Public procurement, a vital component of governmental spending, has long been associated with corruption risks. The intricate contractual arrangements, substantial financial stakes, and discretionary powers granted to public officials make it a breeding ground for malpractices. However, a crucial yet understudied phase in this landscape is the execution of public contracts. A recent publication authored by SAPIENS Network Lead Researcher Prof. Tunde Tatrai and Marie Sklowdoska-Curie Fellow Valentina Bianchini, together with Prof. Petra Ferk and Nikola Komsic delves into this unexplored territory.

The study begins by acknowledging the existing literature’s focus on aspects other than contract execution, such as pre-award phases or data analysis methods. It highlights the lack of emphasis on contract execution despite its significant impact on cost overruns. To fill this gap a comparative analysis of six European countries’ experiences is conducted to investigate the link between perceived corruption and the established contract monitoring systems.

Corruption perceptions and public contract performance monitoring

The researchers propose an analytical framework drawing from relevant literature on contract monitoring, data disclosure, and transparency in public procurement. They argue that countries with higher perceived corruption levels tend to establish stronger monitoring systems to track contract performance data, including contract modifications, thereby enhancing transparency and reducing corruption risks.

After a preliminary analysis of EU countries’ contract monitoring regulations, Finland, Hungary, Italy, Portugal, Slovenia, and Serbia were selected for the study. The selection aimed to ensure comparability and encompass countries with varying corruption perceptions, thus providing insights into different regulatory environments.

Evidences from comparative analysis

The study reveals significant variations in the transparency and monitoring of public contract execution among the analyzed countries. While some countries have dedicated institutions responsible for monitoring contract performance and publishing reports, others lack centralized systems and comprehensive data.

Overall, the researchers found that there is a link between the transparency and monitoring of public procurement contract performance and the level of perceived corruption. Countries with lower corruption perceptions tend to invest less in robust monitoring tools, while those with higher corruption levels prioritize enhanced monitoring and transparency measures.

What needs to be done to enhance transparency in public contracts execution?

The research sheds light on an under explored facet of public procurement, providing valuable insights for policymakers, researchers, and practitioners aiming to enhance transparency, reduce corruption, and ensure effective public spending.

The authors recommend policymakers to consider the study’s findings when regulating contract performance monitoring, recognizing the importance of transparency in combating corruption. Moreover, they stress that data about the contract execution phase need to be collected in a systematic and accessible way for enhancing the monitoring abilities of governmental bodies, but also of civil society. Moreover, they suggest further studies to explore the effectiveness of public contracts performance monitoring systems and develop specific indicators to assess their impact on reducing corruption and ensuring the efficient use of public funds.

As countries grapple with the complexities of monitoring public contracts, this study highlight why investing in such systems can support countries efforts towards more transparent public procurement. To read the study in full, click here.