| In every national budget, there is a part
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| | multi-phase tendering process. Public
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| called "Public Procurement". This is the
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| | competitive bidding is not
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| portion of the budget allocated to
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| | corruption-proof: many times officials
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| purchasing services and goods for the
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| | and bidders collude and conspire to award
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| various ministries, authorities and other
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| | the contract against bribes and other,
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| arms of the executive branch. It was the
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| | noncash, benefits. But we still know of
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| famous management consultant, Parkinson,
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| | no better way to minimize the effects of
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| who once wrote that government officials
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| | human greed.Procurement policies,
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| are likely to approve a multi-billion
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| | procedures and tenders are supervised by
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| dollar nuclear power plant much more
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| | state auditing authorities. The most
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| speedily that they are likely to
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| | famous is, probably, the General
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| authorize a hundred dollar expenditure on
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| | Accounting Office, known by its acronym:
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| a bicycle parking device. This is because
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| | the GAO.It is an unrelenting, very
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| everyone came across 100 dollar
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| | thorough and dangerous watchdog of the
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| situations in real life - but precious
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| | administration. It is considered to be
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| few had the fortune to expend with
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| | highly effective in reducing procurement
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| billions of USD.This, precisely, is the
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| | - related irregularities and crimes.
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| problem with public procurement: people
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| | Another such institutions the Israeli
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| are too acquainted with the purchased
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| | State Reviser. What is common to both
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| items. They tend to confuse their daily,
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| | these organs of the state is that they
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| household-type, decisions with the
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| | have very broad authority. They possess
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| processes and considerations which should
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| | (by law) judicial and criminal
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| permeate governmental decision making.
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| | prosecution powers and they exercise it
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| They label perfectly legitimate decisions
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| | without any hesitation. They have the
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| as "corrupt" - and totally corrupt
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| | legal obligation to review the operations
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| procedures as "legal" or merely
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| | and financial transactions of all the
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| "legitimate", because this is what was
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| | other organs of the executive branch.
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| decreed by the statal mechanisms, or
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| | Their teams select, each year, the organs
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| because "this is the law".Procurement is
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| | to be reviewed and audited. They collect
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| divided to defence and non-defence
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| | all pertinent documents and
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| spending. In both these categories - but,
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| | correspondence. They cross the
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| especially in the former - there are
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| | information that they receive from
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| grave, well founded, concerns that things
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| | elsewhere. They ask very embarrassing
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| might not be all what they seem to
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| | questions and they do it under the threat
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| be.Government - from India's to Sweden's
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| | of perjury prosecutions. They summon
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| to Belgium's - fell because of
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| | witnesses and they publish damning
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| procurement scandals which involved
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| | reports which, in many cases, lead to
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| bribes paid by manufacturers or service
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| | criminal prosecutions.Another form of
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| providers either to individual in the
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| | review of public procurement is through
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| service of the state or to political
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| | powers granted to the legislative arm of
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| parties. Other, lesser cases, litter the
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| | the state (Congress, Parliament,
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| press daily. In the last few years only,
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| | Bundestag, or Knesset). In almost every
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| the burgeoning defence sector in Israel
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| | country in the world, the elected body
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| saw two such big scandals: the developer
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| | has its own procurement oversight
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| of Israel's missiles was involved in one
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| | committee. It supervises the expenditures
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| (and currently is serving a jail
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| | of the executive branch and makes sure
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| sentence) and Israel's military attache
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| | that they conform to the budget. The
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| to Washington was implicated - though,
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| | difference between such supervisory,
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| never convicted - in yet another.But the
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| | parliamentary, bodies and their executive
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| picture is not that grim. Most
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| | branch counterparts - is that they feel
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| governments in the West succeeded in
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| | free to criticize public procurement not
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| reigning in and fully controlling this
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| | only in the context of its adherence to
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| particular budget item. In the USA, this
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| | budget constraints or its cleanliness -
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| part of the budget remained constant in
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| | but also in a political context. In other
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| the last 35(!) years at 20% of the
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| | words, these committees do not limit
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| GDP.There are many problems with public
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| | themselves to asking HOW - but also
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| procurement. It is an obscure area of
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| | engage in asking WHY. Why this specific
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| state activity, agreed upon in
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| | expense in this given time and location -
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| "customized" tenders and in dark rooms
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| | and not that expense, somewhere else or
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| through a series of undisclosed
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| | some other time. These elected bodies
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| agreements. At least, this is the public
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| | feel at liberty - and often do -
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| image of these expenditures.The truth is
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| | intervene in the very decision making
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| completely different.True, some ministers
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| | process and in the order of priorities.
