Integrity Pacts: Harnessing collective action to safeguard public procurement

The Integrity Pact (IP), conceived by Transparency International in the 1990s, is one of the most popular types of multi-stakeholder collective action initiatives to safeguard public procurement from corruption and bad governance. At it's core, the IP consists of a public agreement between public contracting authorities (the government bodies purchasing goods and services) and suppliers (companies providing them) to apply specific transparency, accountability and integrity measures in one or more public contracts. As part of the agreement, an independent monitoring mechanism is led by civil society oversees compliance with laws and regulations, reports potential irregularities to oversight institutions, and foster citizen engagement in the process.

Public procurement, the process through which governments purchase goods, services and works, is essential for the implementation of public policies, the construction of infrastructure, and the provision of public services such as health care and education. For this reason, it is considered a “multiplier” for sustainable development, all of the UN Sustainable Development Goal (SDG) and related targets. The numbers testify to its importance: in total, the value of public procurement contracts is estimated at US$13 trillion a year, making up an average of 13 per cent of GDP and a third of government expenditures in many countries.

Yet due to its complexity, the huge amount of money involved and the close interaction between public and private actors, public procurement is too often marred by corruption and weak governance. Various sources, including the Organisation for Economic Cooperation and Development (OECD) and the International Monetary Fund (IMF) estimate that between 10 and 30 per cent of public contracts' value worldwide might be lost to corrupt practices. Beyond financial loses, corruption in public procurement can divert vital resources away from essential public services, erode public trust, jeopardise public safety and environmental standards, and undermine efforts to respond to global crises, as demonstrated by malfeasance during the Covid-19 pandemic and in projects to mitigate or adapt to climate change.

The international community has long recognised corruption in public procurement as a threat to global development efforts, encouraging governments to adopt laws and policies to increase transparency and participation around public contracts, ensure robust oversight by public bodies and civil society, and foster ethical behaviour among public officials and companies. However, even if such measures are in place, they might still not be sufficient to improve procurement outcomes in contexts of weak governance, challenges to the rule of law, and mutual distrust between different stakeholders. That’s where the Integrity Pacts, embodying the concept of “collective action”, come in.

Since their conception, and thanks to their flexibility, Integrity Pacts have been implemented in at least 28 countries worldwide, bringing benefits to hundreds of different public contracts, from the purchase of medicines to the development of infrastructure. Our recent pilot initiative in the European Union, in which IPs were applied to 18 EU-funded projects across 11 member states, demonstrated their continued relevance, strengthening institutional capacity and integrity among public institutions, identifying and resolving irregularities, and meaningfully involving citizens in public procurement decisions.

Drawing from the lessons learned in the pilot, and from the wealth of experience accumulated over the years, we have developed a new, global blueprint to foster the effective implementation of future Integrity Pacts according to good practices and in line with recent good governance trends in public procurement. The blueprint aims to support governments and development finance actors wishing to safeguards public contracts and investments that are key to the achievement of the SDGs through collective action. This is complementary to our broader efforts to foster public procurement system reforms in line with the first-ever UN Convention Against Corruption resolution on the topic, adopted in 2023.

Leveraging our Movement’s expertise and network, and through a mix of policy development, technical assistance and capacity building, we are supporting global, regional and national authorities, CSOs and business actors in the adoption, adaptation and implementation of the Integrity Pact in various contexts and sectors:

• As a follow-up to our pilot initiative in the EU, and with support from the European Commission (DG REGIO), we have developed an Integrity Pact Helpdesk to provide policy guidance and technical assistance to public authorities across the EU in applying the IP to strategic, EU-funded projects. As part of the initiative, we are also training CSOs across the EU to effectively act as facilitators and monitors in IP initiatives.

• As part of our Climate Governance Integrity Programme, we are collaborating with the Green Climate Fund’s Peer-2-Peer Alliance on Climate Finance Integrity to develop policy guidance for climate finance recipients for the application of Integrity Pacts to climate-related public investment projects and contracts. We are also working with our chapters and local CSOs to build regional and national networks that can advance strong demans for transparency and social accountability in climate finance spending
  

• Under the Siemens Integrity Initiative, we are advocating for the adoption of business integrity incentives and Integrity Pacts in strategic public investment projects and contracts. This includes working with our chapters in the EU and Latin America to facilitate public-private dialogues on integrity reforms, and lead the impactful implementation of IPs, with a focus on providing technical assistance to bidders and contractors on corporate disclosure and reporting, as well as on the implementation of anti-corruption compliance programmes.