FEATURE ARTICLE

Samuel Bayo ArowolajuFriday, February 5, 2016
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CORRUPTION IN PUBLIC PROCUREMENT (CONCLUDED)

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"He who makes fortune unjustly is like a partridge that hatches eggs it didn't lay. In the middle of his days, his riches will abandon him, so in the end he will be a fool" (Jeremiah 17:11, HCSB).

n the last two parts of this write up, we highlighted those processes and procedures that are prone to corruption in public procurement. However, that doesn't mean that corruption is only possible during those stages or phases of public procurement. Generally, public procurement provides corruptive vulnerabilities in all stages or phases, except and unless it is handled by people who are determined not to allow such corruptive tendencies to thrive.

Another situation that is prone to corruption in the public procurement is the size of the project; the bigger, the more vulnerable to abuse and corruption. It is therefore no surprise that is why some governments deliberately embark on 'white elephant' projects, without economic or social value to the people and even sometimes, knowing they may not even complete such. Yet, because such projects are usually very capital intensive, uncommon, complex and maybe requires new technology, the 'chief thief' or the chief executive as they are called will be particularly very interested in picking the contractor and using his/her position to exert power, influence and authority as the chief negotiator and decision maker; all in the name of hatching more eggs they did not lay.

A simple good example: Where for the purpose of making fortune unjustly, a government executes billions of dollar project with a built-in graft of just 10% of the contract amount (some may build-in 20% or more depending on the level of their greed); that easily brings in multi-million dollar corrupt enrichment without raising much eyebrow except through a thorough procurement audit. A corrupt official may also split a big project with a view to avoiding thresholds that requires transparency and competitive tendering, thereby having greater opportunity to steal multiple times.

Other sectorial corruption risk in public procurement include but may not be limited to the Energy, mining resources (Solid Minerals), Major infrastructural projects like highways, railways, sea and air ports, telecommunications and arms or military procurements. It will be recalled that it is the current focus on suspected corruption in arms procurement in Nigeria that triggered our current comments and contributions on Corruption in Public Procurement.

Using arms procurement as a case study here, it is almost given that this type of procurement is highly and easily susceptible to high level but avoidable corruption. According to the Organization for Economic Co-Operation and Development (OECD), Arms Dealers are always operating in a 'Dealers Market' where production capacities are higher than demand and legal exports are scarce. There is long low levels of exports often punctuated by other hyper-active periods. Unlike in common competitive markets, prices of arms and ammunitions are not publicized while similar or identical armaments may be procured differently.

If not through a sole or single source, which is very common, tenders are highly restricted since transactions are labeled or classified "TOP SECRET" all in the name of National Interest or Security. As a matter of fact, under the World Trade Organization (WTO) Government Procurement Agreement (GPA); arms market may be devoid of transparency and competitiveness or democratic oversight unlike what we have in procurement of civil works, goods and services. All the above may be a good shield against public scrutiny but surely and definitely not a license to steal or engage in unbridled corruption.

Most developing countries source their military hardware through International Procurement. This is very obvious since military or defense industries in those countries are either non-existence or very much at a rudimentary stage. As a matter of fact, many developed country still engage in international procurement of arms and armaments for strategic and other national considerations.

BRINGING TRANSPARENCY AND ACCOUNTABILITY TO ARMS PROCUREMENT

The general assumption is that arms procurement is antithesis to open and competitive bidding. But that should not be synonymous with or an open invitation to bribery and corruption. The hallmark of international best practice in procurement (including military procurement) is Transparency and Accountability. After all, the military still spends the public money and should therefore be made accountable to the people - the owners of the commonwealth. This is why, military budgeting and arms procurement processes and principles should require high levels of transparency, fiscal responsibility and accountability. Much more than civil works and services, arms procurement should be more guided by wider government public expenditure and financial management, legislative oversight and judicious observance of military and defense policy planning, making and execution.

The absence of the above is a good invitation for military inefficiency and ineffectiveness and therefore, its inability to protect and defend the nation and its people. If military budget and procurement falls short of transparency and accountability, no weapon may be procured or procuring wrong weapons may make the military deficient. Vulnerability of military procurement to corruption will automatically lead to the vulnerability of the military and the national defense to internal insurrection and external aggression. Therefore, to avoid unnecessary and excessive waste especially through corruption, arms procurement requires a high degree of transparency, accountability and fiscal responsibility even without advertisement in the bidding process.

REMOVING CORRUPTION FROM ARMS PROCUREMENT

Some ways in which corruption can be removed from arms procurement include as follows:

Ensure effective and efficient policy and procurement planning

The stated policy goals and objectives of the military should be the driving force of the military budgeting and procurement decision making. The defense and security needs of the country must be clearly spelt out. To this end, no decision, including and especially arms procurement, should be carried out needlessly. Like in any other area of procurement, all procurement plans must be in place immediately after the approval of annualized budgets. This will give no room for sporadic or fire-brigade approach procurements. These, when strictly adhere to, will eliminate making decisions without link to lay down policies and principles, thereby eliminating waste or corruption induced or driven procurement which doesn't meet security and defense needs.

