Adjust, clarify, simplify: How Integrity Pacts promote better value for money

This article is part of a series exploring the positive impact of Integrity Pacts on public procurement, backed by evidence from 18 pilot projects in the EU.

When procuring public goods or services, governments simply cannot afford to waste time or money. With limited funds at hand, we expect authorities to achieve the best possible value for money and do it on time.

If they fail, they risk the quality and quantity of public goods and services.

Providing value for money is central to public procurement. In the most narrow sense, it means monetary savings but is also closely linked to other quality aspects of contracting, such as timeliness. When project delays are prevented, value is created for the public, which gets to enjoy the provided goods or services according to the envisioned schedule, as well as for the contractor, which avoids incurring penalties and additional costs.

Complications that cause delays and budget overruns are manifold and can occur at different steps of a procurement process. The Brandenburg International airport in Berlin, Germany, is an instructive example that suffered almost a decade of delays, now attributed to a lack of expertise and technical knowledge, inaccuracy of budget estimation, and additional changes and adaptations.

Experience shows that by introducing an additional actor – a civic monitor – in the process, project delays and money losses can be prevented, and issues are addressed before it’s too late.

In Hungary, for example, the National Infrastructure Development Corporation (NIF) came up with financial estimations for a contract in the project to extend the country’s M6 highway. As a civic monitor, Transparency International Hungary worked with an external expert to analyse the estimations.

Together, they concluded that they need to be changed, suggesting that the value of the contract should be much lower than indicated by the NIF.

Keeping other similar projects in mind, they proposed to lower the estimate from 1.5 billion HUF (€4.9 million) to 1 billion HUF (€3.2 million). Discussions followed with the NIF, and after careful consideration of the project’s complexities, the Integrity Pact signatories agreed on a contract value of 1.3 billion HUF (€4.2 million). The contract ended up being awarded for a figure close to the adjusted estimate.

For a procurement process in a sector that faces increased corruption risks, this is a significant achievement. Each time a public authority is willing to listen to feedback and adjust their assumptions and processes, they raise a standard for procurement in highly strategic and risky projects.

Meanwhile, conservation and renovation works were planned at the Alcobaça Monastery in Portugal, a UNESCO World Heritage site. Directorate General of Cultural Heritage (DGPC) – the government entity responsible for managing the country’s architectural heritage – signed an Integrity Pact with Transparency International Portugal. DGPC hoped to achieve better value for money, as the budget allocated for their work tends to be limited and highly dependent on EU funds.

With this aim in mind, Transparency International Portugal reviewed the tendering documentation. They proposed to review criteria for defining the cost of the intervention, clarify deadlines for the execution of works, and add criteria for awarding the contract in case of a tie break to the tendering documentation.

In the end, their contribution even had a long-lasting effect, as all of these adaptations were used again in the following tender of the project.

The monitor’s recommendations anticipated potential questions or even disputes coming from bidders and clarified them ahead of time. In doing so, they prevented delays during the contract award process or the implementation, saving time and money.

Similarly, in Italy, a civic monitor helped prevent future delays by simplifying the procurement and contracting processes. Italy’s Ministry for Cultural Heritage, Activities and Tourism (MiBACT) decided to carry out some development works on an archaeological site called Sybaris and signed an Integrity Pact with a civic monitor, ActionAid Italy.

To improve the visitors’ experience at the archaeological site and a nearby museum, MiBACT was planning to hire contractors to provide guidance and information services to visitors, including signs and multimedia installations. The initial contracting strategy would have required MiBACT to manage up to seven different contracts with different companies, ensuring that all were following the same visual identity and using the same or compatible materials or formats.

The monitor quickly realised that this plan was bound to complicate the process and result in delays and a lower quality of the delivered services. They suggested merging the different service contracts into one tender and leaving the role of coordinating these various services to the contractor.

Their recommendation was accepted, and the process was simplified, effectively preventing project delays.

The available evidence shows Integrity Pacts have contributed to efficient tendering processes from highways to cultural heritage and helped save time and money.

All that’s left for governments to do is take these learnings and keep using Integrity Pacts – not sporadically, but consistently, particularly in projects with high public value and facing critical risks.