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    • News
    • In the news: Accountability

    US aid watchdog urges implementers to 'spot-check' procurements

    Don’t wait until it’s too late. USAID partners need to be more proactive in preventing procurement fraud because they will be the ones held accountable for it, according to the agency’s Office of the Inspector General.

    By Michael Igoe // 09 January 2014
    USAID Engineer Mario Nicoleau (left) speaks with the project manager of CHF's rubble removal work in the Nazon neighborhood in Port-au-Prince, Haiti. Implementing NGOs and contractors should do their own spot inspections of procurement proceedings of projects to avoid fraud. Photo by: Kendra Helmer / USAID

    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.”

    Read more on U.S. aid reform online, and subscribe to The Development Newswire to receive top international development headlines from the world’s leading donors, news sources and opinion leaders — emailed to you FREE every business day.

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    About the author

    • Michael Igoe

      Michael Igoe@AlterIgoe

      Michael Igoe is a Senior Reporter with Devex, based in Washington, D.C. He covers U.S. foreign aid, global health, climate change, and development finance. Prior to joining Devex, Michael researched water management and climate change adaptation in post-Soviet Central Asia, where he also wrote for EurasiaNet. Michael earned his bachelor's degree from Bowdoin College, where he majored in Russian, and his master’s degree from the University of Montana, where he studied international conservation and development.

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