Design and measurement of a corruption risk index from a supplier perspective in the context of COVID-19 emergency

Introduction

The unexpected outbreak of COVID-19 has posed some of the biggest challenges that humanity has had to endure in recent history in terms of public health. Governments have also been confronted to the challenge of preserving as many human lives as possible, while keeping the economy afloat and avoiding the rise of inequality.?

The first measure that the Colombian government adopted in order to manage the pandemic and its effects was the declaration of the State of Emergency. Consequently, it enacted Decree 440/2020, which set the conditions under which national and local authorities are allowed to fast-track the allocation of public contracts as a mechanism to cope with the sanitary emergency at a faster pace. However, such rules also open a window of opportunity for corruption, since contract awarding procedures have lesser screening mechanisms.

Corruption in public procurement may occur through the allocation of contracts to firms whose expertise is not focused on the goods or services requested under the terms of reference, leaving aside firms that may be more suitable to fulfill those demands. In some cases “multipurpose firms”, entities whose purpose is a sort of catch-all-enterprise (e.g. they build roads, organize music concerts, educate citizens and provide health services), bid in procurement processes regardless of the specific know-how required by the contracting entity or of the specific know-how and experience of the offering party, with the aim of securing as many contracts as possible. In most cases, the lack of specialization of such multipurpose contractors endangers the rightful spending of public funds and puts at risk the capacity of the State to meet its goals. As a consequence, it may bring poor public service delivery, or the provision of bad-quality, overpriced elements.

Altogether, contracts awarded to multipurpose contractors may be more vulnerable to corruption and poor management risks than those contracts awarded to specialized firms or organizations. The risk is even greater under a context of exceptional contracting rules due to the COVID-19 sanitary crisis, since contracting bodies may not have the time to do an exhaustive evaluation of the bidders given the urgency to provide the needed services to citizens, or officials may abuse of their increased discretional power in order to favor specific contractors.?