IBLF Russia co-organiser of the International Conference: Practices and Key Areas in Combating Corruption in Public Procurement

On the International Anti-Corruption Day, the Moscow Government in partnership with IBLF Russia, held an International conference Practices and Key Areas in Combating Corruption in Public Procurement.

According to N. A. Sergunina, Deputy Mayor of Moscow City for Economic Policy and Property and Land Relations, the aim of the conference was to establish a platform for a direct, positive, on-going dialogue between the government, Russian and international business communities and the public in order to share experience and formulate balanced recommendations on how to implement the best anticorruption practices in the public procurement system of Moscow. “Such a dialogue should primarily help develop preventive measures intended to reduce possible corruption risks now that a public procurement contract system is being adopted in Russia and form a basis for the joint work of the Moscow Government and business community aimed at creation of a comfortable business climate in public procurement,” stressed Ms. Sergunina.

The foreign participants of the Conference strongly supported the efforts of the Moscow Government to create conditions for an international dialogue. To fight corruption effectively, purposeful work must be carried out by both the government and business community. Overcoming difference of opinions and lack of understanding, both sectors can start a dialogue and share their experience of efficient anticorruption practices removing obstacles on the path of corruption prevention and fight, said Shannon Bullock from the UN Corruption and Economic Crime Branch.

Highly encouraging is the similarity of positions held by the G20 leaders and business community on the need of improving public procurement processes.

In 2013, the G20 leaders launched the Benchmarking Public Procurement initiative whose pilot stage has already been completed by World Bank & IFC. The initiative is aimed at assessing the accessibility, transparency and efficiency of public procurement systems around the world against good practices and identifying ways of improvement, emphasized Federica Saliola, the Program Manager for Benchmarking Public Procurement. The survey covers public officials and business people. Making our analysis, we draw on Doing Business methodology to determine the efficiency of public procurement systems, including assessment of operating costs of the procurement participants.

Alongside the Benchmarking Public Procurement initiative launched by the G20 leaders, the business community developed their own recommendations for improvement of the public procurement process. As a part of the B20 Task Force on Improving Transparency and Anti-corruption, a work stream on Implementation of the Best Anticorruption Practices and Sharing the Corruption Prevention Experience in Russia was set up and acting. It pooled the efforts of the Russian and international companies operating in Russia. The team worked out a number of specific recommendations on refining the public procurement contract system addressing them to the RF Government, stressed Boris Tkachenko, Head, IBLF Russia. Notably, it was recommended to introduce an independent technical expert examination of the bids and provide for feedback from the tender committee in order to disclose and justify their reasons for making choice, for preferring one bidder to others. It was also suggested to introduce a flexible contract form which would preclude disqualification on purely formal grounds.

Mr. Tkachenko’s position was supported by the representatives of Norilsk Nickel MMC, Philips, Baker&McKenzie, Deloitte and others.

According to Dr. Dietrich Moeller, President of Siemens Russia and Central Asia, preventive anticorruption functions are among the key methods of improving efficiency of public procurement and building transparent and simple conditions for running business on the basis of absolutely fair competition. This, of course, needs continuation of the dialogue between the government and business as well as collective efforts of big industrial companies, international organizations, and non-profit organizations. As for Russia, our company has been collaborating with International Business Leaders Forum (IBLF) within the framework of Siemens Integrity Initiative. The most notable outcome of the collaboration was the establishment of Industrial Companies Working Group (ICWG) including, besides Siemens, 17 other major companies. The main goal of the Group is to develop recommendations on improving tender procedures of the Moscow Government in order to ensure maximum transparency of the public procurement process. Not until such transparency is achieved can corruption risks in this sphere be minimized and, what is more important, substantial cost saving of the end customer, i.e. the state, be gained, because manufacturing companies will be motivated to participate in tenders directly rather than through intermediaries.

Collaborative engagement of all members of public procurement process, application of internationally recognized good practice and experience constitute the main prerequisites for improving transparency and efficiency at all stages of the public procurement, especially taking into account the forthcoming introduction of Federal law 44-FZ, said M.V.Cheremisov, Director of Department for Developing Procurement Contract System, RF Ministry of Economic Development.

Procurement contracts will be introduced in January 2014, when Federal Law of April 5, 2013, No.44-FZ On the System of Public Procurement Contracts for Products, Works, Services for State and Municipal Needs comes into effect. The Moscow Government, however, has already tested and implemented over 70 percent of the innovations stipulated by 44-FZ. The pilot project of introducing procurement contracts in Moscow is generating very good results, said G.V. Degtev, Head of Department for Competition Policy in Moscow. The effectiveness of procurement practice in 2013 was 26 percent. All in all, the year of 2013 has seen the cost savings in the amount of more than 110 billion rubles thanks to better procurement system transparency. This money can suffice, for instance, for building 7 underground stations.

The New Year will take us to a new economic reality, noted Mr. Cheremisov. We would be happy to get constructive feedback from international organizations, Russian civic organizations and, of course, from the business community. This positive experience, including the good practice of the front-rank RF subjects, such as Moscow, will be disseminated all over Russia.