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Q64.

Is defence procurement generally conducted as open competition or is there a significant element of single-sourcing (that is, without competition)?

64a. Open competition

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64b. Scrutiny of single/restricted competition procedures

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Some defence procurements are conducted through the Law on Public Procurement (LPP). These procurements appear in the Ministry of Defence’s (MoD) annual procurement plans published by the Public Procurement Agency (PPA) [1]. Bidders are informed of potential projects through the published procurement bulletins [2]. However, the majority of defence and security procurement procedures are excluded from the rules of public procurement [3]. The contracting authority invites multiple companies but, depending on the procurement, there are also procurements where only one company is invited [4]. No statistical data is published on the number of the open and restricted procurements by the MoD. However, single sourcing has been one of the main issues in public procurements in Albania, and targets were set in 2018 for increasing the transparency by reducing the number of negotiated procedures. In 2017, the share of negotiated contracts was 31.8%, while in 2018 the target was set to be reduced to 20% and 15% in 2019 [5]. The EU Commission has called for increased harmonisation of defence procurement with EU public procurement rules [6].

The SSAI can scrutinize all the procurements conducted by the MoD and security institutions. The SSAI does not audit the motives of defence and security institutions that opt for using open or secret procurement procedures. However, there is a tendency by the MoD to overuse the secrecy clause in procurements [1]. For instance, even the procurement for the reconstruction of the MoD building was conducted through the negotiation procedure.

In principle, public procurement is conducted as an open competition. According to Art. 5 of the 2016 Public Procurement Law, public procurement must comply with the principles of free access to public procurement, equal treatment of candidates and transparency of procedures (1). Furthermore, the 2006 Anti-corruption Law stipulates that public procurement procedures must be based on transparency, fair competition and objective criteria (Art. 9), (2).

With regards to Algeria’s actual defence procurement policy, Russia has been the main supplier of arms for the last decade, supplying 84.3% of arms bought (3). Although the country has sought to diversify its sources of arms (4). Russia’s SIPRI Trend Indicator Value remained high; it was 1553 million in 2016 and 795 million in 2017. Germany ranked second after Russia in 2016 (578 million), while Italy was second in 2017 (48 million). Thus, illustrating Russia’s dominance in weapons exports to Algeria during that time (5), (6).

No information on tenders or negotiations on defence procurements has been publicly available in the last few years, making it difficult to assess how many suppliers were invited to negotiations. Various reports published during the last few years stated that tenders are restricted and that potential participants of large-scale contracts are identified and solicited by the military (3), (7), (8).

Oversight agencies do not have powers to question single or restricted competition procedures. Chapter 5 of the Public Procurement Law that regulates control of public procurement does not mention any restriction in this regard (1), see a detailed answer on the various forms of controls in question 59. The Presidential Decree of 1995 establishing the Court of Auditors also does not specifically mention any regulations with regards to single or restricted competition (2).

From the few publicly available audit court records that review procurement contracts in the defence and security sector, the majority is single-sourced, by a direct award, though there are rare cases of restricted competition (2-3 suppliers invited). In August 2018, the Finance Ministry’s supervisory body SNCP complained that senior officials still tend to opt for simplified contracts (direct awards), in clear violation of the law (1), (2).

The audit court has powers to question restricted contract procedures and has done so occasionally, according to court records. However, it must be noted that the audit court has signed off most contracts reviewed (with recommendations), at times despite criticism – when no procedure was indicated, other elements were found missing, or the justification for a direct award was not found convincing (2).

Article 25 of Decree 1023/2001 establishes 3 procurement mechanisms: 1) public tender (understood as a request by the state to receive bids from the public), 2) private tender (understood as an invitation to offer goods or services from among a list of registered providers, which can sometimes involve only one bidder) and as a last resort, 3) direct contracting (where only one provider is nominated and selected). [1] [2] Only 15% of tenders in 2017 were public. This does not mean that all other tenders were “single sourced,” as private tenders can have more than one bidder. Direct contracting (which is always single sourced) represented 35.9% of tenders in 2017. Private tenders were 49.19%. [3] [4] [5] There is no updated information.

The contracting regime of the National Administration establishes that direct contracting is only used when it is not possible to apply another selection procedure and as the amount does not exceed what is established by the regulations. It also contemplates other possibilities, which must be duly justified, including in which cases a contractual operation must be declared secret for security or national defence reasons. [1] [2] The Governing Body is the National Contracting Office which is responsible for the implementation, supervision, and application of the sanctions provided in case of non-compliance. In turn, the Competition Law of 2018 creates a new decentralised and autarkic body within the scope of the Executive Branch: the National Competition Authority. [3] Within it lie the Court of Defence of Competition, the Secretariat of Instruction for Anti-Competitive Behaviors, and the Secretariat of Economic Concentrations. This is the general framework of scrutiny of the procurement and contracting procedures of the National State. Therefore, all contracts made through direct contracting must be justified within the possibilities provided for in the regulations and are subject to scrutiny, both by the bodies dependent on the Executive Branch and the National Contracting Office, the National Authority of the Competition, the Anti-Corruption Office, and the SIGEN; as well as by the AGN, which depends on the National Congress. [4] [5]

The Law on Procurement anticipates four types of procurement procedures: electronic auction, competition, request for price quotation and single source (Article 18) [1]. The Ministry of Finance conducted a workshop on new provisions of the Law on Procurement, stressing that single source purchases should be carefully planned and implemented to avoid corruption risks in procurement [2]. The Law on Procurement (before a new one entered into force on January 1, 2017) anticipates different types of purchase procedures: open competition, open procedures, simplified procedures, framework agreements, single sources, etc. The law does not discriminate based on the type of competition, with a requirement to thoroughly justify single source purchases. According to the figures, more than 90% of competitions are conducted through framework agreements [3]. Maybe this should be allocated under the open competition, but since the terms are different, there is some inconsistency. In 2018, the Ministry of Defence (MoD) purchased from single sources 30 times, for 2019 no single source purchases are shown [4].
MoD informs that in 2019 it organized 902 procurement procedures, of which 661 were competitive, 32 were single source procurements that were not conditioned by copyright, special or exclusive rights, and 241 were single source procurements that are conditioned by copyright, related or special or exclusive rights. In other words, only 5% of procurement was made through single source procedure. In the case of procurement containing state secrets, the invitation is sent to at least three companies. [5].

The Rule of Procedure of the Parliament allows members of parliament with the right to oversee public finance and procurement through making additional inquiries to the state agencies to ask for justifications for any expenditure they may find disputable. They may act in that way both at the planning stage, and thereafter. The Audit Chamber has an immediate authorization by the Constitution and its rule of procedure to oversee public expenditures at state institutions and the ones receiving state budget financing [1, 2]. The Ministry of Finance should examine all kinds of procurement, including closed and from one source, based on the Decision of the Government of the RA No 1454-N [3].

While the Commonwealth Procurement Rules (CPRs) give clear preference to open tenders, saying that limited tenders (which may include single sourcing) should only be conducted under certain very limited circumstances [1], it is difficult to say what proportion of defence procurements are single-sourced, given that the other types of procurement for which there is information available (limited and prequalified tenders) can be, but are not necessarily, single-source [1]. The Division 2 rules of the CPRs, which require additionally high standards for complex procurement processes above a certain value, are such that the “main obligation of the additional rules is to require officials to undertake procurements by way of an open tender in most circumstances” [2]. Analysts are also not aware of what proportion of contracts are single-sourced [3]. Given that open competition is the “default position” of the CPRs [2, p16], it seems that the logical conclusion of the policy would be that the large majority of procurements are not single sourced. However, based on an analysis of historical contract data from data.gov.au, it seems that only around 26% of awarded contracts since 1999 were classified as “open tender”, though it is impossible to know how many of the other types of tenders in the data (“limited tenders” and “prequalified tenders”) were single-sourced or were open to multiple parties [4]. A civil society expert said that their takeaway message on Defence procurement was that Defence procurement is a “closed shop” with a small circle of contractors clinching much of the procurement opportunities available [5].
Given that there is no hard data to support assigning a specific percentage or range of percentages to single-sourced contracts, no score can be assigned and this indicator has been marked ‘Not Enough Information’.

While under the Public Governance, Performance and Accountability Act 2013, the decision to enter into a limited tender – including a single-source tender – must be justified to delegated defence officials who serve as Accountable Authorities [1, 2], beyond the power to audit, investigate, and provide recommendations, external oversight agencies such as the Australian National Audit Office [3] and defence-related Parliamentary Committees [4, 5] have no authority to force a change in the type of procurement selected. There is no public data illuminating how often delegated defence officials question or change the selected procurement method.

According to Article 11.1 of the Law on Public Procurement, the number of bidders must be at least three for participation in the tender. If the number of bidders who have bided is less than three, the procurement agency declines the tender and publishes it in the press (1).
Article 1 states, there are two types of tenders, “open tender” and “closed tender”. An “open tender” means a tender for the participation of the majority of potential bidders on the tender subject announced through mass information disseminated in the Republic of Azerbaijan and internationally. A “closed tender” is a tender held by a limited number of prospective bidders pre-determined by the bidding organizer (2).
The Ministry of Defence reports that a tender is being held in the Procurement and Supply Department to ensure the quality and uninterrupted supply of the purchased goods. The department was established in November 2013. This department conducts tenders (open, two-stage, limited participation, closed tenders, request for proposals, purchase from one source), defined in the Law on Public Procurement (3).
More “closed tenders” are held in Azerbaijan, and winners are usually relatives of officials. “Closed tenders” have been widely distributed in the defence and security sectors. There is no indication that Azerbaijan opens competition – tenders – for defence products (4, 5, 6, 7).
On the contrary, it ensures separate, closed discussions and agrees with several defence industry institutions or companies from other countries, like Israel, Turkey, Ukraine and Russia (8). The results can be seen in the UNROCA report (9).

There is no practice to scrutinize closed tenders in the security and defence sectors. Procurement controls are formally available but are not implemented. Chamber of Accounts, State Service for Antimonopoly Policy and Consumer Rights Protection’s activities in this direction is unclear. There are no reports or surveys on procurement. Experts are convinced that there is an interference of the ruling family, certain political ambitions, and businessmen to military procurement (1, 2). According to experts, procurement in the military is often kept under the name of “state secrets” and control over it is maximally restricted. Parliamentary oversight is generally not visible (1, 2).

There is a very small part of the procurement done through open competition: less than 5% and it is not published online. Indeed, the great majority of procurement is completed through single sourced contracting [1, 2, 3]. Following a search of the websites of the parliament, the Ministry of Defence (MoD), the Ministry of Finance, the government and other media sources, and then verified by interviewees, there is no more information on this topic.

Oversight bodies, including Shura Council committees, have no power to scrutinize single-sources procurements. As most procurement (especially strategic) is signed by the king’s office, as the commander, they cannot be examined [1, 2, 3].

According to the Procurement Policy of 2010 [1], there are now three systems of purchases in operation: open competition, single source and Government-to-Government purchases. In the absence of the DGDP’s annual report, it is not possible to estimate what percentage of defence purchases are conducted through single source or open competition. As such, this indicator cannot be scored and is marked ‘Not Enough Information’.

Neither Parliament nor the Defence Audit Directorate scrutinises the competition procedure. It is overseen by the Armed Forces Division [1].

In principle, defence procurements are conducted in open competition, as required by the legislative framework on general public procurement, and defence and security public procurement [1, 2].

Articles 33 and 34 in the law on public procurement and chapter 3 in the law on defence and security public procurement outline exemptions to this rule. These cover for instant situations when national security reasons justify deviations from open competition, for example, activities of intelligence services, or when a specific international agreement is in place.

Single-sourced contracts can be scrutinised by the Inspection of Finances, the Commission of Defence Purchases and Sales, and the Council of Ministers. These bodies verify, by way of example, if the character of the procurement requires single-sourcing and if the procedure follows the stipulated legislations. A posteriori, the contracts and procedures can be scrutinized by the Court of Auditors [1].

Most of the public procurement in the Ministry of Defence (MoD), according to the Public Procurement Plan [1], is conducted through open competition [2]. The Public Procurement Law (PPL) allows to the defence and security sector institutions to have public procurement procedures in line with Rulebook for Defence and Security Institutions adopted by the Council of Ministers (CoM) [3]. The PPL has set financial thresholds to determine which procurement procedures are possible to use with the open competition being the preferential procedure [4]. For example, the final amount of funds through open competition procurement in 2018 was 12,525,813 BAM (for 59 procurements), one procurement exempt of the Law in the value of 26,576 BAM and 77 direct agreements (direct contracting for values under 6,000 KM) in the total value of 286,070 BAM out of the total amount of funds used for procurement which was 15,543,692 BAM (for 188 procurements). There were four procurements with restricted procedures, 19 competitive dialogue procedures, and 24 negotiated procedures [5].

All public procurement procedures in MoD can be subject to internal and external control. There is evidence that the selection of the procurement procedure is subject to external control [1, 2].
This has been proved by the findings of the Audit Report for the Ministry of Defence of Bosnia and Herzegovina for 2017. Below is the relevant part of the Audit Report:
“In 2017, the Ministry did not foresee the implementation of an e-auction for a sufficient number of the procedures for public procurement as provided for in the Regulations on Conditions and the Manner of Use e-auctions. Namely, this Regulation requires the contracting authorities to provide for the implementation of a public procurement procedure where the lowest price is used as the criterion for awarding contracts for at least 30% of public procurement procedures in 2017 and 50% of the procedures public procurement in 2018. By inspecting the report from the e-procurement system, it was found that the e-auction ministry predicted for only 11% of procurement procedures in 2017.” (Audit Report for the Ministry of Defence of Bosnia and Herzegovina for 2017, p. 32)[3].

The PPL states the criteria that have to be met to use different procedures, and for the negotiated procedure without prior publication of a contract notice, the contracting authority upon request by the PPA has to provide a detailed explanation on why the procedure was used (Article 28, paragraph 8) [1].

In the absence of any quantitative research and based on the tenders published by the PPADB, an estimated 70% of the defence purchases are conducted as an open competition [1]. This is in line with the PPADCT. An estimated 30% of the defence purchases are not conducted in terms of the PPADB Act, which are exemptions that are also permissible in terms of the PAPDB Act [2]. These percentages are deduced from the PPADB website.

The PPADB Act amplified by the PPADB Manual makes provision for the procedures to be followed when procuring entity wishes to employ single-sourcing [1]. The same applies to single sourcing by the BDF [1]. What is not clear in terms of the actual practice is the extent of oversight by the PPADB, DCEC, Auditor General and other oversight institutions in scrutinising the single-sourcing purchases [2]. For example, the Auditor General, in the 3 Audit Reports, does not refer to single sourcing by the BDF [2].

According to Brazil’s Transparency Platform, in 2019, 43% of defence procurements were conducted as open competitions (in the bidding modes pregão and concorrência) [1]. 33.68% of contracts were exempted from open competition, and 17.08% of the contracts do not give information regarding the mode of acquisition.

As previously mentioned, the Court of Auditors (TCU) can audit these contracts, but its evaluation is not systematic or randomized – it is generally motivated by a third party – whether the Military Public Ministry (MPM), the TCU itself or the Congress [1].

According to Article 23 (1) of Law No. 039, “public contracts on works, supplies, usual services, and delegations of public services, are made after a call for open competition or exceptionally, after a restricted competition, or through direct arrangement.” However, Article 6 (1) of the same law, focusing on the purchase of items covered by the so-called ‘defence secret’, constitutes a huge exception to the requirements of Article 23 (opened competition, restricted competition, or arrangement ) (1). Hence, the defence procurement process is not opened at all for secret defence items. Unfortunately, items not covered by defence secret rarely go through an open competition. According to Dr. Wetta Claude, Executive Secretary of the REN-LAC, “defence procurement usually results in a weak or limited competition. The military just make calls for restricted competition. They do not make any calls for open competitions” (2). Majeed and MacDonald, state that “one of the key reasons for corruption in the case of the military procurement is the lack of competition” (3).

