Corruption Risks in Public Procurement Contracts: Monitoring Delivery of Goods, Services and Works Projects

Research about corruption in public procurement builds on the availability of data about the contracting process. Nevertheless, we know very little about what happens once a contract is awarded, a procurement phase for which data disclosure is particularly poor. This is relevant since different forms of corruption may arise in the post-award phase originated from informal exchanges between powerful networks especially in those contexts where corruption is the norm. The research aims to explain how power dynamics among individuals making decisions over public procurement result in different forms of corruption, unique to contract implementation and conclusion. This study explores external audits from the Supreme Audit Institution in Mexico to analyse procurement post-award phase. Audits includes information as to whether the government budget is spent effectively and show irregularities in procurement spending regarding monitoring and outcomes. In this sense, it is possible to define corruption risks as proxies to objectively measure corruption, providing indicators (red flags) in order to observe corruption patterns. Preliminary results of this research suggest that there are particular informal exchanges in the post-award phase different from planning, bidding and award phases. Corruption schemes detected include sub-contracting more than the percentage legally allowed, lack of quality of the output and potential conflict of interest. The contribution of this research is to provide a solid theory to understand why corruptions risks, as part of grand corruption, take place in procurement post-award considering those contexts where this problem is widespread such as Mexico.