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Do European procurement rules generate or prevent crime?

Nicholas Dorn (Cardiff University, Cardiff, UK)
Michael Levi (Cardiff University, Cardiff, UK)
Simone White (European Commission, Brussels, Belgium)

Journal of Financial Crime

ISSN: 1359-0790

Article publication date: 18 July 2008

Abstract

Purpose

The purpose of this paper is to explore whether opportunities for fraud and corruption might be reduced or increased by rules governing public procurement. The focus is on specific European legislation – Procurement Directive 2004/18 on the coordination of procedures for the award of contracts for public works, public supply and public services by public bodies within all EU Member States – however similar issues would arise in other jurisdictions.

Design/methodology/approach

The procurement process is examined in relation to three stages of procedure: preparation of specifications, selection of tenderers, and execution of contracts, within each of which some specific risks (red flags) are identified.

Findings

Particular risks that may not have been sufficiently addressed, in terms of research or legislation, arise at the first of these stages; accordingly this paper focuses there. Generally, risks are summarised in terms of insider‐driven specifications, low visibility of procurement processes, and ample opportunities for renegotiation of terms. Risks may be increased by innovative procurement practices that have the effect of extending the manoeuvring between tenderers and public bodies, such as competitive dialogue.

Research limitations/implications

Fraud and corruption risk in public procurement is an area deserving detailed and comparative study, with special attention to the pre‐contracting stage. Research on this topic within EU Member States should go hand in hand with enquiry into international procurement, and into the EC's own rules as applied by its institutions and bodies.

Practical implications

Suggestions for risk‐reduction are put forward in relation to quality standards and pre‐award publicity.

Originality/value

After some time as the Cinderella of crime policies, large‐scale frauds attract greater interest. This paper gives grounds for asking whether, in relation to procurement fraud, a combination of traditional practices and modernisation may outpace anti‐fraud measures.

Keywords

Citation

Dorn, N., Levi, M. and White, S. (2008), "Do European procurement rules generate or prevent crime?", Journal of Financial Crime, Vol. 15 No. 3, pp. 243-260. https://doi.org/10.1108/13590790810882847

Publisher

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Emerald Group Publishing Limited

Copyright © 2008, Emerald Group Publishing Limited