In Burkina Faso, Articles 84 and 127 of the Constitution give power to both the Parliament and the Supreme Audit Institution, to scrutinize defence activities, including single or restricted competition procedures for the purchase of defence items (1). The ASCE-LC also has similar powers. The scrutiny of single or restricted competition procedures is highly important, as they are more susceptible to corruption. In this regard, Pyman, Wilson and Scott (2009) state that, “if [its] known that single-source contracts are part of the usual defence environment and will not be scrutinized, companies can see an inducement to cut off the risk of losing a bit by influencing and/or bribing key officials to obtain a non-competitive contract” (2). Unfortunately, the scrutiny of single/sole/ restricted competition procedure undertaken by oversight institutions remains very weak (4), (5) without mentioning the fact that access to government information is difficult (3). Overtime these undermine oversight of defence competition procedures for the purchase of defence items. Single source procurement has become a serious concern for many, as it brings up issues of transparency, democratic oversight, and corruption risks (2). Pyman, Wilson and Scott (2009) write, ” the tenders for even routine items like uniforms and food are often severely manipulated and usually awarded to companies which are non-competitive in order to create payoffs for military officials” (2). Oversight institutions are having a hard time scrutinizing restricted competitions in the defence sector.

Articles 4 and 71 of the Procurement Code (2018), clearly state that defence and security related procurement are “Special Contracts and are not subject to tenders or OTC markets and the consideration of any public procurement commission under this Code [1].

Articles 4 and 71 of the Procurement Code (2018) clearly state that defence and security-related procurement are “Special Contracts and are not subject to tenders or OTC markets and the consideration of any public procurement commission under this Code” [1].

The Government of Canada has rigorous ‘Government Contracts Regulations’ that stipulate competitive bidding processes are to be treated as the norm, unless certain circumstances necessitate the use of a single source/supplier. Such circumstances include emergency situations where there is significant risk to lives or an imminent threat to Crown property, as well as exceptions for international development initiatives. [1] There has been a tightening of the procurement ‘integrity regime’ which has made the application of these regulations much more practical, with sole source contracts limited to specific criteria. [2] Sole sourcing is permitted under specified criteria under the Standard Acquisition Clauses and Conditions Manual (SACC) section 3.15 on Non-competative contracting processes, which notes that the requirement to solicit bids may be waived if there is a pressing emergency in which delay would harm the public interest, the nature of the work prevents solicitation from being in the public interest, there is only a single possible supplier for the good or service, or the expenditure does not exceed specific monetary limits ($25,000 for goods, $40,000 for services and contracts; or $100,000 where the contract is “for the acquisition of architectural, engineering and other services required in respect of the planning, design, preparation or supervision of the construction, repair, renovation or restoration of a work”; or for the acquisition of architectural, engineering and other services required in respect of the planning, design, preparation or supervision of the construction, repair, renovation or restoration of a work.” [3]) Under these rules, low value items are excluded. However, there is an explicitly increased standard of adjudication of these requests as outlined by additional requirements for contracting agents of the Crown to ensure they are met by clients of the sole source contract for low value items. [4] In practice, for the “2020-2021 fiscal year” it is determined from a .csv file that almost 27% of procurements awarded to National Defence by Public Works and Government Services Canada are “Traditional Non-Competitive”, which would constitute a significant minority. [5]

For those initiatives that are deemed suitable for a single source to be pursued there is a Code of Conduct for Sole-source supply that dictates proper behaviour and protocol. [1] There is also a mechanism through the Canadian International Trade Tribunal to make complaints about the procurement process if the justification for sole sourcing is deemed insufficient by interested parties. [2] Sole sourcing is permitted under specified criteria under the Standard Acquisition Clauses and Conditions Manual (SACC) section 3.15 on Non-competative contracting processes, which notes that the requirement to solicit bids may be waived if there is a pressing emergency in which delay would harm the public interest, the nature of the work prevents solicitation from being in the public interest, there is only a single possible supplier for the good or service, or the expenditure does not exceed specific monetary limits ($25,000 for goods, $40,000 for services and contracts; or $100,000 where the contract is “for the acquisition of architectural, engineering and other services required in respect of the planning, design, preparation or supervision of the construction, repair, renovation or restoration of a work”; or for the acquisition of architectural, engineering and other services required in respect of the planning, design, preparation or supervision of the construction, repair, renovation or restoration of a work.” [3]) Under these rules, low value items are excluded. However ithere is an explicitly increased standard of adjudication of these requests as outlined by additional requirements for contracing agents of the Crown to ensure are met by clients of the sole source contract for low value items. [4]

There is no public information on the percentage of acquisitions that belong to open competition (public bidding), private competition (private bidding) and direct contract. A Special Investigatory Commission in the Chamber of Deputies reported that, according to the report of the Council of Internal Auditing of Government, in the army 76.4 per cent of purchases were made through public and private tenders (there is no disaggregation), and 23 per cent, were made through direct contract [1]. However, these figures were only available for expenditures between July and September of 2018, and therefore may not be representative of the overall budget executions.

Given the insufficient evidence regarding this issue, this indicator is not assigned a score and is marked ‘Not Enough Information’.

There are two mechanisms for procurement in defence other than public bidding: private bidding, when particular tenders are called to formulate proposals according to specific requirements; and direct contract, when deals are established without public or private bidding (Ley 19.886 Cap. III) [1]. While the General Comptroller has powers to scrutinise procurements in the armed forces, it does so based on specific audits, and it can only comment on the accounting and legal procedures and not the reasoning or “merit” of procurements [2]. The law establishes a Court of Public Procurement, in charge of attending actions that challenge acts or omissions, illegal or arbitrary, that occurred in the administrative procedures of contracting (Ley 19.886 Cap. V). However, the court only acts as a response to challenge actions that proceed against alleged illegalities, arbitrariness or omissions in particular bids and their adjudications. It must be noted that this mechanism only affects contracts and acquisitions made through the system of public procurement (“Mercado Público”).

A distinction must be made between weaponry and non-weaponry procurement. Procurement of major weaponry (usually Russian weapons systems) is conducted through single-sourcing, [1] while non-weaponry procurement involves competitive bidding by licensed companies. In addition, procurement announcements on both the weain.mil.cn and the plap.cn platforms distinguish between competitive and single-source procurement. From the weapons-related platform there is very limited information on single-source, going back only to November 13, 2019. On the non-weapons-related platform, there are 228 pages of single-source procurement announcements going back to November 4, 2019. It is impossible to assess on the basis of total value of contracts, but single-sourcing is estimated to represent between 30-50% of procurement. 4CADS counted 60% public and approximately 40% classified/secret tender announcements. [2]

Oversight mechanisms are internal, not external and have recently undergone a major restructuring. [1] There is no publicly available information on how scrutiny over single-sourcing or restricted competition procedures takes place. However, given the high degree of institutionalisation of procurement and the CMC’s increased attention following many reports on corruption in the former General Logistics Department, [2,3] the existence of formal rules and procedures can be recognised.

The procurement and contracting process is carried out through tendering processes or public bidding, stipulated in Law 80 of 1993, [1] which defines in Article 24 the process the principle of transparency, in which such contractual procedure must allow the competence of the interested parties. Decree 1510 of 2013, [2] stipulates regulations for selection of contracts, identifies four methods: (a) public bidding; b) abbreviated selection; (c) smaller procurement; (d) minimum contracting amount; and (e) direct procurement. Direct procurement is defined in Article 78 and Law 1150 of 2007, [3] which raises the requirements for the realisation of direct procurement contracts, listing the goods and services that can be directly contracted within the defence sector, including: weapons, information systems, military vehicles, ships, etc. Direct procurement may increase the risks of corruption, according to some, since it is used for the generation of contracts outside of those stipulated in the regulations, incentivising processes with a single bidder. [4] Additionally, under direct procurement, the state entity is not obliged to submit a plural selection process, and the proponents are not required to be registered in the Single Register of Proponents (RUT), nor is the requirement of guarantees mandatory. [5] However, according to SECOP II data for the period 2018-2019, [6] 340,140 contracts were concluded throughout Colombia, of which 228,244 (67.10%) were carried out under the direct procurement modality. For the same period, the defence sector made a total of 42,942 contracts (representing 12.62% of the total contracts made). Of these contracts 23,216 were made under direct procurement, accounting for 54.06% of the total contracts in the sector. Competition in hiring and procurement in the sector is therefore limited because the majority of contracts only had one bidder or supplier. [6] Interviewee 7 reports that a number of actions have been taken within the defence sector in order to generate a more transparent recruitment processes, pointing to the publication of all the contracting processes in SECOP I and II as an important step. Additionally, the Ministry of Defence and Colombia Buys Efficiently are in the process of creating an agreement with the aim of reducing direct contracting, according to the Interviewee. [7]

According to the contracting manual of the Ministry of Defence, the processes for the selection of a single supplier must be carried out in accordance with Law 80 of 1993 and Law 1150 of 2007. [1, 2] In the case of direct contracting, a series of procedures are defined by law: the person responsible for budget availability and approval is the authorising officer, the project manager, and/or the structuring committees. [3] The project manager and structuring committee are in charge of the issuance of the administrative act that justifies direct contracting, the pre-negotiation stage, the offer request, the presentation of the offer, its evaluation, and contract negotiation. The authorising officer of spending, the contracting office, and the legal committee are in charge of procedures related to the signing of the contract; and finally, internal supervision processes are carried out by an official designated by the contracting office.

Internal oversight of the legality and transparency process falls to the the General Inspector of the Army and the Internal Control Office, which oversees and monitors the correct management of state resources, and monitors suppliers and delivery of the contracted supplies, identifying risks in the contractual process. Interviewee 7 finds that the reports made by the Internal Control Office are usually filed with the Prosecutor’s Office and the Superintendency of Industry and Commerce who have the judicial and criminal jurisdiction to execute punishments and penalties. The latest acts of corruption related to the contracting of supplies and goods in the Fourth Brigade in Medellín, was identified in 2014 by the Internal Control Office, who filed the necessary documentation to start the criminal investigation then with the prosecution. However, it was only in 2019 that the findings were made public, highlighting the untimeliness of proceedings and investigations. [4, 5]

The Head of the control entities carries out external control of the contracting process after the fact, developing audits of the financial statements and the management of results of the defence sector entities. For Barreto, these actions do not allow for the identification of large cases of corruption. [6] External scrutiny does not provide oversight on procedures prior to contracting, nor does it accompany the design of the specifications for the selection of suppliers. Its role is to control the contracting process afterwards, evaluating the expense and result. [7] The Second Committee of Congress does not monitor contracting procedures, nor can it question the selection of suppliers. [8] Furthermore, the internal control offices do not have the power to initiate criminal proceedings, so they depend on the investigations carried out by the Attorney General’s Office. To conclude, the oversight functions do have some powers to question the selection procedures of a single provider, but these occur through a variety of control mechanisms for preventive, investigative, and sanctioning actions, and on many occasions they do not occur in a quick or timely manner.

Most contracts are not negotiated via open competitions and even less in the form of a restricted competition. Most of the evidence for large-scale military procurement points to single-sourcing (approvisionnment unique or source unique) as the preferred method, based largely on the opportunistic nature of such contracts. In a current (December 2018) list of public tenders in Côte d’Ivoire, there are zero public tenders for the Ministry of Defence out of a total of 56 (1). However, there is also evidence that some open competitions take place for supply contracts that are unrelated to military equipment, mostly for infrastructure buildout. This type of supply contract would not fall under Article 8 of the 2009 Code of Public Procurement, which exempts purchases covering confidential/secret items. For example, on the WAEMU page of litigation cases involving public procurement, two out of the total of 67 cases listed for Côte d’Ivoire are projects contracted by MoD. Both litigation cases challenge the results of public tender No. F06/ 2014 concerning the installation of kitchens for the 2nd Infantry Battalion at Daloa. This could illustrate that some infrastructure and supply contracts may take place via public tenders (2). A second example of a public tender for defence-related infrastructure appeared in the government Web portal on June 18, 2015, in the context of an article on the construction of a building for the newly established Institut d’Etudes Stratégiques et de Défense (IESD). Then Minister of Defence Paul Koffi Koffi stated that the terms of reference for the public tender had already been published (3). The majority of procurements for large-scale military equipment (armoured vehicles, patrol boats, helicopters, weaponry) appear to be single-sourced. However, contracts for non-essential infrastructure projects or non-military supplies may be the result of open competitions.

The preferred method for large-scale defence procurement (armoured vehicles, patrol boats, weaponry) is single-sourcing. This suggests that there is no oversight from watchdog institutions, especially since most of the procurement decisions in Côte d’Ivoire appear to be single-sourced at a high level. The ANRMP, the main oversight body for public procurement in Côte d’Ivoire, has no power to question such single-sourced defence purchases as per Decree No. 2009-260 (Portant Organisation et fonctionnement de l’ARNMP) (1). These high-level purchases are not subject to the regulatory oversight of the ANRMP or any other oversight body under Art. 8 of the 2009 Code of Public Procurement (2).

Non-confidential defence procurements exceeding the threshold value for public tenders are conducted as one of three types of tenders: public tenders, limited tenders and tenders with negotiation [1, 2]. Public tenders are published on the state website udbud.dk, as well as the EU tender website ted.europa.eu, and are open to bidding for all companies. These are used in uncomplicated procurements of standard materials where bidders compete solely on price [3]. In limited tenders, companies first apply to qualify for the bidding. These are used when DALO wish to limit the number of bidders which may be necessary when dealing with complicated procurements or when companies compete on parameters other than the price and where the comparison between and evaluation of bidders then becomes a large task [4]. Tenders with negotiation is made through four phases where DALO and the bidding companies negotiate or evaluate the bids and proposals from industry. This type of tender is made when the assignment is highly complex and DALO is unsure what the industry has to offer [5]. DALO informs that when procurements deviate from these normal procedures (i.e. according to the exemption in law due to national security considerations) this is always done by close interpretation of the law [6]. Research identifies all three different forms of tenders as “open competition”, as all companies are allowed to apply for qualification to bid in the limited and negotiated tenders. Research could not identify the percentage of procurements made as single source procurements, but neither could it identify known instances of single source procurement [7].

According to the law on public tenders, public purchases that fall under the threshold value for public tenders, and that have no cross-border conflict of interest, are subject to a number of stipulations [1]. Most importantly, such a purchase must be made according to market conditions and according to the principles of the Public Administration Act. Research found no information on specific oversight regimes for these contracts, nor for contracts made as exemptions under considerations of national security, but these contracts must be considered to be subject to the general auditing activities of the Danish National Audit Office and the Defence Internal Audit Office who scrutinise the state budget and the accounts, administrative procedures and accounting items of the combine of the Ministry of Defence [2, 3]. Research did, however, not find any publicly available evidence of such activities [4].

According to our sources, the majority of military procurement happens through closed competition or a single-sourced contractor. In the majority of the procurement process, the contractor is contracted to supply the items, or they conduct a closed tender of three contractors after asking them to provide a financial proposal (1), (2), (3). Public Authorities’ Contracts Law no. 182 (2018) lists five types of bidding processes based on their level of competition including public and limited tenders and direct contracting (or single-sourcing) (4). The law allows the MoD and the MMP to conduct single-sourced procurement, and arms procurement is usually exempt from all regulatory requirement regarding competition, according to Law no. 204 (1957) (5).

The Public Authorities’ Contracts Law no 182 of 2018 (Article 77) gives the power to the MoD and the MMP to single-source their procurement in cases of “necessity” (1) but does not define what necessity means and does not mention if these cases are subject to an extra level of scrutiny. Given the generally weak external scrutiny mentioned in several places of this survey (2), it is unlikely that restricted competition procedures are subject to any meaningful or effective external scrutiny, especially in the case of arms procurement.

