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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.
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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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