Integrity Pacts were developed as a tool for preventing corruption in public contracting. An Integrity Pact is both a signed document and approach to public contracting which commits a contracting authority and bidders to comply with best practice and maximum transparency.
'Integrity pacts' are contract features added to public contracts to reduce scope for corruption. Integrity pact is usually a tripartite agreement between the public agency procuring goods and services, the bidder for a public contract and an independent, outside observer . Through the pact the bidders give assurances that they have not paid and shall not pay any illegal gratification to secure the contract in question. From its side, the public agency calling for bids commits to ensuring a level playing field and fair play in the procurement process. Independent third party involves supervision and scrutiny. The third actor, usually a civil society organisation monitors the process and commitments made. Monitors commit to maximum transparency and all monitoring reports and results are made available to the public on an ongoing basis.
Integrity Pacts have been around since the 1990s, and have been applied in more than 15 countries and 300 separate situations. They help save taxpayer money, ensure that infrastructure projects and other public works are delivered efficiently, and close off avenues for illicit gain.
Bringing openness: Governments are huge purchasers of goods and services. They make purchases by floating tenders which seek prices from sellers for supply of goods of given specifications. Ideally the tenders have to follow an open competitive bidding process in which all qualified producers or sellers or suppliers can participate. The contract is awarded to the lowest responsive bidder. Major contracts can be highly lucrative. The stakes are high, competition is cutthroat and the bidders are willing to pay kickbacks to get the contract. An integrity pact will make this process open.
Credibility : Such pacts increase transparency and confidence in the processes through which Government and public sector units conclude major deals. Many national legal systems now recognise such pacts; ONGC signed a MoU with Transparency International India and the CVC in 2006.
- Better economic governance: It can give a proper legal structure to efficient economic governance by providing a legal structure and reducing leakages. However, such pacts have an uncertain status in our legal framework. Government needs to clarify the legal status of the integrity pacts and build them into government transactions covering major tenders.
Integrity pacts reflect both international open contracting principles as well as the local legal and social context. In this way the tool can constantly evolve based on lessons learned and best practices around the world as well as provide up-to-date analysis regarding the country and sector's corruption risk profile. In this way, the Integrity Pact avoids being a one-size fits all approach but rather a living tool that adapts to local opportunities and challenges. This will provide a strong institutional structure to good governance.