For the majority of defence procurements, the open award procedure is used. [1] According to the interviewee’s assessment, less than 10% of procurement involves restricted procedures, which is single-sourced. On the other hand, an inspection covering the year 2015 by the Ministry of Defence shows that around 26% of procurement was single-sourced. [2]

In the case of restricted competition, there are more requirements to follow and more confirmations to obtain. The procedure is more complicated than in the case of publicly accessible procurement. [1] The contractor is obliged to explain to the appointed institutions why the procurement cannot be made public. The scrutiny of the public procurement is done by the Ministry of Finance. [2] Supervisory proceedings, however, are not carried out for the purpose of verifying the practicalities of procurements, but rather to check the procedure. Before a public contract or framework agreement is awarded, the Ministry of Finance may issue a precept to the contracting authority or entity to declare the public procurement invalid. [3] Not all single-source procurements are scrutinised, but the National Audit Office scrutinises sample cases every year. [1]

There are no publicly available aggregate statistics about the percentages of different procurement processes annually. As such, this indicator cannot be scored and is marked ‘Not Enough Information’. However, information about the form of each acquisition process can be found from the individual announcements in Hilma portal (public procurement). [1] In general, defence procurement is carried out according to the EU legislation and national legislation following the principles of effective competition, overall financial inexpensiveness and fair treatment of competitors. [2] Act on Public Defence and Security Procurement, chapter 10, section 69: Contracting unit must make use of the existing competitive environment and primarily carry out procurement through competitive bidding. The unit may ask for an offer from only one provider, if competitive bidding cannot be organised due to justified reasons related to defence, national security or security of supply. It may also do so if: in an earlier competitive process, offers that cannot be accepted were received; if for a technical reason or a reason related to the protection of an exclusive right only one provider can deliver the goods or services; if the organisation of competitive bidding process is impossible due to a crisis related urgency; and so forth (altogether 13 points). [3]

Oversight agencies have the powers to question the competition procedure selected, which has been done e.g. on the basis of security of supply and national industrial development in the past in the Parliament [1]. Moreover, the potential bidders can take an issue to the Market Court, if they consider the competition procedure unjustified [2].

According to order n°2015-899 of July 23, 2015 [1] and Decree n°2016-361 of March 25, 2016 on defence and security procurements, [2] it is common for a defence and security contract to be awarded without competitive bidding. It is hard to assess the proportion of procurements allocated in this manner, as another provision given by this legislation is that defence and security procurement can be allocated without publicity.
According to an expert interviewed, [3] a large proportion of defence and security contracts (between 30 and 50%) are awarded without competitive bidding and without publicity. The ICS case [4] as well as the latest Cour des comptes report [5] show that, for logistical support contracts of Opex for instance, the tender information is always sent to the same five companies who are invited to make offers. They are the only ones with access to the market and are chosen by the official in charge of procurement at the Ministry in a totally discretionary way, which leads to abuses such as the ones mentioned in the January 2019 Cour des comptes report. [5]

On another level, it is interesting to point out that despite European legislation on open competition between companies in the EU (EU directive 2009/81/CE [6]), French companies are still the biggest providers of the MOAF, [7] which can lead one to wonder how completely objective the French State is, given the fact that is also holds shares in these same companies, as explained by the Cour des comptes in its annual report of 2013. [8]

Members of the Defence Committees of the National Assembly and the Senate, or even parliamentarians part of an information mission, can request information about competition procedures or purchases, but according to an expert interviewed, [1] the Ministry will only provide redacted versions of the contracts, as defence and security contracts can, by law, be awarded without competition and publicity.

The Cour des comptes, however, has the power to scrutinise the cases of single/sole/restricted competition procedures. It did do in 2013, pointing to naval material maintenance contracts systematically granted to DCNS (82% of the time), most of them being signed without prior competition or publicity. [2] The Cour considers that significant savings can be achieved by placing greater pressure on suppliers that are relatively small in number but frequently operate in a monopoly situation. These contracts also have the characteristic of being passed frequently according to negotiated procedures without competition and for long periods. The Cour thus noted price reductions of between 25% and 50% of the costs of maintenance in the rare situations where the development of the technologies employed made it possible to move from a monopoly situation to a real competition.
The Cour also states that scrutiny by the General Control of the Armies (CGA) “seems limited”. It adds: “The organisation in place therefore allows, at any time, to ensure that the buyer obtains the services requested by the staff at the best cost. It is based solely on the qualities of the buyers in place and not on governance rules that would ensure a balance of power in the procurement process. This situation is neither sound in terms of management and risk nor in line with the objectives of improving the quality of public spending” (page 18).
Within the MOAF, there is a Costs Investigation Division (BEDC), with 32 investigators, in charge of verifying the margins and costs of providers holding a monopoly, but the Cour regrets the lack of means (only 32 investigators when the American equivalent has 4,000 and the British 390 investigators), of independence from the hierarchy at the Ministry, and of investigative powers (pages 21-22).

More recently, the Cour published a report in January 2019 about the outsourcing process of the French army, specifically within the framework of the Barkhane operation in Sahel. [3] The Cour denounced “anomalies” in the signature and execution of contracts, faulty traceability in the payments made by the army, impediments to equal treatment of candidates, “weak monitoring” of contracts, “serious security risks” on Russian Mi-8 chartered helicopters, and even “threats and intimidation” aimed at the military in charge of the purchases.

Public procurements in Germany are generally conducted as an open competition in accordance with international regulations such as the WTO GPA and specific German laws, particularly the ‘Gesetz gegen Wettbewerbsbeschränkungen’ (Act Against Restraints of Competition) [1].

Single-source and restricted competition procedure contracts are justified to external scrutiny bodies, which have powers to question the competition procedure selected.

Following the full implementation of EU Directive 2009/81/EC on public procurement in the fields of defence and security in Germany, both military procurement and non-military security procurement are increasingly based on competitive procedures. The German defence and security market has therefore become far more accessible for foreign contractors than it was in the past. The trend towards more competitive procurement is still ongoing, particularly in the fields of defence technology and security-related IT, which creates ample business opportunities for new entrants, not only from the EU but also from overseas (see Krohn and Schneider, p. 15) [2,3].

However, military and civilian security procurement that falls under the national security exemption provided by EU or GPA procurement law or that is for the purpose of intelligence activities is usually carried out without a public call for competition. These contracts are awarded by way of restricted negotiated procedures in accordance with the specific security requirements for the goods and services in question (see Krohn and Schneider, pp. 11-12) [2]. Please also see here for very detailed information: Federal Office of Bundeswehr Equipment, Information Technology and In-Service Support (BAAINBw), Basic of Procurement [4].

The suspension of certain regulations – such as competitive tendering – on the grounds of national security has led to significant number of contracts being single sourced: around 30% of contracts between 2006 and 2016 were awarded in single-bidder processes. Over the same period, two thirds of the 83 contracts received by land system producer Krauss-Maffei Wegmann were single-bidder offers, as were half of the 59 contracts awarded to munitions producer RUAG Ammotech [5]. This intensifies the interdependence between the domestic industry and the state and makes policy processes more vulnerable to influence. The situation also limits the transparency of the process on a different level. During a competitive procurement process, the unsuccessful bidders have the option to request independent verification of the results; in single-bidder situations, this element of accountability is lost [6].

Public procurements in Germany are generally conducted as an open competition in accordance with international regulations such as the WTO GPA and specific German laws, particularly the ‘Gesetz gegen Wettbewerbsbeschränkungen’ (Act against Restraints of Competition – GWB) [1]. Certain defence procurements are excluded from the competition requirement according to subsection 145 of the GWB [1]. However, especially with the adoption of Directive 2009/81/EC and the resulting new ‘Vergabeverordnung für die Bereiche Verteidigung und Sicherheit’ (Procurement Ordinance for the Defence and Security Sector) [2], the number of possible exceptions has decreased drastically. An increase in tender procedures can already be observed in the Tenders Electronic Daily web portal [3].

Single/sole-source and restricted competition procedure contracts are justified to external scrutiny bodies, which have powers to question the competition procedure selected. The common procedures for defence and security procurements are the restricted procedure and the negotiated procedure with publication of a contract notice. In both cases, the contracting authority publishes a call for competition by way of an EU tender notice. In a restricted procedure, the contracting authority invites a limited number of candidates, who have sought to participate, to submit bids. These bids are not subject to further negotiation. In a negotiated procedure, the contracting authority also invites a limited number of candidates to submit bids, which are then subject to negotiation [4].

However, it remains unclear whether there are oversight agencies that have powers to question the selection of single/sole/restricted competition procedures. The Bundesrechnungshof (Federal Audit Office) can do so, but only in a non-binding way [5]. The Bundestag’s Defence and Budget Committees can do so, but only in a very limited number of (high-profile) cases, due to lack of capacity.

Most of the details on procurement of hardware are restricted (1), (2), (3). The sole-sourcing practice of the GAF encourages an unhealthy tendency towards corruption. The GAF, in turn, justifies the sole-sourcing method on the grounds of security needs being matched by specific, specialised companies.

The Public Accounts Committee (PAC) of Parliament has in recent years assumed a more robust posture in scrutinising accounts of Ministries Departments and Agencies (MDAs) based on the Auditor General’s report. One issue that has attracted the particular attention of the PAC has been single sourcing. But this kind of robust scrutiny around sole sourcing has not been applied to the Ministry of Defence (1), (2), (3).

The majority (70%+) of defence procurements are conducted as an open competition, though a significant minority of the value of contracts (10% to 30%) are single-sourced due to material sources (FMS, NATO specs, FOS). [1]

Oversight agencies have some powers to question single/sole/restricted competitions, procedures selected and purchases and they occasionally do so.
Single source procurements are usually based on exemption from the general rules with the invocation of article 346 of the Treaty on the Functioning of the European Union (TFEU) to “protect the essential security interests of the country”. The decision of exemption is taken each time by the Government Council of National Security (KYSEA), after the consent of the Special Standing Committee on Armament Programs and Contracts of the Hellenic Parliament. [4]
Most of the other contracts are subject to the pre-contractual review of their legality by the Court of Auditors. [4]

Parliamentary committees can scrutinise competition procedures if there is media interest. However, the MoD usually offers a summary explanation for single-sourcing [1, 2, 3].

There is not enough evidence to score this indicator. Currently, there is limited publicly available data that clarifies how much procurement is open-source. Although we could conclude that the majority of the defence procurement is conducted as an open competition based on data from 2015- 2017 [1] (when we evaluate based on the number of procurements and not value), when taking into account the total value – that may not be true [2].

According to the law, the Public Procurement Council can terminate bids in single-source competitions and repeat the tender; however, there has been no case when this has happened. In the case of larger procurements and recent single source competitions (linked to AIRBUS mainly), the council has no legal power to annul the results [1, 2, 3].

There is not enough evidence to score this indicator, as the proportion of defence procurement conducted as open competition cannot be ascertained. The Defence Procurement Procedure (DPP) aims to ensure timely procurement of military equipment, systems and platforms as required by the Armed Forces in terms of performance capabilities and quality standards, through optimum utilisation of allocated budgetary resources. The new L1-T1 methodology in the DPP-2016 is intended to buy equipment with Enhanced Performance Parameters (EPP), this helps to widen the competition as final selection is based on a combination of price and superior technology offered by qualified vendors. The DPP strives for the highest degree of probity, public accountability, transparency, fair competition and level-playing field. Appropriate publicity may be given to the proposed procurement with a view to generate maximum competition [1][2][3].

The Competition Commission of India (CCI) established under the Competition Act, 2002, promotes and sustains competition in Indian markets [4][5].

India is promoting a policy of ‘Make In India’, where there is a preference for domestic manufacturing where possible. The aims of this policy are not fully realised yet. The government has also stated on record when submitting documents regarding the Rafale deal, that 40% of defence procurement is through Inter-Governmental Agreements (IGAs) [6].

Russian firm Rosobornexport won the $1.5 billion contract for India’s VSHORAD program, despite complaints by competitors that it had failed two initial technical tests, that should have resulted in its expulsion from the bidding process [7].

India has a strong defence industrial base with 41 Ordnance Factories (OFs) and 9 Defence Public Sector Undertakings (DPSUs), forming the public sector component; and more than 100 private companies [8][9]. The DRDO has over 50 laboratories. India’s current defense production is approximately $11.42 billion. $9 billion comes from DSPUs and OFs, with the private sector accounting for $2.42 billion; $2 billion of defence expenditure goes to private defence companies including approximately 3,500 micro and small enterprises [10].

Single-source defence procurement statistics are not readily available. However, as noted in indicator 64A, the government has stated on record recently that 40% of defence procurement is through Inter-Governmental Agreements (IGAs) [1]. Single/sole source and restricted competition procedure contracts are subject to external scrutiny by the CAG and the CCI [2][3]. There is recent evidence of this [4].

There is insufficient public evidence to score this indicator; as such, it is marked ‘Not Enough Information’. Minister of Defence Regulation No. 17/2014 [1] stipulates three methods for selecting providers in arms procurement. The first method is by direct appointment, which is carried out when there is a single provider, when there is a need for consistency or under certain circumstances related to issues of national defence, including defence strategy, confidentiality and acceleration for emergency situations. The second method is by limited bid, which is carried out when there is not a single provider but limited providers. In special elections, the ULP Working Group invites, evaluates and selects potential domestic companies. The third method is by direct purchases, which are carried out in the case of urgent need – for example, if the Republic of Indonesia is faced with a domestic and/or foreign threat and the Ministry of Defence is ordered by the government, with the approval of the DPR, to effectively handle the threat. Direct purchases are made for readily available defence equipment. The Budget User (Minister of Defence) can mandate the use of products from certain companies in writing (PA Directive). If this directive mandates the use the products from a domestic defence company without mentioning specific products/companies, the provider is selected as follows: a) if there is a single provider, then the provider is selected by direct appointment and b) if there is not a single provider, then a limited bid is carried out by inviting, evaluating and selecting a potential domestic company. Meanwhile, according to Chief of Police Regulation No. 10/2015 [2], the procurement of special material tools and equipment (Almatsus) is carried out through limited bid and special appointment. Based on these rules, not all procurement of the Ministry of Defence/TNI and the police is carried out through open tenders/procurement. The selection of prospective providers to take part in the procurement qualification process is carried out through limited invitations from the Procurement Committee. The decision as to whether procurement will be conducted by single sourcing or limited auction is already made during the planning of defence equipment requirements, long before the budgeting process, in accordance with Minister of Defence Regulation No. 35/2015 [3]. The procurement method is decided in the same process that also determines operational requirements, technical specifications, sources of financing and whether the procurement will be domestic or foreign. The institutions that stipulate this are the Directorate General of Defence Forces and the Directorate General of Defence Planning of the Ministry of Defence. The Defence Facilities Agency (Baranahan) merely acts as executor. Arms procurement is actually dominated by single sourcing, especially in the case of repeat purchases [4]. This is due to considerations such as a) maintaining consistency of defence equipment with existing inventory in order to facilitate simpler operations and maintenance and b) continuity of technology transfer from abroad with offset applied. For example, in the procurement of submarines from South Korea, the procurement of the first three submarines was carried out through limited auction, while the subsequent procurement of another three submarines was carried out through single sourcing [5]. However, it is not possible to pin down the proportion of single sourcing procurement compared to limited bid as there is no database that can be accessed.

Arms procurement, whether it is carried out through direct appointment or specifically supervised by the parent organisation, involves the following bodies: the PA and KPA, the PPK, the Head of ULP and the Office of the Inspectorate General of the Ministry of Defence [1]. The same applies to the procurement of Almatsus Polri (with equivalent UO) [2]. PA/KPA issues directives, which could include determination of specific procurement mechanisme such as direct appointment (sole-source) and domestic procurement. Sole-source procurement is acceptable by regulation, when the following conditions occur: there is only one supplier, to achieve commonality of system, and conditions pertaining to defence strategy, confidentiality and expediting for emergency response [3].

