Integrity Pacts: A blueprint for safeguarding public investments in sustainable development

Public procurement, the process through which governments purchase goods and services from private companies, is an essential mechanism for effective governance and the public good, from infrastructure to health care to supporting sustainable development. It constitutes a massive portion of the world economy — an estimated $13 trillion per year.

Yet public procurement is one of the most vulnerable areas for corruption. Corrupt public servants can willfully direct funds to support themselves or their cronies, or businesses can bid on projects for which they’re unqualified to collect the lucrative dividends. The results are devastating: the International Monetary Fund (IMF) estimates 10 to 20 per cent of investments are lost to corruption.

Recognising this, the UN Convention against Corruption (UNCAC) adopted its first-ever resolution on public procurement in December 2023. The resolution underscored the urgent need for governments to prioritise transparency, reduce corruption risks and implement mechanisms to detect wrongdoing. It highlighted the value of open data throughout the entire procurement cycle, clear processes to manage corruption risks, integrity efforts by suppliers, and public monitoring and participation. While these principles are vital, their success hinges on strong actions by governments AND the businesses – a challenge that requires collective action and innovation.

Since the 1990s, Transparency International has championed Integrity Pacts as a collective action tool to safeguard procurement processes. These agreements bring together government agencies, businesses and civil society to ensure fair and corruption-free procurement. In addition to a commitment of the different parties to transparency and integrity, they also include a monitoring system providing for independent oversight by civil society.

Over decades, Integrity Pacts have shown their value by delivering projects more efficiently, economically and with fewer disputes. They help instil a culture of integrity within the sector, laying the groundwork for long-term anti-corruption efforts. They also promote open data and accountability while, in some cases, empowering affected communities to influence projects and ensure they address local needs.

These components are effective for a number of reasons. Firstly, bringing stakeholders together in the development of the pact helps to cultivate connections and build trust. Especially for businesses competing with each other for the same contracts, this helps foster the belief that everyone will play by the rules and that it’s worthwhile to do so. Including input from various groups also helps to ensure the pact is strong, considering different potential loopholes and developing mechanisms to block them that are uniquely suited to the specific context. The close incorporation of civil society as independent watchdogs, and the often unprecedented access given to them further secures compliance. When incorporated, technical assistance and capacity building enable internal systems at companies and public servants to better combat corruption both during the project covered by the pact and into the future.

To scale the impact of Integrity Pacts, Transparency International partnered with the European Commission and local civil society organisations to pilot the initiative across 18 projects in 11 EU member states. These projects, spanning sectors like education, cultural heritage, energy and land administration, were collectively worth €920 million. The results were striking: increased transparency during bidding, improved risk mitigation during execution, and projects delivered on time and under budget. Moreover, data gathered by civil society partners led to reforms in laws and regulations, ensuring stronger procurement frameworks for the future.

Over the years, Integrity Pacts have constantly evolved in line with trends in the global public procurement landscape. Drawing from a wealth of experience and lessons learned, Transparency International has developed a new blueprint to guide the implementation of future Integrity Pacts according to best practices.

The new Integrity Pact blueprint provides guidance across every step of the process to help public servants, business leaders and civil society develop and execute effective Integrity Pacts. It reflects advancements in technology, shifting regulatory frameworks and heightened expectations for accountability, ensuring Integrity Pacts remain effective in promoting fairness, accountability and integrity in procurement for years to come.

The blueprint focuses on three main stages of the Integrity Pacts process.

1. Initiation: Stakeholders explore the context, determine if an Integrity Pact would be necessary or productive for the particular project or sector in question, and identify which organisations and individuals should be involved.

2. Preparation: The civil society monitor develops the particular Integrity Pact, in collaboration with relevant stakeholders, and arranges for the contracting authorities and bidders to sign it.

3. Execution: Contracting authorities and bidders implement the commitments, and the civil society monitor observes the process to ensure adherence, and above all, integrity.

The blueprint guides users so that they can develop Integrity Pacts that best suit their unique contexts. It explains key decision-making points and incorporates concrete examples from past initiatives to ground the model in real-life circumstances. It also includes recommendations for content of the different elements of the Integrity Pacts; as well as concepts for different provisions like dispute mechanisms, sanctions and incentives; monitoring, evaluation and learning; and more ambitious undertakings like broader collective action or reform.

Integrity Pacts have already optimised numerous public procurement processes across different countries and contexts, but it’s not yet enough. The UN calculates that the world is only on track to achieve 17 per cent of the Sustainable Development Goals by 2030, and across the globe, corruption still sabotages essential public projects. Without better procurement processes, corruption will continue to undermine the public interest around the world, robbing people of the infrastructure, health and other government projects they need not just to function but to survive.

The only way to move forward is through collective action that unites public authorities, business leaders and civil society to protect public investment and ensure projects serve the people. Integrity Pacts are a vital tool to achieve this better future.