A Sourcebook - UN-Water

Applying the rules effectively is critical. Three techniques that are generally useful include:
• Strictly enforcing bid validity and contract negotiation periods. Practitioners may be hesitant
to declare mis-procurement when the process of selecting a winning bidder and awarding
a contract takes too long, especially if a reasonable excuse is offered. However, long decision
and negotiation periods can be indicative of poor and potentially corrupt practice, and
should not be tolerated
• E nsuring good record-keeping. Good record keeping reflects the kind of discipline required to
minimize the prospects of fraud and corruption. Project procurement files should include, at a
minimum, the records of advertisements, a copy of all prequalification and bidding documents
(including bidders excluded in the prequalification process the losing bids, not just the winning
bid), a copy of the minutes of the bid opening meeting, the report from the bid evaluation
committee—including a clear statement of the rationale for any bids that are disqualified, the
contract award, and a copy of the signed contract
• R eviewing bids for unusual patterns. Once a number of bids have been run, and the government
has collected information on the procurement packages and winning bids, practitioners
should review this information for unusual patterns such as repeated packages just below certain
procurement thresholds, similar bids submitted by losing bidders, and bid awards being
“revolved” between a small number of bidders. If practitioners are untrained in spotting such
unusual patterns, they can hire a fraud specialist or forensic accountant to assist in bid analysis.
Such analysis should be repeated on a regular basis, and used to feed-back in to future procurement
design.
Yet, in the context of a specific project, it is difficult to change (or improve) general procurement rules.
Accordingly, practitioners may wish to target their efforts on tightening up procurement processes in
the ways that are discussed in Sections 8.2.2 through 8.2.10 that follow. Many of these can be implemented
within the existing rules and systems. Others, such as eProcurement, need changes to the system
and possibly to procurement rules and processes also.
8.2.2 Regulatory scrutiny of major investments
A regulatory agency, or other supervisory body (for instance, a line ministry, or contract oversight
agency), may be able to provide a useful check that the utility or ministry proposing water and sanitation
projects has planned and evaluated them properly. An economic regulator’s job is generally
to ensure that the required electricity service is provided at least cost. Since the water and sanitation
sector is capital intensive, regulators generally scrutinize utility investment to make sure that they are
the least cost way of delivering the required service.
Regulators are most commonly used when the water and sanitation provider is private. Where the utility
is private, over-spending on investment does not generally indicate corruption but either inefficiency
or an attempt by the utility to extract additional profits.
Increasingly, regulators are being tasked with overseeing decisions made by publicly owned utilities.
Where there is a regulator of a publicly-owned company, applying standard regulatory approaches
to the utility’s investment plan can help to ensure it is least cost, and in doing so reduce the potential
for corruption.
8.2.3 Public and community participation in project selection and procurement
International evidence shows that public participation can sometimes provide effective scrutiny of
large water and sanitation projects. When communities are involved in selecting projects and identifying
appropriate project specifications, there is less opportunity for officials and bidders to benefit from
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