Civil Society Engagement: myths and realities.

A case from the Integrity Pact experience.

Eduardo Bohrquez
and
Transparencia Mexicana

Juanita Olaya
Transparency International
Secretariat

Transparency International
November 2003

www.transparency.org

Overview
The case for Civil Society involvement in preventing
corruption in public contracting
Civil Societys involvement: myths and limits
Practical Implications for policy makers and CSOs

The impact of corruption

in Governance
Could the government be trusted for the decisions they
are making?
Was the final outcome of these decisions altered by the
procurement or contracting process?
Were fiscal resources spent wisely?
Is the Government trusted to do anything about (against)
corruption at all? And then on, on other issues?

The case for CSOs involvement in

preventing corruption in public contracting:
The cost of corruption from
the citizens and firms perspective:

On average, households paid USD $9.50 for each bribe

On aggregated figures, this accounts for USD $2.3 billions (23,400 millions of
pesos) in petty corruption

Households in Mexico use 6.9% of their income just for bribes

Households in Mexico under one minimum wage use 13.9%

Firms worldwide: percentage of the contract value typically offered in unofficial

payments when firms (in your industry) do business with the government:
between 5% and 10% (WBES2000 Survey).

Firms worldwide: more than 80% of the firms pay up to 25% of their revenue
per annum as unofficial payments to government officials. (WBES2000
Survey).

How harmful is corruption

in Public Contracting?
It has been estimated that about 68% of government
expenditure (world average) turns one way or
another into contracts (e.g. on a yearly basis, the
Federal Mexican government participates in more than
15,000 20,000 public procurement processes).
Experts estimate that corruption can add up to 25%
to the costs of contracting.
Low levels of trust in government: procurement and
contracting are important sources of social distrust.
Citizens needs: unattended.

Is there a role
for Civil Society in Procurement?
An opportunity to attend unforeseen consequences of the law
and to act accordingly
An independent facilitator to the contracting process or
procurement law enforcement
A final chance to directly address the loopholes of the
contracting or procurement laws
A source of support and sustainability for public policy
A tool for conflict management and good policy implementation
CSOs can contribute in bringing balance vs. powerful
stakeholders.

Civil Societys involvement

The benefits
Safeguarding integrity, but much more relevant, trying to
restore trust in public institutions
Allows civil society and public opinion to understand the
rationale behind a public decision
Provides an open discussion about the quality of the
public decision
A third party is conscious about the output of a
procurement process but also about the final outcome
Preventive role
Helps important initiatives to survive government change

IP: the model and some results

The model:
Collaborative: public sector, private sector and Civil Society
Based on political will
Explicit agreement: levels the playing field, facilitates law
enforcement, facilitates acces to information
Creates monitoring role

Current application
Different versions retaining essential elements worldwide
(aprox 12 different countries) on more than 100 contracting
processes.
Assesment on its way

IP: the model and some results

Reported impact, some examples.

Savings. For example:

Colombia technological turnaround of the -Banco Agrario- ( 2002), finished with an
awarding price 30% below the budgeted price
Pakistan: K-II Greater Karachi Water Supply Scheme (2001-2002) the Karachi Water
and Sewerage Board (KW&SB) included the application of the IP concept in the
contracting process for consultants.

Trust. When losing bidders say: we are unhappy that they lost, but know we lost fairly

Sanctions. In some countries, companies have been blacklisted for violating the Pact.
( i.a. Italy, Korea)

The Myths

Civil Society engagement is

1. The panacea
2. An Unncessary hassle: pandora box for intruders
3. Another word for lobbying
4. Is Not-Civil or Not-Society

We all know what Civil Society is

Civil Society is the same everywhere

The Limits
Unbalanced interests, the direct output (a winner) vs. the
final purpose and outcomes.
An early warning system, like civil society monitoring in
public procurement, is not a permanent solution for a
problem: room for future legal reform.
The importance of keeping a comprehensive approach to
governments overall operation.
When engagement backfires: misunderstanding civil
society, enforcing prejudice and exaggerating limitations.
Daily life is difficult enough: understanding priorities and
transaction costs.

The Limits
What do we MEAN by Civil Society? Definitions and
approaches vary from country to country.For example
Arab world: limitations to freedom of speech and association,
local-type organizations, non/representativeness, no tax
payers. Is there a Civil Society?
Eastern Europe: government was too big? Distrust in law,
government and institutions..who trusts who?
Asia: role of ethnicity and religion.

The test: what stakeholders are not having a voice in the

process but do have a say in it?

Practical Implications
The role of political will and firms social responsibility: without
it, it does not happen.
The difference between power and authority: losing power may
give authority and thus give more power afterwards.
Technical capacity on all sides is crucial at making participation
productive and constructive.
No news is good news: success is not appealing to the Media.
Local dynamics are wiser.
International civil society also exists.
A different sense of government: balanced involvement,
cannot serve as an excuse to postpone Govmt. Reform.

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