Introduction:

Public procurement is a cornerstone of government operations, involving the acquisition of goods, services and works from external sources. In the Middle East, public procurement is particularly significant due to the region's extensive infrastructure projects and government spending.
Effective procurement processes are essential for ensuring value for money, transparency in procurement and accountability. However, structural deficiencies in procurement systems can enable corruption and fraud, undermining economic development and public trust. This article explores these deficiencies and suggests measures to mitigate corruption.

Key deficiencies in public procurement

 

1. Lack of transparency and accountability: In many Middle Eastern countries, procurement processes are not fully transparent. Limited public access to procurement information and opaque decision-making processes creates opportunities for public procurement corruption. For example, the absence of publicly accessible procurement portals with mandatory requirements for publishing bid evaluation reports for published tenders can hinder accountability
2. Complex regulations and inconsistent policies: The procurement regulations in the Middle East can be overly complex and inconsistent. This complexity can be exploited by corrupt officials to manipulate procurement outcomes. Complexity can also create opportunities for corruption and fraud, despite competitive process. For example, allowing the procuring party to distribute business disproportionately among shortlisted parties in a framework arrangement. Simplifying and harmonising these regulations and policies across the region can help reduce corruption
3. Inadequate oversight: Weak oversight mechanisms are a common issue. In some cases, oversight bodies lack the independence or resources needed to effectively monitor procurement activities. This can lead to unchecked corruption and inefficiencies
4. Insufficient training: A lack of proper training for procurement officials is another significant issue. Without adequate training, officials may be unaware of best practices or ethical standards, making them more susceptible to corrupt influences. Continuous professional development is crucial to address this deficiency
5. Collusion and favouritism: Limited competition, often due to prequalification criteria favouring select entities, allows collusion between bidders and officials. Lack of proper mechanisms to identify and mitigate conflicts of interest often results in biased award decisions.

Impacts of corruption in public procurement

 

• Economic costs: Inflated project costs due to bribery, kickbacks, or overpricing drain public resources, reducing funds for essential services
• Quality compromises: Contracts awarded to incompetent or unqualified suppliers often result in substandard infrastructure or services
• Erosion of trust: Persistent public procurement corruption undermines citizens’ confidence in government institutions, leading to social and political instability.

Strategies to address structural deficiencies

1. Enhancing transparency and access to information: Establish open-data platforms for procurement processes, providing real-time updates on tenders, bids,t and awards
2. Strengthening oversight and accountability mechanisms: Implement whistle blower protection programmes to encourage reporting of misconduct
3. Streamlining procedures with technology: Enhance e-procurement systems that digitise and automate procurement workflows, minimising human intervention and errors while ensuring oversight, control and transparency. Use advanced data analytics to identify anomalies and patterns indicative of corruption
4. Building institutional capacity: Provide continuous training to procurement officials on the best international practices and ethical standards
5. Fostering a culture of integrity: Conduct ethics awareness campaigns emphasising the importance of ethical practices in public procurement.

Conclusion

Addressing structural deficiencies in public procurement is essential for mitigating corruption and ensuring efficient utilisation of public funds. In the Middle East, governments must adopt a holistic approach that combines transparency, accountability and technological innovation, while fostering an ethical culture within procurement institutions.

How BDO can help

BDO’s teams have extensive practical experience in conducting forensic investigations or fraud risk advisory engagements with governments as well as designing anti-fraud programmes and controls. For any questions around this document or if you are seeking advice of any sort, on the back of an incident, potential issue, whistle blower complaint or any related matter, please feel free to reach out to the following key BDO contacts. 

  

Authors:

Zeeshan Shahid, Senior Director, Forensic, BDO Saudi Arabia
z.shahid@bdoalamri.com  Mobile: +966 555 638 532
Rahul Samdani, Director, Forensic, BDO UAE
rahul.samdani@bdo.ae Mobile: +971 56 414 3952
Abdur Rab Sharjeel, Head of Advisory, BDO Saudi Arabia
a.sharjeel@bdoalamri.com Mobile: +966 55 754 0579
Shivendra Jha, Head of Advisory, BDO UAE
shivendra.jha@bdo.ae Mobile: +971 55 572 0269