WHAT IS AN INTEGRITY PACT?

1. What is an Integrity Pact?
An Integrity Pact (hereinafter referred to as IP) is a cooperation mechanism that allows a public authority to collaborate with civil society to promote compliance with regulations in the activities of institutions and bidders, reduce corruption risks, and enhance public trust. In essence, it is an agreement between a public representative and bidders participating in a tender. To ensure effective implementation of the IP, a monitoring plan, carried out by a non-governmental organization, is an integral part.

2. Why is the Integrity Pact important for municipalities?
For municipalities, the use of IP generally improves the quality of procurement procedures, prevents risks of dishonesty, prevents waste of public funds, and promotes the timely completion of procurement processes. Throughout the procurement implementation process, violations, including corruption, can be identified and resolved promptly. The municipality benefits from more transparent and efficient organization of procurement tenders and has the opportunity to improve openness.

3. Why is the Integrity Pact important for companies?
Within the framework of IP, additional budget is allocated for expertise, which strengthens the company’s reputation and transparency. IP provides additional human resources for procurement oversight and expert involvement, as well as access to foreign experience and networks that can help companies participate in procurement tenders in other countries. Additionally, companies have the opportunity to improve their internal processes, including gaining experience in tender participation and execution in accordance with good governance principles.

4. Why is the Integrity Pact important for society?
Civil society benefits from transparency, which provides the opportunity for the public to verify that public funds are used efficiently in the interest of society. Through the monitoring process, the public can gain confidence that the process has been conducted fairly and there is no reason to suspect any violations. Increased transparency creates opportunities to enhance overall public trust and offers greater opportunities to follow the procurement process, for example, when the involved non-governmental organization regularly informs the public about the ongoing procurement process.

5. What are the stages of implementing an Integrity Pact project?
The stages of IP implementation are divided into three parts, each involving the following activities:

• Pre-tender stage
  This stage consists of the establishment of a procurement commission, checking for conflicts of interest, conducting market research, and preparing documents.
  During this stage, it is also necessary to check whether there is an adequate assessment of needs and whether there are any “red flags” indicating informal agreements regarding the contract or external influence on the decisions of officials. In planning and budget creation, it is important to ensure that the planned procurement is feasible within the budget, and that the specifications, selection criteria, and requirements are objective to avoid any suspicions of them being tailored to specific companies. Additionally, unnecessary samples of goods/services should not be requested, and malicious procedures that distort competition should not be used. The contracting authority may consult with independent experts, institutions, or suppliers. These consultations can be used in procurement planning and preparation, as long as they do not limit competition and violate the principles of equal treatment and transparency.
• Tender stage
  At this stage, the tender is announced, offers are submitted, and, if necessary, the procurement is suspended. After that, the offers are evaluated according to the criteria, and exclusions are made in accordance with the laws of the Republic of Latvia.
  It is mandatory to ensure the existence of a public announcement inviting bids, which also discloses the evaluation and award criteria. Bidders must not be familiarized with the process over time, personal interests must not be pursued by the municipality, and an effective “four-eyes principle” must be applied when making decisions in both announcing the tender and reviewing the bids. Bidders must provide precise cost and/or price data in their proposals to avoid inflating the contract price. The involved NGO overseeing the procurement must have access to the procedural records. The organization can also involve an independent expert to analyze the technical specifications. Additionally, the organization can clarify procurement requirements or the estimated contract price to the public through public information activities.
• Post-tender stage
  Finally, the contract is concluded. Once the bidders and their offers have been evaluated, a meeting is held to determine the winner of the procurement and grant the right to sign the contract (protocol). All bidders are informed of the result and given a time limit to contest the decision. After the expiration of the waiting period, the contract is signed in writing. Afterward, the contract is published, and no later than 10 business days after the day the procurement contract or framework agreement takes effect, or any amendments to it, the contracting authority must post the procurement contract or framework agreement, amendments, and the justification for amendments in accordance with Sections 61.2 and 61.3 of the Public Procurement Law on its buyer profile, ensuring availability throughout the contract’s duration. Information about the concluded procurement contract or framework agreement and its amendments is reflected in the publication management system and published on the Procurement Monitoring Bureau’s website. The contract register provides data, including information on the contracting authority, supplier, contract signing date, contract subject, contract price, contract performance deadline, contract amendments, and information on the actual performance of the contract (contract price, performance deadline, contractor, and reason for termination, if applicable), and other information if necessary. If needed, the contracting authority has the right to unilaterally terminate the procurement contract early by sending the supplier a written notice in the following cases:
  • Significant amendments have been made to the procurement contract that are not allowed according to the PIL;
  • The procurement contract was not concluded in accordance with the rules set out in the procurement procedure documents, or essential provisions of the procurement contract included in the procurement procedure documents have been changed;
  • At the time of awarding the contract, the supplier met one of the exclusion grounds;
  • The supplier should not have been awarded the contract due to a ruling by the European Court of Justice.
    The following aspects should be particularly checked during the monitoring process to prevent any abuse of the contract by the supplier, especially regarding its quality, price, and timing:

Significant changes to the contract terms to give the bidder more time and/or higher prices;

Product substitution or substandard work or services that do not meet the contract specifications;

Theft of new assets before delivery to the end user or before recording;

Inadequate oversight by public officials and/or secret/informal agreements between the contracting parties or between the contracting party and oversight officials;

Subcontractors and partners selected in a non-transparent manner or not officially responsible for performance;

False or duplicate invoices for undelivered goods and services, including interim payments.

6. Who funds the implementation of the Integrity Pact?
In Latvia, Integrity Pacts are funded by European Union funds or from Delna’s resources, but international practice shows that IP can be funded by various participants, including public institutions, international organizations, various funds, and even private sector representatives involved in public procurement who want to ensure fair competition and ethical business practices.

Transparency International’s memorandums of integrity, or Integrity Pacts, are legally binding contracts that:

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1) declare an active anti-corruption and moral policy, which is broader than that applicable to public procurement procedures, and is binding on all parties involved in procurement procedures;

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2) collate a set of legal instruments, which guarantee adherence to the declaration, and lay down penalties for potential violations.

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Under the auspices of an integrity pact; in addition to the client and the supplier, a third party to the pact is an independent organisation, which is obliged to act as a whistleblower in the event that the law is broken or possibly corrupt transactions occur.

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.More information:

• European Commission’s information page 
• Transparency International’s guides on Integrity Pacts
• Transparency International Latvia informative materials (in Latvian)

 The website section was created with the funding of the European Union Recovery Fund. Transparency International Latvia is responsible for the content of the project’s activities and it does not necessarily reflect the opinion of the European Union.

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