducial guarantor. Publicising proceedings stimulates discus-sion and enhances transparency. All this is held to favourably affect the process, leading to better results. This, in turn, is held to affect the overall environment over time. In order to accommodate for the ethical dimension introduced by IPs, the present analysis incorporates an “ethical” factor operating over the conditions under which tenders are conducted. Ascertaining the operation of this hypothetical factor is an empirical question. The examination of IP premises, together with evidence collected from instantiations of the meth-odology, plus the absence of comparative empirical data on bribery, leads to the conclusion that IPs do not heighten the risk of bribing for participants. Contrary to the methodology’s claim, en-forcement, be it from arbitration or otherwise, is shown to be dependent on each particular envi-ronment. Conditions under which particular tenders are conducted might be bettered, but not un-conditionally, as the institutional framework perforce dominates private agreements. The influence of the “ethical” factor cannot be assessed for lack of empirical evidence, and the honesty pledge IPs rely on is argued to be devoid of significance. Although for lack of data the economic effi-ciency of the methodology cannot be ascertained, there is no reason to suppose that IPs do not bet-ter the outcomes piecewise. The methodology fails to address the problem of cartelisation that af-fects public markets, and – perhaps due to the low frequency of its application – does not discuss measures to counterbalance the action of cartels. Interpreting the premises behind the IP idea, it is argued that they stem from a perspective on cor-ruption rooted on morality rather than on the mechanisms that propitiate bribery. Thus, tackling individual instantiations is favoured over confronting systemic factors. IP guidelines stipulate that the absence of allegations of bribery in a tender authorises the sponsor-ing NGO to announce that the tender was “clean”. It is argued that such manifestations of overcon-fidence are hazardous for the reputation of NGOs that adopt the methodology. It is also argued that the continuous involvement of NGOs with IPs raises questions about their entitlement to it, more-over because NGOs are not bound by oversight and accountability constraints that formally charac- terise State organisms. It is contended that for both governments and NGOs, promoting and par-ticipating in IPs is a strategic decision that should be balanced with their effectiveness towards the aim of changing the institutional environment.Control, corruption, integrity pact, public procurement, regulation, Transparency International

A short note on the prisoner’s dilemma as applied to public procurement

The prisoner’s dilemma is sometimes invoked to describe the situation facing participants in tenders. Reasoning on the basis of the dilemma metaphor, it is contended that agreeing not to bribe public officials in order to win contracts (collaboration) leads to better outcomes than bribing (confrontation). Here it is argued that the prisoner’s dilemma does not correspond to an adequate metaphor for public tenders. Incidentally, it is also argued that the assumption that bribery financially harms participants, which stimulates the allusion to the prisoner’s dilemma in the first place, is arbitrary.Prisoner’s dilemma, public procurement