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Integrity

Q. What do you understand by Integrity Pacts? Highlight the role they can play in bringing transparency in allotment of public contracts and ensuring proper utilization of public funds in India.

Integrity Pacts are essentially an agreement between the government agency offering a contract and the companies bidding for it that they will abstain from bribery, collusion, extortion and other corrupt practices for the extent of the contract. To ensure accountability, Integrity Pacts also include a monitoring system, typically led by the civil society organisations.

Integrity pacts can ensure transparency in allotment of public funds because of its features such as:

• Contractual obligations:

o An undertaking by the contracting authority that its officials will not demand or accept any bribes, gifts or payments of any kind and maintain appropriate disciplinary, civil or criminal sanctions in case of violation.

o A statement by each bidder that it has not paid, and will not pay, any bribes in order to obtain or retain the contract.

o An undertaking by each bidder to disclose all payments made in connection with the contract in question to anybody.

o Bidders must have a company code of conduct and a compliance programme for the implementation of the code of conduct throughout the company.

• It demonstrates a commitment to fight corruption, reinforces existing anti-corruption measures and sends a strong message that the public procurement processes will be fair and transparent.
• It encourages institutional changes with focus on transparency, such as the increased use of e- procurement systems, simplified administrative procedures and improved regulatory action.

These pacts are even more important for India as there has been a history of delays and scandals in public procurement in India and existing anti-corruption regulations have had limited success.

Given the situation, Integrity Pacts can play an important role by also ensuring proper utilization

of public funds, as seen from the following:

• It levels the playing field in public procurement processes, boosting fair competition and innovation.
• Smooth procurement process means projects are likely to start and end on schedule.
• Public works contracts are more likely to be awarded to the bidder offering the best value for money.
• It empowers civil society, as the independent external expert monitor, in its contribution to the integrity of public procurement processes.

It pinpoints systemic anomalies in a given contracting authority’s functioning mode which, if corrected, will result in considerable improvement of future procurement processes.

Integrity Pacts are a must-have in all public contracting in India and its mandate needs to be backed by an institutional mechanism that involves a multi-stakeholder effort between the government, private sector and the civil society with adequate resources, capacity, leadership, commitment and credibility.