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| use public money to build their private
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| | They have the propensity to alter both
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| "empires". It could be a private business
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| | quite often.The most famous such
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| empire, catering to the financial future
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| | committee is, arguably, the Congressional
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| of the minister, his cronies and his
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| | Budget Office (CBO). It is famous because
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| relatives. These two plagues - cronyism
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| | it is non-partisan and technocratic in
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| and nepotism - haunt public procurement.
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| | nature. It is really made of experts
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| The spectre of government official using
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| | which staff its offices.Its apparent -
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| public money to benefit their political
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| | and real - neutrality makes its
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| allies or their family members - haunts
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| | judgements and recommendations a
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| public imagination and provokes public
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| | commandment not to be avoided and, almost
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| indignation.Then, there are problems of
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| | universally, to be obeyed. The CBO
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| plain corruption: bribes or commissions
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| | operates for and on behalf of the
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| paid to decision makers in return for
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| | American Congress and is, really, the
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| winning tenders or awarding of economic
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| | research arm of that venerable
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| benefits financed by the public money.
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| | parliament. Parallelly, the executive
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| Again, sometimes these moneys end in
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| | part of the American system - the
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| secret bank accounts in Switzerland or in
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| | Administration - has its own guard
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| Luxembourg. At other times, they finance
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| | against waste and worse: the Office of
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| political activities of political
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| | Management and Budget (OMB).Both bodies
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| parties. This was rampantly abundant in
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| | produce learned, thickset, analyses,
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| Italy and has its place in France. The
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| | reports, criticism, opinions and
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| USA, which was considered to be immune
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| | recommendations. Despite quite a
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| from such behaviours - has proven to be
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| | prodigious annual output of verbiage -
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| less so, lately, with the Bill Clinton
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| | they are so highly regarded, that
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| alleged election financing
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| | virtually anything that they say (or
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| transgressions.But, these, with all due
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| | write) is minutely analysed and
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| respect to "clean hands" operations and
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| | implemented to the last letter with an
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| principles, are not the main problems of
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| | air of awe.Only a few other parliaments
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| public procurement.The first order
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| | have committees that carry such weight.
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| problem is the allocation of scarce
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| | The Israeli Knesset have the extremely
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| resources. In other words, prioritizing.
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| | powerful Finance Committee which is in
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| The needs are enormous and ever growing.
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| | charge of all matters financial, from
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| The US government purchases hundreds of
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| | appropriations to procurement. Another
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| thousands of separate items from outside
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| | parliament renowned for its tight
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| suppliers. Just the list of these goods -
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| | scrutiny is the French Parliament -
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| not to mention their technical
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| | though it retains very few real
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| specifications and the documentation
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| | powers.But not all countries chose the
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| which accompanies the transactions -
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| | option of legislative supervision. Some
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| occupies tens of thick volumes.
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| | of them relegated parts or all of these
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| Supercomputers are used to manage all
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| | functions to the executive arm.In Japan,
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| these - and, even so, it is getting way
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| | the Ministry of Finance still scrutinizes
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| out of hand. How to allocate ever scarcer
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| | (and has to authorize) the smallest
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| resources amongst these items is a
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| | expense, using an army of clerks. These
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| daunting - close to impossible - task. It
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| | clerks became so powerful that they have
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| also, of course, has a political
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| | the theoretical potential to secure and
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| dimension. A procurement decision
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| | extort benefits stemming from the very
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| reflects a political preference and
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| | position that they hold. Many of them
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| priority. But the decision itself is not
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| | suspiciously join companies and
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| always motivated by rational - let alone
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| | organizations which they supervised or to
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| noble - arguments. More often, it is the
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| | which they awarded contracts -
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| by product and end result of lobbying,
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| | immediately after they leave their
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| political hand bending and extortionist
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| | previous, government, positions. The
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| muscle. This raises a lot of hackles
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| | Ministry of Finance is subject to a major
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| among those who feel that were kept out
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| | reform in the reform-bent government of
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| of the pork barrel. They feel
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| | Prime Minister Hashimoto. The Japanese
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| underprivileged and discriminated
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| | establishment finally realized that too
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| against. They fight back and the whole
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| | much supervision, control, auditing and
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| system finds itself in a quagmire, a
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| | prosecution powers might be a Pyrrhic
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| nightmare of conflicting interests. Last
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| | victory: it might encourage corruption -
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| year, the whole budget in the USA was
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| | rather than discourage it.Britain opted
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| stuck - not approved by Congress -
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| | to keep the discretion to use public
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| because of these reactions and
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| | funds and the clout that comes with it in
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| counter-reactions.The second problem is
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| | the hands of the political level. This is
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| the supervision, auditing and control of
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| | a lot like the relationship between the
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| actual spending. This has two
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| | butter and the cat left to guard it.