Procurement organisers always invite the Inspector General of the Ministry of Defence to be the internal supervisor, in this case the Government Internal Supervisory Apparatus (Aparat Pengawas Internal Pemerintah/APIP). The Office of the Inspectorate General of the Ministry of Defence conducts audits before, during and after each procurement process. As the result, the APIP can anticipate the possibility of problems and issue a warning [3].

External oversight, especially from politicians/parliament, is not stipulated in the procurement regulation. However, upon receiving information from government (i.e. ministry of defence), politicians could perform oversight duty by questioning and criticising inappropriate procurement and its mechanism. As example, defence minister’s plan to procure second hand fighter jet from Austria in 2020 (sole-source) and armored vehicle from PT Pindad (domestic industry) was criticised by MP Tubagus Hasanuddian [4]. So far, this type of oversight happen before the procurement process starts.

Defence procurement which depends on foreign suppliers is mainly conducted illicitly given that Iran is under an international arms embargo [1]. Iran has an active domestic defence industrial base, but little public information is available on how defence contracts are awarded to national entities and companies, which are usually affiliated to rather than independent of the armed forces [2].
In this sense, it can be said that the majority of defense procurements are not conducted as open competition. Furthermore, the Tender Law for the armed forces provides that most of the armed forces institutions and affiliates may conduct transactions without a tender procedure (3).

There is no evidence of existing oversight agencies for single or restricted competition procedures, although a complaints board is granted in the Armed Forces Tender Law (see Q68)[1, 2]. While the complaints board could be considered an oversight agency, its powers are not defined, other than stating its role is to handle complaints, and it can renew or cancel a bid. The legal provision focusing on its duties specifies what is not subject to review/appeal by the complaints board rather than what is [2].

In January 2010, the Iraqi government approved a set of competition laws, designed to ensure fair competition for locally produced goods and services. However, the Competition and Consumer Protection Commissions created by these laws have yet to be established. Without the commissions, investors will have no recourse against unfair business practices such as price-fixing by competitors, bid-rigging, or the abuse of a dominant position in the market (1). Summarised in one report, Iraq’s investment environment is marked by elevated security risks, rampant corruption and low economic openness (2). However, as the first reviewer makes clear, companies and their proxies can dispense with the need for open competition, which as the second reviewer presents evidence of, opens the door to corruption. Shell companies can be founded, for this purpose, or middlemen with little procurement expertise undertake political lobbying duties without implicating the political beneficiaries. The political process and by extension procurement behaviour is driven by competition over access to state funds and resources. Loyalty between party members is no longer enough, money drives rent-seeking factions, requiring them to secure ministerial positions, and thus, allocated funds.

An Iraqi contracts lawyer, questioned the efficacy of full and open competition, “although it exists on paper, your bid will only be considered if you’re connected to a political bloc or your interests are bound up with theirs”. Most contracts added the source, “are secured through single-source contracting, and often behind closed doors” (1) which has resulted (as is illustrated by the magnitude of corruption) systemic failure in procurement oversight and compliance with ethical practices.

While public tenders are the default, some defence contracts are exempt under the 1993 Tenders Regulations (1). Most (50%+) defence procurements are conducted as an open competition, though a significant percentage of the value of contract (30% to 50%) are single-sourced. There are many small tenders, but it is lower than the 90% of sole supplier orders (1) (2) (3). There is open competition only about small systems, arms or items, but not about the big and expensive systems.

All single source and restricted competition procedure contracts must be justified and subject to external scrutiny (such as parliament or the external audit office), who have the power to reject the competition procedure selected. Single source supplier decisions are publicized on the MOD’s website, so that potential suppliers can apply to the MOD regarding their ability to participate in future tenders or turn to the courts to contest the decision to procure through a single source supplier. Under the law the exemption from a public tender is irregular. The general rule is to have a public tender and the unit should explain why it should be under an exemption and not public tender. The tender committee (that consists of representatives of legal advisors, Chief Financial Officer of opposition party; and a representative of public) has to be the director general appoints the tender committee. He may appoint and assign the appointment (1) (2).

Public procurement is periodically scrutinised by the Court of Auditors. Its last report, from June 2020 [1], analyses the procurement of the Ministry of Defence in the period 2014-2017.

As reported, there has been a wide use of negotiated procedures with less than 5 operators (procedura negoziata con meno di 5 operatori), due to the specificities of the defence procurement and in compliance with law 208/2011. In some other cases, the negotiated procedure has been used for the completion of previous supplies [2]. The percentage of defence procurement with this procedure has been 77 per cent for goods in 2017 and 78 per cent for services in the same year [3]. The recourse to the ordinary procedure is very modest (6 per cent for services and 13 per cent for goods).
As for classified contracts or contracts requiring secrecy measures, art 162 of legislative decree 50/2016 applies [4]. Data available refers to the year 2015 and the first four-month period of 2016, period in which informal biddings and direct awards have been respectively 9 per cent and 15 per cent of the total procedures. [5]

Regardless of the type of procedure, there is a preventive control on the administrative and accounting regularity of the acts, as regulated by legislative decree 123/2011 [1]. Should any flaw of legitimacy be detected, the act is invalidated. Moreover, the possibility remains for the bidding operators to address the regional administrative court, should the operator perceive any discrimination or irregularity during the process [2]. In addition, the Court of Auditors also performs a control over restricted procedures without prior publication of the procedure to assess the rightfulness of the process and has the power to reject the procedure. [3]

Aggregate information on defence procurement contract types is not available from Japan. The Japan assessment in TI’s Government Defence Anti-Corruption Index 2015 cited a source on the percentage of single-sourcing in Japanese defence procurement, but this source is no longer available, and other sources with the same heading do not include information on the percentage of single-sourcing. [1] Japanese defence procurement in 2017 was made up of (see Q58A):
– central procurement from domestic sources 48%
– central procurement from general imports 2%
– central procurement through Foreign Military Sales (FMS) 15%
– regional procurement from domestic sources 29%
– regional procurement from general imports 5%
– regional procurement from FMS 0.3%. [2]

Procurement means purchase of goods and services on those goods (such as reparations). The Ministry of Defence (MOD) also orders construction work, which is not included in the above figures. According to theAcquisition, Technology & Logistics Agency (ATLA), of the central procurement in fiscal year 2018, measured by amount of spending, 32.8% was open competition, 0.1% was restricted competition, 39,3% was discretionary contract and 27.8% was FMS. [3] When it procures through FMS, the Government of Japan enters into a contract directly with the US Government. [2] Furthermore, the MOD has divided contract announcements on its website into two categories: open competition and discretionary, and FMS is subsumed under discretionary. [4] Thus, FMS is here treated as a discretionary contract. As for regional procurement, whereas all of the MOD’s eight Regional Defence Bureaus post calls bids, both for open competition contracts and for discretionary contracts, on their websites, none of them have statistics on the types of contracts used. [5] Thus, here it is simply assumed that there is slightly more discretionary than open competition regional procurement, as there is for central procurement.

Japanese contracts that give rise to public spending build on the Public Accounting Act. Article 29-3 item 1 of this act specifies that such contracts shall be put out to tender. However, a contract that only a small number of persons will participate in must be put out to selective tender (item 3), and a contract whose nature or purpose does not permit tender must take the form of a discretionary contract (item 4). [1] If a discretionary contract is selected, the Minister of Defence or a person to whom the Minister has delegated authority must approve of single source or restricted competition procurement. [2] The discretionary contract entered into will then be registered in an excel file for such contracts on the homepages of ATLA (in the case of central procurement). The file must include the reason that the contract was discretionary. This reason will most usually refer to the Mutual Defence Assistance Agreement between Japan and the US or Article 29-3 item 3 or 4 of the Public Accounting Act. [3] In a case of regional procurement, one of the MOD’s 8 Regional Defence Bureaus will register the contract. [4] In its annual Audit Report (see Q17A), the Board of Audit can consider topics that are important for the efficient operation of the state. The issue of single source defence procurement contracts was, however, not raised in any of its recent annual audit reports. The Board has the mandate to report a violation of the law, a Cabinet Order, or the approved budget. [5] Part of the Inspector General’s Office (IGO)’s mandate is to conduct annual inspections of the work by the MOD to prevent collusive bidding. In connection with this, in its inspection for FY 2018, IGO found that all the defence institutions with a mandate to conduct procurement that it inspected had established Discretionary Contract Evaluation Committees, that included members who were neutral in relation to the contract parties, to assess why single source contracts had been selected. [6] ATLA’s circular “On measures to make public procurement more suitable” had called for this. [7] IGO can suggest improvement measures to the Minister of Defence. [8] Neither the Public Accounting Act nor ATLA’s circular “On measures to make public procurement more suitable” state that the government must submit a report about such contracts to the Diet. However, MPs have the right to request information from the Government if they wish to raise the issue of defence procurement (see Q2A). Such an initiative could, for example be taken when the Diet reviews the Board of Audit’s Annual Audit Reports. However, a search of the mainstream newspapers Asahi Shimbun [9] and Yomiuri Shimbun [10] returned no reports of Diet consideration of discretionary contracts were found, indicating that the Diet has not given this topic high priority.

Military Supplies Law No. 3 of the year 1995 [1], and Military Works System No. 4 of the year 1995 [2], explicitly set out the criteria for procurement, whether in relation to construction, or general goods and services. All defence procurement according to legislation must be done through open competitions. However, in practice this seems to be inconsistent across different defence institutions in the country. The main defence institution, the armed forces, does not have a portal for open competitions [3]. Being one of the largest public sector employers in the country, it is safe to assume that the armed forces have high procurement needs given its size. It is important to note here that Military Supplies System No. 3 of the year 1995, allows the armed forces to not carry out its defence procurement through open-competition and stipulates that single-source procurement is allowable. As the armed forces have their businesses, with links and connections to other businesses, they use 2-3 sources known to them [4].

It has been established throughout this assessment that defence decisions, budgets, expenditure and procurement are never scrutinised. In fact, instead of scrutiny over defence expenditure the Parliament’s financial committee proposed supporting all necessary allocations for the military and all security services and increasing the defence expenditure [1]. There is almost no room for defence scrutiny in Jordan. For example, the Parliament does not receive audited reports of the annual accounts of the security and defence sectors [2, 3, 4]. The armed forces do not appear on the list of audited entities by the Audit Bureau [2]. There are no oversight mechanisms over defence expenditure [5]. In the 2017 annual financial accounts of the Ministry of Finance, there is no mention of defence or military expenditures [6].

The majority of low-value defence procurements are conducted on an open competition basis. However, for high-value procurements, they are rarely made public and are often done under restricted tendering. In 2019, the parliamentary Public Accounts Committee (PAC) established that the Ministry of Defence (MOD) had blocked the audit on the misuse of restricted tendering, which involved skewed awarding of tenders worth millions of shillings. [1] The majority of these procurement processes are not scrutinised due to the legal privileges that protect procurement processes of national security organs, such as KDF. [2]

There are a number of departmental committees in parliament that are mandated to scrutinise MOD’s procurement processes they include parliamentary Public Accounts Committee (PAC) which has the mandate and power to conduct oversight over procurement activities of the Ministry of Defence among others. Parliament, through the PAC,constantly exercises its oversight role over the ministry for the purchase of various goods and services including both those carried out through open and classified/restricted processes. [1]

This primarily includes those tenders that have been flagged by the Auditor-General reports whether they open or restricted tenders. [2] Other departmental committees, such as the Defence and Foreign Relations Committee, also have the power to summon the cabinet secretary and other witnesses to appear before them and answer questions that relate to ongoing procurement. [3]

In some instances, for low-value open tender procurements, disputes can be scrutinised and adjudicated by the Public Procurement Oversight Authority PPOA. In its 2016 annual report, MOD was the entity most frequently accused of procuring before the Public Procurement Administrative Review Board appearing four times in the year. [4] The Auditor-General Report of 2015-2016 for instance noted irregularities in the purchase of aircrafts worth ($2,883,562) in early 2009 most of them according to MOD technicians were defective.

The report further noted that MOD went ahead and bought aircraft spareparts for $12,956,827 from an unspecified firm through restricted tendering; instead of procuring them directly from the aircraft manufacturer. The Auditor-General observed that, from an audit verification of the purchases, seven of the aircrafts were defective and had never been operational since they were purchased. Instead, they were used as sources of spare parts for other similar machines. The Auditor-General noted that no justifaction was given for the purchase of these seven aircrafts at USD 7,136,035 and use them for spareparts. Furthermore, in these two instances, noted the audit report, it was impossible to acertain whether there was value for money and whether the process was legal. [5]

As regards the open or restricted competition of defence procurements, no information is available specifically for the procurement procedures used by the MoD. However, there is information published by the PPRC about the procurement procedures used by the Ministries/bodies of the KG in total share. Based on the 2018 annual report of the PPRC, 91.17% of the procurement contracts of budget/Government organizations were conducted through open competition during 2018 (1). While, less than 1% or 0.70% of contracts were conducted through restricted competition procedures in 2018 (1). Furthermore, in the framework of these percentages is included the MoD’s procurement contracts procedures; however, specific data/percentage on the use of procurement procedures by the MoD are not available.

The Procurement Review Body (PRB) is granted legal powers by the Law on Public Procurement: namely, the Body can question procurement contracts and review procurement procedures [1]. The PRB acts as expeditiously as possible, and considers the potential consequences of actions for all stakeholders likely to be harmed, including the public.
The current legislation does not specifically outline rejection processes. However, the legal powers of the PRB described in the Law on Public Procurement imply that the Body may question and reject procurement contracts conducted through single sources or in restricted competition by contracting authorities in Kosovo, including the Ministry of Defence [3].
The PRB can: i) (if both parties involved in a procurement process have not yet lawfully signed the contract) issue an order setting aside or suspending a public contract or its result; ii) issue an order to a contracting authority to suspend or terminate the conduct of a procurement activity or the implementation of a decision related to procurement; iii) issue an order to a contracting authority to cancel or revoke a decision, if procurement was carried out in unlawful conditions; iv) issue an order to a contracting authority to correct an alleged violation and/or to prevent further damage to the complainant and/or another interested party; v) issue an order to the contracting authority to remove discriminatory technical, economic, financial or selection specifications, requirements or criteria contained in any notice, invitation, tender dossier, contract document or other document relating to a procurement activity; vi) issue an order that annuls a concluded and signed contract, if it has been concluded without prior publication or if the signing of the contract was concluded after a certain time, as foreseen by the Law on Public Procurement; vii) impose penalties on any contracting authority that, despite warnings, continues to implement a contract that has been annulled [3]. Furthermore, the PRB has the power to issue an order requesting law enforcement to assist in executing orders [3].
The Auditor General, from the National Audit Office, also has the legal right to notify law enforcement authorities in the case of violations of the law [4] during the external audit processes in the particular institution. However, information is lacking for the PRB to assess cases: this is the main reason why there is no proof of the PRB or Auditor General using the law to address these issues.

According to SIPRI, 88 percent of Kuwait’s military purchases are from the US, which analysts and activists say suggests that these are not open competitions, an auditor and analysts said (1, 2, 3 and 4).

There is cause for concern: the purchases of “defence materials” made by these institutions are not subject to the oversight of the Public Tenders Authority, according to article 2 of Law no. 29 of 2016 for public tenders (5).

Defence purchases, according to the Government guide of doing business in Kuwait, include all weapons, communications and monitoring systems related to defence and security. There are internal policies regulating these purchases but the Government admits that they are “more flexible” than the ones applied by the PTA and not available to the public, the officials and the Government’s guide for doing business said (6). No further details were available.

Parliament and the SAB have the right to question defence and security officials on everything and anything but their questioning is made almost pointless by the fact that they cannot reverse their decisions because the Emir can dissolve the Parliament at will and the SAB can only raise the alarm and demand investigations but nothing else, according to the PIL and the SAB’s law.