Lack or weak democratic control of the military

Some countries especially developing countries whose democracies were mid-wife by military dictators usually have very weak, almost subservient relationship to the military class. They therefore lose considerable necessary and sufficient democratic oversight responsibilities and functions on military and defense matters. This may be due to lack of executive political and parliamentary will or interest. There may be an unnecessary inherent fear of military insurrection thereby removing the civil leaders from office, which they cherish so much. The military on their own, wearing the toga of professionalism, may out pride and arrogance side track or push aside the civil leadership as incapable of knowing the needs of defense and security. Having placed itself over the authority of the civil leaders, the military leaders are now in a position to do whatever they like about matters concerning their constituents especially the procurement of arms even if it is riddled with bribery and corruption which put the whole country at grave perils.

Over Exaggerated Official Classifications

There is no doubt some matters and issues concerning military and defense need not be opened to the enemies of the nation. Due to this, most issues that are sensitive and of security concerns have earned over and undue secret classifications, thereby taking them out of the purview of 'bloody civilians'. Therefore, procurement processes and procedures are then removed from international best practices including policies of transparency, integrity, accountability and budgeting. Such issues can easily be hidden under the fiat that military or arms procurement are too sensitive and secretive because they concern national security and defense, more than other state matters. Having taken these off the radar of parliamentary oversight, and having taken such items out of open and competitive bidding, arms procurement thus become so porous to corruption and manipulative tendencies. But this should not always be.

Susceptibility of Arms Procurement to Corruption

Generally, the nature of military especially arms budget and expenditure is secretive and therefore different from civil procurement. Because of this, arms procurement, domestic or international can be wasteful and corrupt. If where the procuring entities - especially service units - are honest and integrity driven, the stringent and sometime secretive processes and procedure can easily result in very questionable strategic and logistic problems like delays and high costs.

To say that arms procurement does not follow due process of law, is an aberration and in the least very deceitful. A procurement even some that are not military or security material may be exempted from Open Competitive Bidding, yet will still have to follow due process. In most countries around the world, the Sole or Single Source method of bidding may be used as alternative to open and competitive bidding due to the sensitive or secretive nature of procurement like of a new technology. The only thing that has changed here, is that there would not be open advertisements in the media.

But this doesn't remove other forms of solicitation for contractors, suppliers or vendors. All the procurers or customers or clients will have to do is like procurement of vehicle, where requirements and specifications even without branding is the rule of the game. As for arms procurement, the very requirements and specifications of the type of arms and ammunition are known to sellers or better still, manufacturers. On the other hand, it may be the manufacturer or the supplier or dealer who in form of a proposal solicits for patronage in writing to prospective buyer countries, nations and governments who might be interested in their military products.

DISTINCTION BETWEEN ARMS AND CIVIL PROCUREMENTS

Since civil and military procurements depend on public financing and expenditure, the two should in principle follow the public sector procurement principles of openness, transparency, integrity, cost effectiveness and efficiency and value for money outcome; including of course, high degree of consultation and evaluation. However, when it comes to arms procurement, there are additional layers of cover that distinguish military from civil procurement. These are, yet, not excuses for corruption and mismanagement of public fund. They are:

Cost considerations in bidding

It is given that non-arms procurement strives and in fact prides in spending less to achieve more, using 'value for money' outcome; arms procurement may emphasize other factors or considerations but not saving costs in the final bid outcome. This is where national laws plays a great role than cost in the regulation of arms procurement. For instance where modern weaponry with highpoints technology is essentially required, low cost consideration may be out of place. The higher the cost, the better the product might be, where quality and country of origin will be of a special consideration to the buyer. This is one of the reasons why defense budgeting and expenditure cannot be easily boxed or contained as applied in other public finance management.

Confidentiality and National Security

Openness and Transparency in arms procurement unlike what operates in the civil procurement or even in military procurement of works, goods and services and other non-arms procurement may be limited by national security and confidential considerations. This must be subject to national legislations and not just the whims and caprices of individuals, which will make the process predictable in following the due process of law.

The time frame for major weapons procurement

In some specialized arms procurement, it may require months and even years - some up to 10 years from inception to delivery and inspection of major weapons. This is why major consultations, evaluation, re-evaluation, negotiation and re-negotiation and flexibility are built into contractual agreements. These would in the course of contract administration, necessarily take care of inflations, fluctuations especially in costs and foreign exchange rates and other unforeseen contingencies. There is usually, long turnaround time for arms procurement since most arms are unlike on-shelf acquisition, must be made to specification or peculiar needs and requirements and therefore, adequate inspection and quality control measures must be put in place before delivery. Some contract agreements may include manufacturing maintenance in-training and after-sale service agreements. All these can always make final cost unpredictable and very highly susceptible to corruption, if due process of law is not judiciously applied.

The complexity of arms procurement

From the above, we can see and appreciate the complexity of arms procurement, which requires a strict regime of sound fiscal and procurement management involving cross-functional, international and interdisciplinary teams of efforts. These kind of approaches will involve local and international expertise like in procurement and logistics, engineering, resource management, contracting and supplying, designing and quality assurance. Again, because of these complexities and personnel involved, corruption is highly possible but the more the risks of corruption, the more mitigating factors should be put in place; the more integrity and accountability weapons the government should deploy. For example, the number of layers of procurement should determine the number of layers of approval and oversight needed.

International arms treaties and national legislations

In most cases, major weapon or arms procurement is not from the open market. National considerations like security, economic, military, and political and trade considerations may be involved in the determination of relationship between two or more nations. There may be international economic and especially arms treaties that may encourage or completely prohibit arms trade or even movement across boarders and between nations. All these will affect the availability, costs, transparency, accountability and oversight that may be available or not available to arms procurement of any given country.

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