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| dimensions:How to make sure that the
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| | Still, this idiosyncratic British
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| expenditures match and do not exceed the
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| | arrangement works surprisingly well. All
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| budgetary items. In some countries, this
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| | public procurement and expenditure items
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| is a mere ritual formality and government
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| | are approved by the EDX Committee of the
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| departments are positively expected to
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| | British Cabinet (=inner, influential,
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| overstep their procurement budgets. In
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| | circle of government) which is headed by
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| others, this constitutes a criminal
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| | the Ministry of Finance. Even this did
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| offence.How to prevent the criminally
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| | not prove enough to restrain the
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| corrupt activities that we have described
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| | appetites of Ministers, especially as
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| above - or even the non criminal
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| | quid pro quo deals quickly developed. So,
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| incompetent acts which government
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| | now the word is that the new Labour Prime
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| officials are prone to do.The most
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| | Minister will chair it- enabling him to
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| widespread method is the public,
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| | exert his personal authority on matters
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| competitive, tender for the purchases of
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| | of public money.Britain, under the
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| goods and services.But, this is not as
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| | previous, Tory, government also pioneered
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| simple as it sounds.Some countries
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| | an interesting and controversial
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| publish international tenders, striving
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| | incentive system for its public servants
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| to secure the best quality in the
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| | as top government officials are
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| cheapest price - no matter what is its
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| | euphemistically called there. They
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| geographical or political source. Other
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| | receive, added to their salaries, a
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| countries are much more protectionist
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| | portion of the savings that they effect
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| (notably: Japan and France) and they
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| | in their departmental budgets. This means
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| publish only domestic tenders, in most
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| | that they get a small fraction of the end
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| cases. A domestic tender is open only to
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| | of the fiscal year difference between
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| domestic bidders. Yet other countries
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| | their budget allowances and what they
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| limit participation in the tenders on
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| | actually spent. This is very useful in
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| various backgrounds: the size of the
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| | certain segments of government activity -
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| competing company, its track record, its
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| | but could prove very problematic in
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| ownership structure, its human rights or
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| | others. Imagine health officials saving
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| environmental record and so on. Some
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| | on medicines, or others saving on road
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| countries publish the minutes of the
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| | maintenance or educational consumables.
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| tender committee (which has to explain
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| | This, naturally, will not do.Needless to
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| WHY it selected this or that supplier).
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| | say that no country officially approves
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| Others keep it a closely guarded secret
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| | of the payment of bribes or commission to
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| ("to protect commercial interests and
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| | officials in charge of public spending,
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| secrets").But all countries state in
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| | however remote the connection is between
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| advance that they have no obligation to
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| | the payment and the actions.Yet, law
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| accept any kind of offer - even if it is
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| | aside many countries accept the
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| the cheapest. This is a needed provision:
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| | intertwining of elites - business and
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| the cheapest is not necessarily the best.
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| | political - as a fact of life, albeit a
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| The cheapest offer could be coming from a
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| | sad one. Many judicial systems in the
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| very unreliable supplier with a bad past
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| | world even make a difference between a
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| performance or a criminal record or from
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| | payment which is not connected to an
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| a supplier who offers goods of shoddy
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| | identifiable or discernible benefit and
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| quality.The tendering policies of most of
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| | those that are. The latter - and only the
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| the countries in the world also
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| | latter - are labelled "bribery".Where
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| incorporates a second principle: that of
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| | there is money - there is wrongdoing.
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| "minimum size". The cost of running a
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| | Humans are humans - and sometimes not
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| tender is prohibitive in the cases of
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| | even that.But these unfortunate
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| purchases in small amounts.Even if there
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| | derivatives of social activity can be
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| is corruption in such purchases it is
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| | minimized by the adoption of clear
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| bound to cause less damage to the public
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| | procurement policies, transparent and
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| purse than the costs of the tender which
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| | public decision making processes and the
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| is supposed to prevent it!So, in most
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| | right mix of supervision, auditing and
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| countries, small purchases can be
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| | prosecution. Even then the result is
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| authorized by government officials -
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| | bound to be dubious, at best.
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| larger amounts go through a tedious,
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