The New Year brings with it new opportunities in Guatemala, along with the change of government administration. Priorities for the current administration include heavy investment in infrastructure and in the strengthening of the country’s public health system.
In Part I of this series, we discussed the major red flags to be aware of during the pre-tender stage of the public procurement cycle. Here, in Part II, we look at the importance of safeguarding investors’ interests during the tender stage. Characterized by heavy bureaucratic procedures, understanding the bidding stage and its risks will allow for better project planning on behalf of interested bidders. The tender stage refers specifically to the process that determines the pre-qualification of candidates; the evaluation of the bid offers as well as the awarding of the contract.
Common corruption risks can be identified as early as when the invitation to present a public bid is publicized for interested parties. Publicity and transparency throughout the process are key principles for ensuring a successful project. Transparency brings accountability and should be the aim for all stakeholders in a procurement process. By nature, projects held under a public procurement process serve a public interest. In this sense, transparency allows for a good evaluation of the process to ensure that no favoritism, hidden agendas or interests are being favored to secure a contract. There are reasons for which certain information should be legally protected, for example national security, intellectual property, or confidential information. However, outside these exceptions, the general rule is that information related to the contracting process is available to the public.
Investors should be mindful that any process that begins in a restricted manner, where information is not distributed to the public and when invitations to offer bids are provided with very little time and preparation, could result in a risk of collusive bidding or lack of real competitive bidding - where the technical and financial information presented by a serious investor could be used by unscrupulous competitors or government officials to obtain privileged commercial data for their own advantage.
One other very important factor to be considered by investors for preventing corruption risks is evaluating if, according to the bidding rules, all selection criteria for the awarding of the contract is clearly established and pre-disclosed to secure a fair, impartial, and non-discriminatory selection process. Objective criteria should be established beyond only determining pricing criteria. Weighting measures of items that are not necessarily monetarily quantifiable should also have evaluation criteria that are not at the discretion of the board awarding the contract. In sum, investors should seek to protect the information that should be disclosed to prevent misuse of their commercial strategies. The only way to prevent or mitigate these risks of misuse of their commercial information is to analyze the bidding process through a critical lens, including the political strategy behind the process and the intent behind the competitors willing to participate in the procurement process.
It is of paramount importance for foreign investors to be drivers of business integrity and not contribute to a culture where ethical standards are not upheld. A level playing field is ultimately good for long-term economic prosperity within a country and creates more opportunities for competition and investment.
In Part III, we will discuss the importance of identifying risks during the post-tender stage, in which accountability, contract management and compliance with contract obligations by the government and the awarded party are to be heavily scrutinized to ensure a proper delivery of the public good sought by the government.