There are no detailed, openly available, comparable statistics on the allocation of defence procurements; the publicly available information confirms that most are conducted through open competition. [1] [2] However, according to information provided by the MOD, the vast majority – over 90% – of defence procurements are conducted through open competition, [4] [5] the exception being in some cases where, for security reasons, only general information is released (e.g. neither sums, nor amounts were provided when procuring Stinger portable air-defense systems in 2017 [3]). Information on non-secret procurement is openly available. The Procurement Monitoring Bureau is an institution which constantly follows the rule that open competition is applied to defence related procurement.

All procurements are subject to external scrutiny by the State Audit Office which has the power to request any information related to the procedures and inform the Parliament and, subject to disclosure limitations, also the public of its findings. [1] At the same time, while doubts have been expressed about the organisation of procedures, [2] no major procurement procedures have been stopped or rejected.

This indicator has not been assigned a score due to insufficient information or evidence.

Awarded contracts are not published, thus it is unclear what percentage are conducted as an open or single-sourced (1); according to the LAF’s DoO, it depends on the type of goods and services being procured (2).

The type of competition is usually indicated at the top of the bidding announcement on the website (1). The LAF does not publish the frequency of the type of awarded contracts (2). The CoA, which suffers from a weak capacity to conduct audits (3), is responsible for overseeing the public procurement process (4). Furthermore, the audit bodies have indicated the level of effectiveness in their conduct (5). However, the research could not find public evidence of CoA’s document to the LAF (6).

According to the Law on Public Procurement in the defence sector, there are five methods to follow for purchasing goods and services [1]. The first four include (a) single-sourcing (or restricted competition),which enables any supplier to participate, but only those suppliers invited by a contracting authority may submit a tender; (b) negotiated procedures with or without publication of a contract notice, meaning that the contracting authority consults the suppliers of its choice and negotiates the terms of contract with one or more of these; (c) competitive dialogue, which means that any supplier may request to participate and the contracting authority conducts dialogue with the selected candidates in view of developing one or more suitable alternatives meeting its requirements, on the basis of which the selected candidates are invited to submit tenders. Single-sourcing is permitted in cases such as extreme urgency or extreme situations, for technical reasons or for reasons connected with the protection of exclusive rights, purchasing research and development services, when, under very favourable conditions, services and goods are purchased from a supplier who is restructuring, facing bankruptcy, has entered into a settlement agreement with creditors, or is subject to a similar procedure under the state legislation it is registered in. The last method of procurement procedure is the (d) open procedure [2]. According to information published by the Public Procurement Office, in the last quarter of 2017, there were nine procurements, of which one was open competition, two were restricted procedures and six were negotiated procedures without publication of a contract notice [3]. Overall, in 2017 there were eight open competition procedures, twenty-nine negotiated procedures without publication of a contract notice, twenty-one restricted procedures and eight negotiated procedures [4]. Taking all the procedures into account, there were thirty-five cases (out of sixty-six) where only one bidder appeared (including five cases of open competition) [3]. As little as 0.5 percent of the bidding was conducted through open tender; 28.9 percent through restricted tender; and as much as 64.3 percent through negotiations without publication. In contrast, the new Head of the Defence Resource Agency claims that during 2017 as much as 82.2 percent of all tenders were open [4].

According to the Law on Public Procurement in the defence sector, in the case of each purchase, the contracting authority shall prepare a report in writing on procedures confirming the transparency of the selection process and the non-discrimination of suppliers, and submit this to the Public Procurement Office [1]. Despite the Public Procurement Office monitoring compliance with the law during procurement procedures, single source contracts are not externally scrutinised purely due to the nature of the procurement [2,3].

According to the government reviewer, a procurement governed by international rules by way of negotiated procedure without publication of a contract notice may only be commenced with the consent of the Public Procurement Office regarding such choice of procedure. Also, types of award procedures are shown in procurement plans so that the Public Procurement Office can analyze and (if necessary) start an investigation. Also procurement procedures can be reviewed by The National Audit Institution.

In theory all procurements of strategic assets must undergo an open tender process as stipulated under the Financial procedure Act of 1957 (amended 1972), the Treasury Instruction, the Government Contract Act 1949, Treasury Circulars, and the Federal Central Contract Act Circulars. [1] Some sources estimate that around 20-30 percent procurement exercises for strategic assets went through open tender; [2] while government sources report the figure as 89 percent. [3] Since there is no clear and reliable figure, this indicator is marked as ‘Not Enough Information’ (NEI).

The government may offer an open tender or restricted tender depending on the sensitivities of the asset being procured. [2] Restricted tender or direct negotiation is a worldwide practice and is done for strategic reasons – political and defence alliances, friendly nations, interoperability and other security reasons. According to Dr Kogila Balakrishnan, in some procurement processes, the government has decided to adopt a direct negotiation method. [4] This is due to several reasons. Firstly, the assets procured are offered by only one specialised company. Secondly, the specification requirements could not be offered or met by many companies locally or abroad. Thirdly, only a specific local or joint-venture company has the expertise. The interviewee pointed out that even open tender processed were subject to manipulation by the competing parties. In some cases, decisions of tender are already known even before the board meeting ends. Direct negotiation, according to her, led to the appointment of a local agent closely related to the regime. For instance, DEFTECH is closely related to the BN-led government. [5, 6] The local agent forms a joint venture with international companies that specialise in the asset in question. Although the Pakatan Harapan government promises to give more room for open tenders in the procurement of strategic assets, the Prime Minister, Dr. Mahathir Mohamad, pointed out that direct negotiations are still used for essential purposes. [7]

According to the official tender and procurement regime, “Individuals, companies or corporate bodies intending to participate in Government [procurement] must register” with the Ministry of Finance. This is to ensure “that companies/contractors are bona fide, truly committed in the relevant business fields and possess the capability to carry out works.” [1] However, there is no further evidence to suggest that Parliament or other external oversight entities have the power to question the competition procedure selected to supply and provide the services. [2]

There is conflicting evidence about the MDAC’s use of open tender contracts, but it appears clear that most recent major purchases have not been subject to open competition.
The website of the regulatory body ARMDS records that the MDAC issued more than 18 open tenders between May 2017 and April 2018.11 Some of these tenders relate to minor needs such as office stationery, camping equipment and fuel and tyres for military vehicles. But some are for more substantial purchases such as fuel trucks and works to construct undefined “infrastructure” at a military base in Sévaré.7
The website of the DGMP-DSP displays a list of public contracts issued between 1 January and 30 September 2016.12 The list contains details of 36 contracts awarded by the MDAC, of which:
– 20 were subject to open bidding
– 10 were subject to restricted open bidding
– 5 were concluded by direct agreement
– 1 was concluded by restricted competition.8
The most expensive defence purchase on the list was for 120 4×4 pick-up vehicles, which cost just under 3 billion CFA (USD 5,4 million).¹⁶ This tender was conducted via restricted open bidding, while there is also evidence that other larger contracts were awarded via completely open bidding.8 But there is also at least one report in the Malian media from 2017, based on sources within the defence sector, alleging that fraudulent practices are commonplace at the Directorate of Finance and Equipment (DFM).¹⁴ It alleges that defence contracts are not typically subject to open and competitive tenders: instead they are often awarded to family members or close associates of defence officials.
The fact that many defence-related purchases are exempt from the standard procurement regulations means that many large defence contracts are not subject to open competition. As Article 8 of the Code says:
“This decree does not apply to contracts for works, supplies or services when they relate to the needs of national defence or security, which require secrecy or for which the protection of essential national interests is incompatible with the publication of such contracts. The system under which these contracts operate is fixed by decree of the Council of Ministers”.¹ There is no evidence to suggest that any of the government’s recent major defence purchases have been made through open public tenders. This applies to the purchase of the:
– one C295W aeroplane from Airbus
– one new Super Puma helicopter from Airbus2
– one used Super Puma helicopter from Ireland2
– attack helicopters from Russia, which were bought after 8 million Malians reportedly signed a petition calling on the Russia government to help Mali by supplying military equipment1
– six A-29 Super Tocano combat planes from Brazilian company Embraer Defense & Security2
The purchase of the presidential jet in 2014 for 18.59 billion CFA was also not subject to an open tender given its secretive and off-budget nature.⁹ ¹¹ ¹² Neither was the maintenance contract for the presidential plane that increased repair costs by over 500% in some cases.¹² Neither were the contracts signed by former defence minister Soumeylou Boubeye Maïga for various forms of military transport that involved an overspend of 393 million CFA and were subsequently cancelled.3
There is also substantial evidence showing that the MDAC has regularly been using imprest accounts as a way of purchasing items without having to comply with procurement requirements, which are not subject to open tenders. In 2014, the IMF noted that:
“The execution of exceptional expenditures is subject to very minimal controls considering the amounts involved. In general, funds are released without prior proofs and receipts. The payment of the advance is subject to simplified controls, focusing primarily on the identity of the payment authorization officer and the amount of the advance. Control of the compliance of the expenditure being carried out, based on supporting documentation for the payment, takes place after the actual disbursement of the funds to a supplier or service provider”.5
The IMF also states that there are numerous deficiencies in the controls carried out, “particularly with respect to the imprest accounts of the defence and security forces in Mali”.5 It adds that “some imprest accounts receive quite substantial advances that go well beyond their original purpose of ‘minor operating expenditures’. For example, the special imprest account of the Ministry of Defence carries out monthly expenditures exceeding 2.3 billion CFA”, none of which relates to open tenders.5

Oversight bodies are occasionally able to audit single-source contracts, but this appears to only occur retrospectively rather than helping to prevent abuses and errors before they are signed off and public money is lost. Moreover, scrutiny of restricted competition procedures happens on an irregular and not comprehensive basis.
The BVG publishes annual reports evaluating the government’s various spending programmes. Meanwhile, it is the AMDS’s job to regulate public sector contracts and spending.
However, defence finances have generally not been subject to comprehensive audits or publicly detailed in recent years. In 2016, the ARMDS found that it was wholly unable to audit the Ministry of Defence’s finances for 2014 because of the lack of documents provided by the ministry.1
In April 2018, opposition party Parena claimed to have gained access to an unpublished BVG audit of defence purchases, which identifies numerous cases of overspending and dubious activity in military procurement.5 Parena maintains that the report shows that the government bought one of the Super Pumas from Ireland, paying 3.5 billion CFA for the used helicopter in cash. The audit also reportedly shows that the second Super Puma, bought directly from Airbus, cost 3.9 billion CFA, although the terms and conditions of the contract are opaque, according to the auditors.5 These claims were also reported by a journalist, who had also seen the unpublished audit, in Le Républican newspaper.7 The fact that this audit remains unpublished indicates that the BVG and the ARMDS are likely more active than their number of publications would suggest. Indeed, the BVG’s last published report came in 2015 and makes no mention of defence spending or incomes.2 As the World Bank points out, the BVG has not specifically reviewed Ministry of Defence accounts, and only an aggregate administrative account is transmitted to the auditor when the annual budget is examined.3,4
When the IMF, the World Bank and the EU suspended their aid programmes to Mali following reports of the off-budget purchase of a new presidential jet in 2014, it was the BVG that audited the account (see Q16C). The BVG’s report showed strong signs of its independence and ability to question the rationale of single-source defence purchases (see Q29C).
The BVG found that the MDAC had failed to respect the 2014 Finance Law requiring it to register these contracts and submit them as part of the annual budget. Moreover, many of the contracts were found to be heavily overpriced, strongly suggesting that these acquisitions involved substantial illicit activity..6
– Lorries that can transport up to 5 tonnes of goods that normally cost 28.5 million CFA were priced at 78 million CFA in the contract.
– Lorries that can transport up to 10 tonnes that normally cost 34 million CFA were priced at 115 million CFA.
– Petrol-tankers that can carry up to 6 cubic metres of fuel, normally costing 29 million CFA were billed at 120 million CFA.
– And petrol-tankers that can carry up to 18 cubic metres of fuel, normally worth 38.5 million CFA were billed at 210 million CFA.6
As of April 2018, it has yet to be determined what happened to the money overspent on these contracts, which would have amounted to 393 million CFA had the government not subsequently cancelled them. But the Defence Minister responsible for signing these contracts has since returned to government as Prime Minister.

Pursuant to the Public Sector Acquisitions, Leasing, and Services Law and the Public Works and Related Services Law, there are three procedures for procurement and contracting: public tender, invitation to 3 people, and direct award. The agencies and entities may not carry out the public bidding procedure and choose the invitation procedure for at least three people or the direct award procedure, basing their selection on criteria of economy, effectiveness, efficiency, impartiality, honesty, and transparency. Likewise, military or navy acquisitions may exempt public bidding when contracting through public bidding puts national security or public safety at risk, under the terms of the relevant laws. [1] [2]

SEDENA made 1,581 awards (from January 2017 to June 2019): 40.1% were made through direct award; 16% by national public tender; 29% through international public bidding; and 14.9% by invitation to 3 people. [3] [4] [5] [6]

In cases of direct award or invitation to 3 people, the head of the area responsible for contracting must send the internal control body a report regarding the contracts formalised during the immediately preceding calendar month, in this case from SEDENA or SEMAR, no later than the last business day of each month, accompanied by an analysis of the proposal or proposals and the reasons for the direct award of the contract. [1] The ASF has the power to evaluate that acquisitions and contracting through direct award procedures are carried out in accordance with the regulations on the matter. However, military acquisitions are an exception to the norm. [2]

Very valuable procurements are excluded from the Public procurements law and information about them is confidential.

For example, in 2018 around 8 million euros were dedicated to public procurements. About 10% were small procurements exempted from the Law on public procurements, while no information about the total amount spent in open tender procedures is provided. [1] The total amount of funds spent through secret procurements is not publicly available. [2]

Limited information about so called government-to-government contracts is available [3] and shows that, in 2018, the Ministry concluded a 30 million dollar deal for helicopters through government-to government contracts, [1] nearly four times more than the total amount of public procurements conducted in that year. Details about these contracts are confidential. [3]

According to the MoD reviewer, until the Public Procurement Regulation in the field of defence and security is adopted (2020), the Ministry of Defence conducts procurement procedures of defence and security matters in accordance with the Law on Public Procurement, through open procedures, in accordance with the Law on Public Procurement, applying the legal principles of competition protection, transparency and equal treatment in procedures does not limit the number of participants in the procedure. Also, as previously stated, the Rulebook on Implementation of Procurement Procedures, which has exeptions from the application of the Law on Public Procurement, regulates internal procedures for the implementation of these procedures, as well as procedures based on bilateral and multilateral agreements with international organizations, national authorities of EU Member States or third countries, which do not conclude the contract with the bidder, but with the Government of the country with which the agreement has been concluded, which delegates the bidders who can perform the procurement in question and determines how many bidders will participate in the procedure. [1][4]

The Parliamentary Committee for Defence and Security has powers to question any procurement procedure or purchase. [1] However, members of the Committee very rarely use those powers, [2] and they discuss the Ministry’s purchases only in general terms. [3][4][5][6]

The State Audit Institution conducted a few targeted audits where they were dealing with some concrete purchases. [7][8][9] The Institution reviews the finances of the Ministry within its audit of the overall public budget, but rarely deals with details of its actual purchases. [10]

The Inspection for public procurements has limited capacities and rarely conducts inspection control over institutions; [11] it usually deals only with formal matters. [12]

The revised version of the Code of Public Procurement Contracts (2013) states that public procurement should be submitted to open competition (1)(2).

