Transparency and Benchmarking: Two Powerful Corruption and Collusion Mitigation Tools
Posted on October 30, 2013
Faced with increasing allegations of malfeasance in the public works sector at the provincial and municipal levels, the government of Quebec took three steps in 2011 and 2012 to combat corruption and collusion:
1. In February 2011 Quebec set up a permanent anti-corruption unit (UPAC). This 200-person inter-governmental agency is modeled after New York City’s Department of Investigations. According to media reports, the mere creation of UPAC was sufficient to reduce bid prices in some sectors.
UPAC continues inexorably to amass information and to make arrests. While some believe that this is a passing storm, it is important to remember that, as its name indicates, UPAC is permanent.
2. Later that year, the government set up a commission of public enquiry, commonly known as The Charbonneau Commission, after its president, Justice France Charbonneau. The commission’s mission is to look into collusion and corruption in the award and management of construction contracts and to recommend solutions. Its proceedings are for the most part televised and closely followed by the media and the population at large. The commission’s mandate was initially to end in October 2013. Last March, Quebec extended the deadline to October 2015 but asked that an interim report be submitted in January 2014.
3. Finally, on December 7, 2012, shortly after taking power, the Parti Quebecois successfully pushed forward Law 1, The Integrity in Public Contracts Act. The Act was adopted unanimously by the National Assembly’s four parties. Among many other things, Law 1 requires all persons and entities bidding on public contracts to be prior approved by the Autorité des marchés financiers (AMF), Quebec’s SEC.
Because Quebec does business with more than 23,000 suppliers, it was decided first to deal with those bidding on contracts or sub-contracts of $40 million or more and then gradually to deal with bidders on smaller contracts. The only exception being Montreal which asked for immediate application of the vetting process in connection with a number of specific projects, both large and small.
These steps have had considerable impact. But there are two other measures missing from the overall anti-corruption response. These measures deal with transparency and benchmarking.
Transparency and Benchmarking
While increased surveillance and prior vetting is most useful, transparency has shown to be a powerful deterrent to poor behaviour. After all there must be a reason why the world’s best known anti-corruption NGO is called Transparency International.
The AMF or other authority could set up and maintain a website wherein material terms and conditions of public works contracts would be made public.
The information would have to be presented in an intelligible manner and be easy to retrieve and comprehend. Ranges and other safeguards could be provided to protect the legitimate commercial interests of the bidders but also so as not to stifle competition.
Additionally, the information should be benchmarked against terms and conditions applicable in other geographical areas, both within and outside Quebec.
Public disclosure of contracts and their benchmarking is standard practice in public-private partnerships in Quebec and elsewhere in Canada. There is no reason why such practice could not be generalized to all public work contracts.