Corruption in Public Contracting Auctions: The Role of Transparency in Bidding Processes

Abstract

The paper discusses corruption in public auctions and the role of transparency as a tool to prevent it. First, we analyse where corruption occurs, emphasizing the importance of considering the whole process, from deciding whether to contract-out to implementing the contract. We then analyse the effects of corruption on public auctions and argue that corruption undermines their stated aims. Second, we discuss the ways transparency can mitigate corruption and possible trade-offs regarding competition and efficiency. As an instrument, we focus on the Integrity Pact, a tool developed by Transparency International, and analyse cases in Argentina (school supplies) and Colombia (telecommunications), where transparency helped to prevent corruption and collusion and, furthermore, was able to enhance competition. We conclude with some policy implications.