However, the Code of Public Procurement Contracts explicitly exempts the Armed Forces from a certain number of conditions:
– Article 86: Procurement contracts for the Armed Forces can be agreed without prior publicity and bidding for tenders.
– Article 129: Architectural consultancy for the Armed Forces can be agreed without prior publicity and bidding for tenders.
– Article 171: The National Defence Administration is exempt from the following conditions: budget restraints (article 6), opening of the offers in public (articles 17, 36, 46, 63, 104 and 121), publication of the estimated programme, market achievement report and a number of other documents (article 147), use of electronic exchange procedures for documents and reverse electronic bids (articles 148, 149 and 151), market audits and controls (article 165), control over military equipment, weaponry and ammunition procurement contracts (article 156).

A number of military procurement contracts benefit from the following conditions: restricted bids for tenders, no budget limit, no administrative certificate needed.

In the absence of transparency and some requirements usually implemented for other kinds of public procurement contracts and given the observations in the local and international press, one can state that most contracts benefiting the Moroccan Armed Forces are likely to be single-sourced. This lack of transparency and open-competition implies corruption risks (3)(4).

The only oversight body in Morocco (National Audit Office) does not overview military spending (1)(2).

Whilst the revised version of the Code of Public Procurement Contracts (2013) (3)(4) states that public procurement should be submitted to open competition, it explicitly exempts the Armed Forces from a certain number of conditions:
– Article 86: Procurement contracts for the Armed Forces can be agreed without prior publicity and bidding for tenders.
– Article 129: Architectural consultancy for the Armed Forces can be agreed without prior publicity and bidding for tenders.
– Article 171: The National Defence Administration is exempt from the following conditions: budget restraints (article 6), opening of the offers in public (articles 17, 36, 46, 63, 104 and 121), publication of the estimated programme, market achievement report and a number of other documents (article 147), use of electronic exchange procedures for documents and reverse electronic bids (articles 148, 149 and 151), market audits and controls (article 165), control over military equipment, weaponry and ammunition procurement contracts (article 156).

A number of military procurement contracts benefit from the following conditions: restricted bids for tenders, no budget limit, no administrative certificate needed.

Myanmar’s military mostly makes its defence purchases in secret and rarely makes them public [1]. As a consequence, Myanmar’s defence market is not transparent and the assessors could not ascertain whether there is fair competition for contracting companies or not. Given that there is no evidence on this issue, this indicator cannot be scored and is marked ‘Not Enough Information’.

Myanmar’s military has its own audit and the Office of the Auditor General lacks the power to scrutinise defence spending; one source indicated that there is an internal process for tenders [1], but this could not be verified in the public domain. Myanmar’s military mostly make its defence purchases in secret and rarely makes them public [2].

There is insufficient evidence to score this indicator, besides legislation; as such, it is marked ‘Not Enough Information’.

There are three types of contract award procedures used by the Ministry of Defence [1]. The first is the award procedure under the Defence and Security Procurement Act, which is an open award procedure open to all companies [2]. The second is the award procedure under the Public Procurement Act, which enshrines openness and applies to civilian goods [3]. The third award procedure operates under the EU exemption (Article 346 of the Treaty on the Functioning of the European Union) and applies to the procurement of military materiel [1]. Article 346 of the Treaty states that a Member State is not obliged to supply information if it is considered contrary to the essential interests of its security [4]. The EU exemption means that the acquisition of some military materiel is exempt from the open award procedure outlined in the Defence and Security Procurement Act. However, according to the Defence Industrial Strategy, the majority of defence contracts are tendered through the open processes outlined in the Defence and Security Procurement Act [5]. A number of conditions must be met before invoking Article 346: (1) an essential interest of national security precludes the application of the Defence and Security Procurement Act, (2) if the acquisition relates to military equipment, the relevant equipment must appear on a 1958 list of military equipment, (3) the civil market must not be disrupted and (4) the measure must be necessary and proportionate [5]. The latter means, among other things, that a case must be made as to why the protection of the national interest is at stake. All procedures for tenders are outlined in a guideline document, but the way in which the Purchasing Department decides which process to follow for each project is not explicitly disclosed [6].

Procurement processes are overseen by the Central Government Audit Service and the Netherlands Court of Audit, however, while these bodies can monitor, question and recommend, they cannot reject decisions made by the Defence Materiel Organisation or the Purchasing Department [1,2]. The most recent annual audit report by the Central Government Audit Service shows that there is currently a project underway to monitor key controls in the MoD’s procurement processes [3].

Government Procurement Rule 3 clearly states that all suppliers must be given an equal opportunity to bid for contracts, regardless of whether they are foreign or domestic [1]. However, in the case of foreign entities this is done according to merit, and exclusions could apply for cases of national security – although there is nothing preventing a foreign company from making a bid. Agencies must openly advertise procurement opportunities if they fall under certain conditions, such as those that meet or exceed an estimated value of $100,000 NZD [2, 3, 4, 5]. There are certain parameters that allow either a closed competitive or direct source process, but these must be evidenced with facts and circumstances verifying the reason for exemption and must apply the same standards of evaluation as open competitions [6]. Despite these stipulations the Assessor has found no conclusive evidence to verify the percentage of procurements completed through open competition. Nonetheless, a weighted assessment of the available information strongly suggests that the vast majority of defence procurements are indeed conducted in open competition. Given the lack of relevant evidence on this issue, this indicator cannot be scored and is marked ‘Not Enough Information’.

The FADTC and OAG have the power to review all aspects of sourcing and procurements. In an example from the 2019/20 session on the Estimates for Vote Defence and Vote Defence Force, questions were directed towards the Minister pertaining to the selection of a single-source supplier for the C-130 replacement to which the Minister had to justify the reason [1]. The FADTC does not independently have the power to reject decisions. If such a scenario were to arise it may be referred to the House for consideration, the New Zealand Commerce Commission, Serious Fraud Office, or the OAG may undertake its own separate investigation. Apart from the House, which in theory could collectively veto decisions, it is highly unlikely that a contract would be cancelled without evidence of criminal wrongdoing or a serious failure to apply Government Procurement Rules [1, 2, 3, 4, 5, 6].

The 2016 Public Procurement Code (1) and the 2013 Decree (2) provide for an open competition and include penalties against those attempting to undermine this. According to an interviewee, most defence procurements are conducted in open competition, though some percentage of the value of the contract is single-sourced (3). It is unclear what the proportions are. At the same time, as another interviewee noted, sometimes to respond quickly to an imminent threat, it is more reasonable to shorten a procedure without engaging in open competition, especially if there are only very few competent companies with the required specialized expertise. This proves flexibility on part of authorities to bend the law when strategic security concerns may be present, which is the case for Niger. However, it is difficult to determine if more than 50% of defence procurements are conducted as an open competition given the inherent non-transparent nature of the whole process.

The assessor did not find evidence that there is an oversight body to question single/restricted competition procedures (1,2).

This indicator has not been assigned a score due to insufficient information or evidence.

The Ministry of Defence website contains no information regarding competition to provide defence-related goods and services. The Ministry of Defence states on its website that it is subject to the Public Procurement Act 2007. However, the extent to which the PPA 2007 covers defence special goods such as defence-related goods and services is unclear. Audit reports are not released to the general public. There is no scrutiny and no open competition in the selection of contractors in the defence sector (1). This indicates that single sourcing is very common in the defence sector. A defence procurement contract was recently terminated by President Buhari because of allegations of fraud. The contract was signed off by the Federal Executive Council in December 2017. The Contractor HSLi was given a $50 million downpayment for $195 million to supply a number of special mission helicopters and 12 fast intervention vessels for the Nigerian Navy.

General procurement is open and competitive in accordance with the Law on Public Procurement [1]. According to a recent government decision, classified procurements should be less than 1% of the defence budget [2]. In addition, classified procurements would be subject to oversight by the Parliamentary Committee for Defence and Security.

Single-source procurements are implemented when the requirements of Article 99 of the Law on Public Procurement are fulfilled [3]. The Law outlines different situations, such as products for research and development, additional deliveries for already signed contracts and procurement of contingencies for when when single-source procurements are allowed. Within the Ministry of Defence’s Department of Logistics, this type of procurement is minimal: the 2014 Ministry of Defence self-assessment claimed that less than one per cent of all procurements were single sourced [4].

However, the Difi report notes it is almost impossible to determine the percentage of public procurements from a single-source in the defence sector. No information on this is publicly disclosed. Moreover, classified procurements are open only to companies that meet certain conditions, such as holding a licence for trade with arms and military equipment issued by the Ministry of Economy. A security certificate providing access to classified information is also required. This may encourage the purchasing of all military equipment from a single-source [5].

All non-classified procurements, including the single-sourced ones, are subject to revision. The audit of the contracts is carried out periodically and simultaneously to the audit of the procurements by the authorised institutions. In parallel, these institutions inspect and internally audit the Ministry of Defence, to ensure compliance with the conditions for conducting the procurements. The State Audit Office and Auditors from the Ministry of Finance oversee the process [1]. Also classified procurements are subject to revision, including the single-sourced ones. The State Audit Office prepares two separate reports: on classified procedures and documents and on non-classified ones. They are separate, but both assessments are done during the audit. The fact that some procurement actions (quite few as previously reported) are exempt from the Public Procurement Law (the classified ones), does not exclude them from the audit procedures (both internal audit and one done by SAO). Actually, it the 2018 audit all single/restricted competition procedures were scrutinized [2].

In accordance with the Defence and Security Procurement Regulation (FOSA) and the Acquisition Regulations for the Defence Sector Defence (ARF), all procurement shall as far as possible be based on competition, and the procuring authority shall not discriminate against a contractor owing to nationality or local affiliation [1, 2]. As a main rule, all contracts are subject to competitive bidding and have to be published on DOFFIN (the Norwegian national database for public procurement) [3]. The Defence and Security Procurement Regulation (FOSA) also provides conditions under which procurement processes can be exempted from open competition. The exemptions cover for instance situations when only one supplier can meet the procurement requirements, if a rapid procurement is required due to unforeseen needs, or if national security reasons justify deviations from open completion [1]. The Public Procurement Act has equivalent rules on open competition and single sourcing [4]. As mentioned in the previous GDI report, in 2011 an investigation conducted by the Office of the Auditor General (OAG) revealed that, out of 98 defence procurements audited, 60 had been single-sourced, and of these only 9 had the required documentation to be justified as single-sourced [5]. Yet, it is important to stress that such thorough external scrutiny does not occur on a regular basis and the aforementioned data corresponds to defence procurements in the period June 2008 – August 2009. According to a source form the Norwegian Defence Material Agency, the aforementioned investigation concerned a selection of contracts of lower value and was not an investigation of all procurements. There is no available recent data on how many defence procurements resulted from open competition and how many were single-sourced, therefore this has been marked ‘Not Enough Information’ [6].

According to the Norwegian procurement regulations, all single-source procurements have to be justified [1, 2, 3]. However, online media research shows that unjustified single-source acquisitions is a recurring theme for the Norwegian Armed Forces [4, 5]. The latest example is of the Defence Logistics Organisation, which has bought clothes and equipment to soldiers without competition and without the approval of the Ministry of Defence [5]. The acquisition was presented as an emergency procurement allowed under Article 123 of the EEA-agreement, but at least parts of the procurement did not conform to the requirements. The Office of the Auditor General (OAG) has the power to investigate the competition procedure selected, but such investigations do not occur on a regular basis [6]. The OAG issues recommendations but lacks the ability to cancel projects. The OAG submits reports to the Norwegian Parliament and Parliament in plenary may make a decision about initiating an investigation of a particular project. The OAG reports are often followed by hearings conducted by the Standing Committee for Scrutiny and Constitutional Affairs. The committee may call in representatives from ministries and organisations, experts or private individuals to hearings for the purpose of obtaining further information [7]. There exists, however, the internal Contract Audit section, whose task is to conduct audits of contracts and financial contractor reviews primarily in situations when only a sole supplier can perform the contract [8]. The Contract Audit section assesses criteria to ensure compliance due to the lack of sufficient competition. It also performs supplier assessments in order to prevent contracting with a vendor in a weak financial position that most likely cannot complete delivery according to the contract.

Most of the defence purchases are implemented through single-source suppliers. This specifically refers to strategic deals such as weapons, tanks, jets, ammunition or military vehicles (1), (2). There is no open competition when it comes to strategic deals, but bidders can compete when it comes to food supplies or logistical supplies such as roads and so on (1). As referenced before, the e-government portal states clearly that data around security and defence is not publicly available on the grounds of national security (3). There is no evidence of any active tender boards or open competitions, and defence suppliers according to SIRPI fact sheet indicate Oman’s main suppliers are companies based in the UK (38%), USA (28%) and Norway (7.9%), there are no further breakdowns indicating which companies supply the weapons (4). Foreign media outlets highlight Oman defence purchases but without details on companies, procedures or competition (5), (6). Evidence suggests that defence procurement is not carried out through an open competition and that the majority of defence contracts are done directly through single-suppliers.

There is no oversight mechanism (internal or external) to question single sources or open competition for purchases (1). Defence procurement is not generally done through open-competition, there are virtually no restrictions over single-supplier procurement, and defence institutions are not subject to any form of external oversight or scrutiny (2).

Usually, security and national forces procurement is conducted in open competition and calls for tenders are typically published on the MoF website, and in the newspapers, if the costs of the material are more than 5000 USD (1). However, other supplies are not released. In such cases, single-sourced or renewal for an existing contractor is in place. The head of the agency can approve single-sourced supplier without general competition (General Procurement Law, and Intelligence Agency Procurement Law). Usually, the bids of the security sectors are published at the website of general supplies department of the MoF (2).

The MoF military audit department and the SAABC are oversight agencies that have some powers to question single/sole/restricted competition procedures. Questioning is a bureaucratic process without any important recommendations or reporting (1). The PACC report of 2017 mentioned many cases of corruption, yet, there were no prosecutions or reports on sanctions against any persons involved. Political influence can be exerted to avoid serious questions (2).

In 2015, the Commission on Audit reported that less than 40% of defense procurement are conducted as open competition [1]. Review of the procurement activities under the AFP Modernization Program disclosed that no public bidding was conducted for 19 out of 25 projects [1]. In 2017, Duterte signed Executive Order 34 making it easier for government to use alternative methods of procurement instead of public bidding for government contracts [2].

The Commission on Audit (COA) has the power to question the competition procedure selected and has done so on a number of ocassions [1, 2, 3]. However, its authority has been undermined by several speeches given by the President [4].

Counting the value of contracts, single-source procurements result in 64% of contracts awarded in line with the Public Procurement Act [1] and of 75% of contracts awarded in line with the MoND’s Decision No.367/MON [2]. Consequently, the level of single-soured procurements is 70%.
MoD anti-corruption unit assesses that 60% of procurements (by their value) are single-sourced.

The President of the Public Procurement Office has the formal power to question the accuracy of single-source procedure selection before the award of the contract (audit ex-ante). However such audits may concern only procurements based on the Public Procurement Act, they are not mandatory for the defence sector and actually are undertaken in some selected cases. Since July 2016 PPO questioned only 4 single source procedures in total, of which one related to the defence sector. [1,2,3,4]

There is not enough information to score this indicator.

An analysis of the public procurement register shows that non-competitive procedures are dominant across defence institutions, including both administrative and military sectors [1]. However, the register does not include procedures below the €5000 threshold, and there is evidence that public buyers in Portugal under-report their purchase of goods and services [2]. Furthermore, defence-related procurement provides for opting out of tender notice publishing [3]. Since no credible percentage of non-competitive awards can be established, this indicator has not been scored.

The Court of Accounts (CA) is specifically mandated to enforce oversight on contract awards [1, 2] and is known to have rejected at least two defence-related single-source awards recently [3, 4], although the latter was appealed by the Ministry of Defence and then validated by the CA [5].

The majority of defence procurement is not conducted through open competition, and there is no evidence of a single defence competition announcement. It has become clear that defence institutions are exempt from state tender laws, and there are legal provisions that enable direct procurement with single suppliers (1,2). Moreover, defence and security sectors have historically never published any open competitions for works, services or goods needed by defence institutions. As is the case with most matters related to the defence sector, procurement seems to be done directly through single suppliers. Single bidders and selected bidders are the major sources for the army and MoD personnel [3,4]. Even food and meals are purchased through a single bidder selection. As one officer stated, “it is easier for us to do it via single bidder. We are small country and we know all the companies, so we contact whomever we see suitable directly” [4].

