U4 Issue 2011:10
The basics of integrity in procurement
www.u4.no
4. Post-award phase Examples of red flags
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Use of questionable agents or subcontractors
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Complaints regarding poor-quality goods, works, or services
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Delivery of poor-quality goods, works, or services
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Continued acceptance of poor-quality goods, works, or services
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Questionable contract amendments (change orders)
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Questionable invoices
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Payment of high prices without justification
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Absent or questionable documentation
4.1 Contract management Examples of risks
Examples of mitigation strategies
Sources and tools
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Price, quality, or specifications change after contract is signed.
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Public officials exercise poor supervision.
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Corrupt company and corrupt supervising official collude.
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Subcontractors are not selected in a transparent manner and are not held accountable for their work.
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Run frequent and unannounced controls.
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Put in place external monitoring.
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Set a threshold for changes allowed and plan for how to handle change requests.
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Appoint a board of contract appeals.
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Include provisions making it possible to hold back payment if bribery is detected in the contract.
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Make whistleblowing possible.
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Have a whistleblower protection strategy ready.
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Follow the “four eyes rule”: always have more than one officer inspect, supervise, and interpret issues that are not objectively clear.
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Online reporting and electronic systems*
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Independent body to receive whistleblower messages
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Whistleblower protection strategy
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Supervisory committees
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Post-award risk assessments of financial vulnerability of contractors*
4.2 Order, payment, and audit Examples of risks
Examples of mitigation strategies
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Claims are filed for goods and services not supplied.
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Corrupt supervisors are willing to justify false claims.
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Lack of separation of financial duties and supervision increases the possibility for false accounting, cost misallocations, and false invoicing.
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Renegotiation of contract is allowed and substantial changes to the contract are introduced, undermining the relevance of the bidding process.
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Include a performance rating as part of the procedure in large projects.
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Conduct performance audits in addition to normal audits.
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Make sure that staff managing the contract and staff approving payments communicate closely so that payment is not approved for goods and services that have not been delivered.
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Include provisions in the contract making it possible to hold back payment if 35