The U.S Agency for International Development’s Office of the Inspector General says aid contractors need to take the lead in stopping procurement fraud, since the “vast majority” of it takes place under their watch.
Contractors should not assume that just because USAID designs a project that means it has the necessary internal controls and safeguards to prevent corruption, according to Daniel Altman, the OIG’s Special Agent in Charge.
Altman urged contractors and implementing NGOs to perform their own “spot inspections” of procurement proceedings, to ensure bidding competitions actually take place as described in project documentation.
He also suggested implementers make it common practice to contact 10 percent of the firms alleged to be involved in a given procurement, ask if they bid for the project, and ask for a copy of the bid they submitted.
The “vast majority” of fraud cases involve contracting mechanisms carried out by implementers, the official said on Wednesday at an International Consortium on Governmental Financial Management meeting in Washington, D.C.
Conduct your own probe
Regularly mandated OIG audits of development programs struggle to obtain the “forensic” evidence necessary to show that fraud may be occurring, and Altman’s office claims to lack the resources to respond to all of the fraud tips and complaints they receive.
Sometimes, he explained, local firms will show up in project documents as bidders looking to provide goods and services to U.S. aid implementers, but upon closer inspection those firms either do not exist, or were not actually involved in a fair and open bidding process. Checking up on firms that did not win the bid can also be a source of information about whether any conflicts of interest or nepotism were involved in the outcome of the procurement.
“I don’t think there’s a culture or place in the world where people like to lose to a cheater,” said Altman, noting that losing bidders can sometimes be valuable sources of information about any foul play taking place in the procurement process.
When things go wrong and people find out about it, it is the implementing agencies who end up answering for fraud allegations within the implementation process.
“Two and a half years from now from when you’re sitting across the table from my team and you’re sitting with a $2 million fraud allegation because you didn’t properly vet those contractors… the people from USAID will no longer be working for USAID… or they will have forgotten about it themselves,” said Altman.
He added: “Just because USAID asks you to do something doesn’t mean that you should do it … When I’m that guy, and we show up, we don’t care what silly idea they asked you to do.”
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