Although there is no external oversight mechanism, and there is very little internal oversight mechanism, these units have no power to question or influence the process as a whole or partially. [1,2]

According to Article 93 of Federal Law No. 44 ‘On the Contract System for the Procurement of Goods, Work and Services to Meet State and Municipal Needs’, single-source procurement is allowed in 55 specific situations [1]. In 2014, the total number of these special situations was 28. Nowadays, these include working with natural monopolies, such as housing and public utilities, railroad transportation, and electricity or providers of cultural and art products [1]. Clauses 24-25.3 of Article 93 stipulate the rules for single-source procurement in cases where open tenders fail. The clauses that are relevant to the defence sector are Clause 3 (single-source procurement for the purpose of mobilisation training) and Clause 7 (contracts with suppliers of arms and military equipment). In addition, Article 109 of the law describes the provision of communication services, and states that the MoD may ask the Russian Government to obligate a communications operator to provide services to the defence sector. The chosen communications operator does not have the right to reject this obligation [1].

According to Article 110, Clause 1 of Federal Law No. 44 and Government Decree No. 826 ‘On the regulation on keeping a register of sole providers of Russian arms and military equipment’, those included on the list of sole providers of armament cannot refuse to provide services to the defence sector [2]. In 2018, 14.2% of all state procurement contracts were made with sole providers [3].

There are several types of competition, including closed tenders and ‘other types’. In 2017, for example, 62.7% of all contracts were under the ‘other type’ category and 31.6% – with sole providers [4]. According to the Ministry of Finance, contracts with sole providers are sometimes masked under the category of ‘other type’.[4]

As for defence sector procurement, many experts say that it is based mainly on sole providers – i.e. companies of the military industrial complex [5]. Manufacturers of military equipment and armament work solely for the MoD and are legally registered as sole providers [5]. All contracts with these companies are carried out via the single-source procurement law [6]. The Federal Antimonopoly Service even excluded the MoD from the list of departments required to justify every single-source-procurement contract [7].

Besides, even contracts for minor products, such as food and clothes, are generally carried out by the defence structures via single-source contracts [8,9]. Also, a large percentage of defence contracts are classified and, therefore, non-competitive in the first place [10].

According to Article 93, Clause 1.2 of Federal Law No. 44 ‘On the Contract System for the Procurement of Goods, Work and Services to Meet State and Municipal Needs’, the president’s decree or regulation is enough to proceed with the contract with the sole provider [1]. The Minister of Defence may send the president a letter asking to include a provider in the list of sole providers and the simple justification ‘to complete the State Armament Program’ will be enough [2]. There is no evidence that Putin has ever rejected the MoD requests. Indeed, in late 2018, Putin gave an order to simplify the requirements for companies of the military-industrial complex to be nominated as sole providers [3].

Also, when the Federal Antimonopoly service required ministries to justify every contract with sole providers, it excluded the MoD from the list of obliged departments [4].

So, there is in fact an oversight agency (the president) that has the power to question single-source procurement. However, there is no evidence that he has used this power, even occasionally.

According to our sources, around half of the procurement is done through open competition. However, competitors are invited to compete through the pool of their contacts within the ministry. When it comes to purchases of ammunition and weapons, two to three companies are invited or (based on a decision from the commander in chief, the crown prince) a single source is invited to provide the arms (1), (2). Strategic defence procurement deals in Saudi Arabia are typically reported after the fact by international press sources, and details surrounding them are rarely released by the Saudi government either before, during or after the procurement cycle.

Military and procurement planning have in the past been conducted incoherently in Saudi Arabia (3). Historically, senior princes were given control of various security and defence institutions as part of a broader power-sharing arrangement within the royal family, and these institutions were traditionally run as personal fiefdoms. A primary example was the Ministry of Defence under the late Sultan bin Abdulaziz, who ran it from 1963 until his death in 2005. This included autonomous control over budgets and procurement, and arms deals were often pursued unilaterally by himself and his sons, Bandar (who was Saudi ambassador to the US from 1983 to 2005), and Khaled (who was deputy minister of defence from 2011 to 2013) (4). A number of these deals were undoubtedly conducted through single sourcing, and indeed several were subject to corruption allegations, investigations and lawsuits – including the high-profile al-Yamamah series of arms deals with BAE Systems as well as the lesser-known deals struck during the 1980s and 1990s between US defence companies Litton Industries and United Technology Corp and Khaled alongside Fahad, another of Sultan’s sons (5), (6).

Since the ascension to power of Saudi Arabia’s current de facto ruler Mohammed bin Salman, who became minister of defence in January 2015 and crown prince in June 2017, he has been increasingly consolidating and centralizing power, including in the defence and intelligence sectors (7). He has also stated aims to streamline defence procurement processes, and to that end has created two new military industry bodies including the General Authority for Military Industries (GAMI). GAMI was established in August 2017 and is tasked with managing military procurement, issuing tenders and vetting contracts (8). However, it is unclear as of yet whether this will lead to an increase in open competition for government contracts.

According to Globaltenders.com, an online database of national and international competitive bids, Saudi Arabia has submitted at least ten tender notices for defence equipment and services for December 2018-January 2019, including vehicles, military uniforms, insurance, maintenance, and others (9).

There is no power or authority with oversight mechanism to question either single-source bids, or any other form of bid in the Saudi defense procurement cycle (1).

The Ministry of Defence (MoD) and the Serbian Armed Forces (SAF) implement three main types of procurement: public procurement (goods and services which are not security-sensitive), public procurement in the field of defence and security (where confidentiality is required, but legislation still applies) and procurement in the field of defence and security exempt from the Law on Public Procurement [1].
In the first case, the MoD and SAF could implement several procedures prescribed in the law [2]. The law generally promotes the use of an open procedure, unless it is a specifically defined case. The open procedure means that tender is publicly advertised, anyone cold bid and the winning bid is selected following pre-set criterion (the lowest price or economically the most advantageous bid). Single-sourcing is possible through using negotiation procedure without an invitation to bid, which is only permitted by law in strictly defined cases and upon obtaining the opinion of the Public Procurement Office [3]. When the overall value of goods and services of the same kind planned to be purchased in a single year does not exceed five million dinars, contracting authority applies low-value public procurement procedure, which still requires publishing a call for bids and approaching at least three potential bidders [4]. Public procurement in the field of defence and security could be implemented through a restricted procedure or negotiation procedure with an invitation to bid, yet other procedures (i.e. single-sourcing) may also be applied if necessary legislative requirements are met [5]. When it comes to procurement in the field of defence and security exempt from the Law, there is no normative guidance calling for the competition to be secured.
The majority of public procurement in the MoD in 2017 (60%) was implemented through low-value public procurement procedures [6]. The open procedure was used in 35% of all contracting cases in the same year, while negotiation procedure without an invitation to bid was applied in 3% of cases [6]. However, a risk of de facto single-sourcing remains notable in practice. In 2017, MoD received only one bid in 66% of tenders using an open procedure. The average number of bids in open-procedure tenders in the same year was 1.74 [7].

The Law on Public Procurement obliges contracting authorities to request an opinion by the Public Procurement Office before initiating a negotiation procedure without an invitation to bid unless this procedure is initiated after a failed open competition [1]. Nevertheless, this obligation does not apply in cases of public procurement in the field of defence and security [2]. The State Audit Institution audited the expediency of the use of negotiation procedures without an invitation to bid in the Serbian public sector in 2016, but the selected sample of five contracting authorities did not include the MoD. Nonetheless, the findings offer valuable insight into the practice of this type of procurement procedure and recommendations on how to make it more efficient and more economical [3].

The Ministry of Defence (MINDEF) has a centralised system of procurement to acquire goods and services for civilian and military applications via the Defence Science and Technology Agency (DSTA), with tenders engaged through an open and transparent system. Opportunities exceeding S$5,000 in value are published in the government’s GeBIZ portal, which also provides information on the schedule of bids and tender awards [1]. Requirements, key evaluation criteria and procedures are communicated clearly in the tender documents [2]. Opportunities above $80,000 in value must be approved, by a tender board comprising of a minimum of three senior officers. However, an unknown proportion of major acquisition efforts – typically involving high-value military platforms and critical subsystems – have evidently been single-sourced [3, 4, 5]. In general, bid participation and tender processes remain secret, although there have been rare instances in the past where participating bidders have been allowed to reveal details of their entries [6].
Besides open tenders, MINDEF uses the approach of closed tenders (Limited Tender Multiple Source) for defence procurements, too. Such tenders are competitive in nature, MINDEF notes that approximately three-quarters of defence procurement cases were performed through competitive methods in 2019.[7].

All single/sole-source and restricted competition contracts are generally discouraged and are subject to external scrutiny who have powers to question the selected contracting method, although these are accepted when the acquisition effort concerns national security or when it is not feasible or practical to call for open tenders, such as when intellectual property concerns are present [1]. External agencies such as the Attorney-General’s Office perform regular audits of procurement activities [2] and have in several instances reported lapses in contracting to Parliament for debate [3], prompting a review of existing policies.

In terms of both Defence Acquisition Handbook DAHB 1000[1] (for acquisitions) and the Public Finance Managing Act (PFMA) and National Treasury instructions (for procurement)[2], multi-source procurement should always be the default, and single-source procurement is strongly discouraged and limited only to instances where an emergency procurement is required, or only a single supplier is capable of fulfilling the tender. Deviations require prior approval from National Treasury.

Examples of these deviations being rejected or approved are contained in a 2018 presentation to Parliament’s Standing Committee on Public Accounts by the Department of Defence, in which it listed each request for a deviation, the reason, and outcome [3]. For instance, a request to use Denel as a single source for the Project Biro offshore patrol vessel requirement. This was denied by National Treasury [3], and the contract was subsequently awarded through competitive tender to Damen Shipyards Cape Town [4]. It is not possible to provide a percentage of procurements which are conducted through open competition. As such, this indicator is marked ‘Not Enough Information’.

Deviations from standard multi-source procurement and acquisition are subject to audit oversight by the secretary for defence and auditor-general [1] along with parliamentary oversight by the relevant committees [2], while those above a certain value require explicit pre-selection approval from National Treasury, which can deny such requests [3].

In South Korea, there is restricted competition in defence procurement. The South Korean government has adopted the “Defence Supplies Designation Policy”, designating the type of defence supplies needed in order to secure a steady supply of high-quality munitions. As part of the policy, the “Defence Contractors Designation system” has been implemented, which invites a limited number of suppliers to produce specific munitions. [1] Thus, competition in defence procurement is limited and single source procurement is allowed under the “Defence Supplies Designation Policy” [방산물자지정제도] in the country. [1] A single source procurement allows one supplier to produce designated goods. The Defence Acquisition Programme Administration (DAPA) permits multiple suppliers to manufacture single munition since 2012, but it is not very common. [2] The DAPA also admitted the shortcomings of its policy. According to “2018-2022 Defence Industry Development Master Plan” published in February 2018, the current policy restricts competent defence suppliers from participating in the bidding, and improvement is strongly required to enhance the effectiveness of the policy. [3] The number of munitions and defence suppliers which are exempt from open competition is 1,472 and 91 respectively as of 2018 according to the DAPA’s statistics. It proves that single source procurement within the defence sector is widely used in South Korea. [4]

The Ministry of Trade, Industry and Energy and the DAPA are responsible for overseeing single-source procurement procedures. Article 35 of the Defence Acquisition Programme Act states that the Minister of Trade, Industry and Energy has the right to designate defence contractors who meet the requirements of relevant qualifications, including the number of personnel, facilities and security system. When selecting the contractor, the Minister of Trade, Industry and Energy should pre-consult with the Minister of the DAPA regarding the designation of defence contractors. [1] However, the oversight mechanism is questionable. According to the Regulations of Designating Defence Materials and Contractors, the Ministry of Trade, Industry and Energy can consult with the Defence Technology information Service and Agency for Defence Development and other relevant defence institutions, which have expertise in the defence field. However, it is not compulsory to request them to review the procedure, showing the lack of an external oversight mechanism. [2]

It is not possible to gauge percentages or rates for the amount of procurement conducted through open competition, because such information is not available publicly. This indicate is therefore marked ‘Not Enough Information’. Even though the law says procurement is supposed to happen via open competition, this does not always happen. Also, defence procurement can be listed as “classified,” which means the public is likely not have knowledge of its procedures. [1] Previous purchases, for example of the three Mi-24 helicopters in 2015, do not seem to have been conducted via an open competition. As noted by the UN panel of experts on South Sudan, the purchase violated government procedures for purchases of this type. [2] The panel did not state the procedures that were violated. Although the Procurement Act was not yet promogulated in 2015, it is possible that the violation could centre around lack of legislative scrutiny, accountability etc.

There is no publicly available information to score this indicator; as such, it is marked ‘Not Enough Information’. While institutions such as the National Audit Chamber, the Security/Defence Committee and the army inspector general’s office are supposed to offer oversight, there is no evidence in the public domain to show that this has happened. [1] A review of media outlets shows none of this has happened. [2]

“Public spending on weapons and weapons systems takes place in a non-competitive environment” [1]. The Annual Contracting Plan of the Ministry of Defence (PACDEF) includes “the proposals for contracts, technical agreements and other onerous legal deals that the Ministry of Defence plans to hold during the 2019 financial year”. The plan lists 6,630 contracts valued €2,188,449,713.11 in seven categories of contract. Open contracts account for 68% of the total number, but only 40.8% of the total economic value. Other figures are as it follows: framework agreements (0.1% of contracts valued 4.2%), based on framework agreements (20% of contracts valued 40.6%), centralised procurement (5.8% of contracts valued 5.3%), negotiated with publicity (5% valued 4.6%), negotiated without publicity (1.5% valued 4.5%), and restricted (0.1% valued 0.08%) [2]. However, non-R+D contracts negotiated without publicity are excluded, which means that the percentage of open processes is probably significantly lower. Similarly, the Special Armament Programmes, accounting for most of the economic volume of procurement in Spain, are also not included in the PACDEF, as they “have a particular idiosyncrasy” [3]. According to the last three annual reports available (2018, 2017, and 2016) on statistics of economic affairs in the Ministry of Defence, negotiated procedures account for a majority of the total economic volume of contracts, while open procedures are much less relevant. In 2018, 75.7 per cent of the total economic volume of contracts were negotiated procedures, while only 17.8 per cent corresponded to open procedures [4]. In 2017, the percentage of negotiated procedures was 21.2 per cent, while the one for open procedures was 30.6 per cent [5]. In 2016, the percentage of negotiated procedures was 72.1 per cent 2016, while data for open procedures was not available as such [6]. In 2014, seven in ten contracts for the Ministry of Defence were negotiated [7]. While in 2013 and 2014, the percentage of contracts negotiated without publicity were, respectively, 58 per cent and 54 per cent [7]. In previous years, 85 per cent of all contracts were negotiated [8].

As per data from the 2012-2017 period, the contracting authorities that most often have contracts with a single participant are by far related to the defence sector, including the Ejército de Tierra (Spanish Army, with 18.1% of the total of contracts), Ejército del Aire (Spanish Air Force, 7.2%), Armada (Spanish Navy, 5.1%), state secretary of defence (5%), Ministry of Defence (3.9%), and defence sub secretary (2.8%). The percentage for the remaining four bodies that also resorted to single-participant contracts (state secretary of culture, State Tax Administration Agency, general secretary of penitentiary institutions, and the Institute for the Elderly and Social Services) is between 2.3% and 3% [9]. In the defence sector, the objective of the single-participant contracts were as follows: repair and maintenance services (17.7% of the total number of contracts); security equipment, fire extinguishing, police and defence (9.8%); IT services: consulting, software development, Internet, and support (7.3%); transport equipment and auxiliary products (6.5%); and medical, pharmaceutical, and personal hygiene equipment and articles (6.2%) [9].

