Corruption red flags in public contracts
The corruption risks the OECD flags at each stage of a public contract, and how a consultancy keeps its own purchasing and billing records clean.
By Achekam · · 5 min read · For Consulting businesses in South Africa, Nigeria, Kenya
A consultancy that wins government work sits on both sides of procurement. It responds to tenders issued by public bodies, and it buys from its own subcontractors, associates and suppliers to deliver the work. Corruption can reach it through either door: a request to "help" write a specification, a competitor suggesting a cover bid, an associate's invoice for days that were never worked.
The firm's reputation, and its future eligibility for public work, depend on staying clear of all of it and being able to show that it did. The OECD's work on integrity in public procurement maps where the risks arise, stage by stage. This article walks through those stages from a consultancy's point of view, and then looks at the firm's own purchasing records.
Why public procurement is so exposed
The OECD describes public procurement as one of the government activities most vulnerable to corruption. It says the risks are exacerbated by the volume of transactions, the financial interests at stake, the complexity of the process and the close interaction between public officials and businesses.
That last factor describes consulting precisely. Advisers work closely with officials, often over years, and the line between building a relationship and gaining an unfair advantage needs watching. The OECD states that integrity risks occur at every stage of procurement, from needs assessment through the bidding phase to contract execution and payment, with red flags including undue influence, conflict of interest and various kinds of fraud. Its brochure, Preventing Corruption in Public Procurement, sets out those risks for each stage alongside the measures governments can take against them.
Before the tender: specifications written for one bidder
When procurement specifications are being developed, the OECD lists two integrity risks: technical specifications tailored for a specific company, and selection criteria that are not objectively defined and established in advance.
For a consultancy, the danger is often an invitation that looks like goodwill. An official asks the firm to draft the terms of reference for an assignment it then intends to bid for. Or a specification arrives that only your firm's methodology, or your named expert, could possibly meet. Practical rules:
- if you help define a need, decide in writing whether you will step back from bidding for it;
- do not supply specification wording to an official for a tender you intend to answer;
- where evaluation criteria are missing or vague, ask the buyer in writing for clarification through the formal channel, so every bidder gets the answer.
Choosing the procedure: splitting and false urgency
At the stage where the buyer chooses its procurement procedure, the OECD flags the abuse of non-competitive procedures, such as contract splitting and abuse of extreme urgency.
A consultancy can be drawn in from either end. An official may suggest dividing a large assignment into several small orders, each below the level that would require open competition. Or a direct appointment is justified as urgent when the need has been known for months. Decline to participate in either, and keep a note of the conversation. The same pattern can occur inside your own firm when purchases are split to avoid an approval limit, which splitting purchases to dodge quote thresholds discusses for contractors.
At evaluation: cover bids, rotation and carving up the market
At the bid evaluation stage, the OECD lists collusive bidding as a risk, including cover bidding, bid suppression, bid rotation and market allocation.
These usually require at least two firms to agree. A competitor might ask you to submit a deliberately high bid so that a tender looks competitive, to sit this one out in return for being left alone on the next, or to keep to separate provinces or ministries. Each of these is collusion, whatever it is called in conversation. Brief everyone who prepares bids that such approaches must be refused and reported to a partner immediately.
At award: conflicts of interest and the four-eyes principle
For the award stage, the OECD lists conflict of interest in bid evaluation, arising from familiarity with bidders, gifts or promises of future employment, and the absence of an effective "four eyes" principle.
The consultancy cannot control the buyer's evaluation committee, but it controls what it offers. Keep a register of gifts and hospitality given to officials, however modest. Never discuss employment with an official who is evaluating your bid. And apply the four-eyes idea internally: no bid goes out, and no fee proposal is changed after submission, without a second person in the firm reviewing it.
After award: false invoices, and the checks on your own purchases
Once the contract is running, the OECD lists false or duplicate invoicing for goods and services not supplied, and deficient separation of financial duties leading to false accounting and cost misallocation, as post-award risks.
Here the consultancy is the buyer. Its subcontractors and associates invoice it, and it bills the public body in turn. A false associate invoice inflates both. In Achekam, several checks help keep the firm's own purchasing clean:
- Quotes on file. Supplier quotations are captured against a requisition and one is selected. Choosing one that is not the cheapest needs a written reason that is kept, and a quotation can be disqualified with a reason.
- No double posting. Posting a matched supplier invoice puts it in the ledger as expense, input VAT and trade payables, and the supplier's invoice number stops it being posted twice.
- An integrity review. A procurement integrity review, sold as its own add-on, raises questions about warning patterns such as competing quotes sharing contact or bank details, or a supplier paid into an employee's bank account. Its check for purchases split under a threshold does nothing until a threshold is set, and the app cannot set one today, so that pattern still needs a person's review.
These are questions for a person to investigate, not verdicts. Pair them with clear separation of who approves and who pays; segregation of duties explains the principle.
Start by writing a one-page integrity policy covering specifications, cover bids, gifts and associate invoices, and have every partner and bid manager sign it.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