Oversight agencies have powers to question single/sole/restricted competition procedures selected or purchases, and occasionally do so, but not actively or on a continuous basis. From the second half of the 1990s to today, the vast majority of the economic volume of arms procurement in Spain is related to the Special Armament Programmes (PEAs). These programmes included 19 weapon systems (now 26) contracted through a “monopsony-monopoly” relation between the three branches of the military (“with almost total exclusivity”): the Spanish Army and General Dynamics-Santa Bárbara Sistemas, Navantia and the Spanish Navy, and EADS and the Spanish Air Force [1]. The PEAs were extraordinarily long (they still represent the bulk of the Spanish procurement budget) and expensive: the Ministry of Industry had to provide loans to the companies with no interest estimated at €14,000M for the period 1998-2012. Deliveries were expected in the period 2012-2025, and the total cost was in the region of €27,000M but increased later due to overrun costs [1]. Only six PEAs (out of 26) have been audited, and only once, by a body independent of the Ministry of Defence [2], but the rest were never audited by an organ external to the Ministry of Defence [3].

Most of the non-PEA contracts are also concentrated on very few companies. In 2018, the last year with figures publicly available, the AIRBUS Group turned over 58.7 per cent of all sales in the defence sector in Spain, and with Navantia (10.6 per cent), Indra (5.1), General Dynamics Santa Barbara Sistemas (4.3), and ITP Aero (2.8) totalled 81.5 per cent of the total turnover. No other company out of a total of 359 companies is over 0.8 per cent [4].

Exceptions and restrictions are not always properly justified. For instance, in 2014, the Court of Audits criticised that contracts awarded by the Intelligence National Centre (Centro Nacional de Inteligencia, CNI) resorted by default and in an automatic manner to the option negotiated without publicity. The Court of Audits stated that reasons of security and secrecy were not always applicable in all the contracts analysed, and said that “this special protection should not always and necessarily imply the elimination of publicity” [5].

Article 19 of Sudan’s 2010 Public Procurement, Contracting and Disposal of Assets Act requires procuring authorities within the Government of Sudan to widely broadcast a call for tender and invite suppliers and contractors to submit their bids. Article 13 also requires competitive, fair and open bidding among any bidders that meet the required conditions. Article 14 states that restricted competition is allowable if a limited number of competitors have already been determined as being capable of executing the contract [1].

However, none of Sudan’s defence sector institutions, nor its Ministry of Finance, list any information about upcoming defence sector procurements or solicitions for procurements on their websites. Phone interviews with two independent experts on Sudan’s defence sector [2,3] confirmed that there is a lack of information about open competition for security sector procurements in the public domain and that ministries typically do not have any visibility on or involvement in procurement – meaning that open-competition procurement is only carried out by defence sector entities if these institutions decide for themselves to do so. The International Budget Partnership’s 2017 Open Budget Survey for Sudan scored Sudan’s transparency 2 out of 100, its public participation 0 out of 100 and its budget oversight 31 out of 100 [4]. Sudan’s security and defence activities are exceptionally secret and opaque. Global Integrity’s 2019 Global Integrity Index for Sudan indicated a score of zero against the following criteria: a) ‘In practice, major procurements involve competetive bidding’ and b) ‘In practice, citizens can access the results and documents associated with procurement contracts (full contract, proposals, execution reports, financial audits, etc.)’ [5]. Given that there is no relevant evidence on this issue, this indicator cannot be scored and is marked ‘Not Enough Information’.

Sudan’s defence procurements are generally secret and therefore do not enable open competition. In any case, no evidence could be found in Sudan’s Public Procurement, Contracting and Disposal of Assets Act of 2010 that single/sole-sourcing is prohibited in procurement [1]. Since procurement in Sudan’s defence sector is opaque even to the Ministries of Defence and Interior themselves, and individual defence sector forces do not, in practice, report their revenues or expenditures to the Ministries of Defence or Finance, there is no institution that provides oversight or can question restricted competition procedures [2,3]. By law, the General Audit Chamber has the authority to independently audit any government entity, but as noted by a 2017 report by Transparency International, ‘in practice it is subject to political interference and lacks the resources to fulfill its mandate’ and the ‘lack of transparency and information allows for a discretionary administration of the public finances and makes it difficult for anti-corruption watchdogs and for other branches of government, such as the legislature of the auditor general, to scrutinise how money is spent’ [4]. GAN Integrity’s Sudan report, published on its Risk and Compliance Portal, summarises as follows: ‘Public procurement in Sudan presents companies with a very high risk of corruption. A system of patronage, cronyism and nepotism distorts the market competition’ [5].

In the past three years, 61%-63% of defence procurements have been conducted as an open competition, which means that non-advertised (or single-sourced) purchases constituted 37-39% during the same period [1]. The lack of open competition in defence procurement may be partially understood as a historical heritage, as Sweden maintained its own domestic arms industry during large parts of the 1900s by funding military R&D and offering major contracts to predominantly Swedish companies. This supportive military R&D and procurement policy has changed a lot since the mid 2000s , making the industry increasingly internationalised [2], but the Swedish market for armaments can still be described as ‘partially captive’ [3]. For instance, Saab has been able to purchase a majority of the other defence and security firms in Sweden, making them near-monopolists, and 60% of the Swedish defence procurement budget in 2018 was made up of orders to Saab [3]. This ‘tight-knit’ partnership between the government and major arms companies like Saab (see the Swedish Defence Materiel Administration Agency (FMV) procurement case in Q63) is therefore still a relationship of interdependencies, and has been referred to elsewhere as a ‘dysfunctional family relationship’ [4]

Auditing bodies like the National Audit Office [1] and Swedish Competition Authority [2] have the power to question single-sourced tenders when reviewing FMV’s annual budgets and reports. Single-sourced purchases have amounted 37-39% of all defence procurements over the past three years. This level of procurements made without competition is not justified by the FMV [3] however, nor substantially or regularly questioned by auditors who instead focus their recommendations on FMV’s calculations of e.g. assets and royalties [1] [4].

There are different types of tenders (open procedure, selective procedure, invitation procedure and negotiated procedure) and the rules vary depending on the procedure that applies [1]. Switzerland is among the initial signatories of the World Trade Organization’s plurilateral Agreement on Government Procurement and follows those rules on public tenders [2]. These rules apply to some defence procurements only. Chapter 3 of the Ordinance on Public Procurement (VöB) lays out the rules for procurement. Procurement falling under Chapter 3 does, unlike all others also allow for the not publicly advertised invitation procedure and the negotiated procedure. For all procedures under Chapter 3, no legal recourse is possible (Article 39, VöB) [3, 4]. The invitation procedure still requires three competitors if possible and one of them should be non-local (article 35 VöB). The threshold for the negotiated procedure is for contracts on goods below 50,000 CHF or below 150,000 CHF for constructions or services contracts (Article 36.2 b and c, VöB) [4]. The percentage of non-competitive negotiated procedures averages above 50% (in 2015 46%, 2016 65%, 2017 53%, and 2018 68%) [5].

There are different types of tenders (open procedure, selective procedure, invitation procedure and negotiated procedure) and the rules vary depending on the procedure that applies [1]. Chapter 3 of the Ordinance on Public Procurement (VöB) lays out the rules for procurement. Procurement falling under Chapter 3 does, unlike all others, allows for a not publicly advertised invitation procedure and negotiated procedures. For all procedures under Chapter 3, no legal recourse is possible (Article 39, VöB) [3, 4]. The invitation procedure still requires three competitors if possible and one of them should be non-local (article 35 VöB). The threshold for the negotiated procedure is for contracts on goods below 50,000 CHF or below 150,000 CHF for constructions or services contracts (Article 36.2 b and c, VöB) [4]. Negotiated procedures must be justified according to the VöB (Article 13 and 36) [4]. The Federal Department of Finance (FDF) provides data yearly on procurement procedures and the percentage of negotiated procedures for all ministries [5]. The negotiated procedures are subject to the oversight mechanisms in place, for all federal spending, including the Swiss Federal Audit Office (SFAO) and the internal audit at the Federal Department of Defence, Civil Protection and Sport (DDPS). The DDPS internal audit reviewed in a recent report the practice using negotiated procedures and reported improvements. It saw a substantial increase in legal verification of negotiated procedures, peaking at 97% of all procedures being scrutinized to reduce risks associated with non-competitive procedures. The audit report also highlighted that the Federal Council has to report yearly to the Finance Delegation of the Parliament on negotiated procedures including information on the type of procurement, its value, justification and the selected supplier. The report also found shortcomings in data collection [6]. Parliamentarians have, in the past, criticized the number of negotiated procedures, a lack of transparency and a late inclusion in the process as far as oversight is concerned. The government maintains that information can be obtained on request and that the DDPS follows international standards and has a well-established oversight system [7].

For decades, most defence procurements from Taiwan’s indigenous defence industries have been supplied by government-affiliated organisations such as the National Chung-Shan Institute of Science and Technology (NCSIST), Aerospace Industrial Development Corporation (AIDC), and the Taiwan International Shipbuilding Corporation via mechanisms of restricted competition [1]. The mechanism of open competition in Taiwan’s defence procurements is gradually being establishing to improve Taiwan’s small and medium sized defence industry enterprises [2]. Both open competitions and restricted/single competitions for tenders are employed in defence procurements depending on the requirements of individual projects.

Statistics for 2019-20 show that 14,511 contracts for a total of 536 bn TWD were awarded by defence sector institutions. (The awarded amount for 12 contracts were nor disclosed).

1,750 contracts (12%) for a total of 426 bn TWD (79%) were awarded as a result of single source procedures, namely “restricted bidding (with no public selection or public solicitation)”.

1,052 contracts (7%) for a total of 19 bn TWD (4%) were awarded as a result of restricted bidding (after public selection or public solicitation) or selective bidding (establishing a list of qualified manufacturers for follow-up bidding).
11,709 contracts (81%) for a total of 110 bn TWD (17%) were awarded as a result of open tenders or other forms of competitive procedures. Among them many minor contracts for civilian services. [3]

The MND has administrative powers to question the single/sole/restricted competition procedure used to make selections and purchases, and occasionally does so. In the mean time, the National Chung-Shan Institute of Science and Technology (NCSIST) is, under the MND, expected to play a leading role in coordinating Taiwan’s indigenous industries to expand their markets into the defence industry [1]. The dual role played by the MND (i.e. administrative scrutiny vs. industry development) has resulted in experts speculating that administrative scrutiny alone will not be sufficient or even in place to question restricted competition or purchase [2, 3].

There is not enough information to score this indicator. Defence purchases are never transparent. It is thus impossible to tell if they are done under competitive conditions or not. The interviewee diclined to respond to this question. [1]

There is not enough information to score this indicator. Again, given that the purchase data are not publicly accessible, it is impossible to tell if they are subjected to effective scrutiny. No information was forthcoming from the interviewee. [1]

According to the Public Procurement and Supplies Administration Act 2017, Section 8, procurement and supplies administration must be carried out openly and provide opportunities for fair competition. On this point, Section 55 also states that the procurement of supplies should be conducted by solicitation made specifically to at least three business operators possessing qualifications determined by a state agency for tender proposals, unless there are less than three business operators in existence that qualify for the work in question [1]. This means that the majority of procurement activity is restricted in terms of competition, with usually around two to three suppliers invited to compete.

Moreover, according to the Regulations of the Office of the Prime Minister on Procurement and Supplies 1992, the MoD is also allowed to procure weapons or supplies for national security through special methods, including single-sourcing. In other words, military weapons can be single-sourced, but only in the case of government-to-government trade [2]. According to Interviewee 1, it depends upon the security service and the military hardware involved, but there is definitely insufficient open competition. Often, there is single-sourcing [3].

In Thailand, there are specialised audit or anti-corruption bodies overseeing the competition procedures in the public procurement system. While the Materials Inspection and Acceptance Committee inspects the fulfillment of a procurement contract and verifies the quality and quantity of the procured goods or services, the Auditor General audits the legality and value of the procurement. For each procurement process in Thailand, the procuring agency must keep a register of all bids and a record of the decisions for at least 10 years and the Office of the Auditor General has access to these documents [1].

However, according to the Public Procurement and Supplies Administration Act 2017, Section 7, in cases of military procurement related to national security, the real authority in terms of decision-making belongs solely to the Minister of Defence and the Defence Council, so there is a chance of single sourcing. Additional scrutiny by no more than three external experts is allowed, but the external experts must be professionals who have a high level of expertise in the defence sector; they can question the competition procedure selected but they cannot reject the purchases [2,3].

According to Interviewee 2, a military expert, there is a lack of open competition within the MoD as the ministry has full control over its internal audit, so any body conducting external scrutiny does not have the power to question the competition procedure selected [4]. In addition, the cabinet’s approval of a 952-million-baht plan to upgrade 12 C-130 planes was also non-transparent, and details of the projects were left for each military branch to explain [5].

According to our sources, military procurement is not always conducted in an open competition (less than 15%). Although a big portion of the procurement is conducted in an open competition, many are single-sourced and conducted through direct negotiation with the manufacturer, for example communications and military vehicles. The percentage of the two categories is not known (1,2). Article 6 of Decree n°1039-2014, dated 13 March 2014, Organising Public Procurement, provides that procurement must be conducted as an open competition. However, article 49 of the same decree provides that procurement can be made by direct negotiation for public security and national defence reasons (3). Article 2 of Decree n° 88-36, dated 12 January 1988, on the Special Procedure of Control of Expenditure of the Ministries of Defence and Interior, provides that certain purchases of these two ministries can be made by direct negotiation. This special procedure is justified by security matters (4). According to the Ministry of Defence, there is a strict obligation to apply competition, although only in defence procurement and projects for acquiring major weapons systems.
Direct purchase agreements are to be clearly and strongly justified, it is the same for single sourcing (5). It is not possible to assess what percentage are single-sourced but the variety of suppliers (USA, Netherlands, Turkey, France) shows that there may be some competitio (6,7,8,9).

According to our sources, there is, in theory, a committee that oversees and scrutinises the work on tenders’ commissions. However, this committee can be superficial and ineffective. A committee is responsible for the opening of tenders, price negotiation, and the preparation of contract clauses. This applies to cases of defence expenditure that does not fall under the general laws of procurement due to their sensitive nature (1). According to Article 5 of the same decree, this work is overseen by a special committee chaired by the concerned minister or his representative.
However, despite extensive research, we have not been able to find other information on the functioning of the commission or its effectiveness (2). For other purchases, general legislation applies (Decree n°1039-2014, dated 13 March 2014, Organising Public Procurement). For these purchases, decisions are subject to independent control, for example by the High Committee of Procurement and the committees of procurement control (3).

In terms of open competition, we once again need to differentiate between those defence procurements that are small in cost and conducted by the Ministry of Defence (90% or more procurements conducted as open competition) and those major defence procurements conducted by the SSB (30-50% conducted as open competition).

As explained above, the Ministry of Defence has a pretty transparent online system for calls for bids, through which any interested and qualifying firm would be able to inform themselves and deliver bids accordingly [1]. Open-source reserarch also shows that, for those minor procurements in the defence sector, the government’s EKAP online bidding platform is used and all the calls for the defence procurement bids of military units are available to the public and firms [2].

However, as explained above, with regard to those major, multi-million-dollar defence procurements, which are mostly managed by the SSB, we do not see the same level of transparency or the same inclination by the government to opt for open competition to avoid single-sourcing. Interviewee 3 suggested that less than half of these defence procurements (30-50%) are conducted as open competition [3]. He added that the majority of procurements conducted by the SSB, under the strict control of the presidential palace, are either conducted as restricted competition (i.e. two or three suppliers invited to compete) or single-sourced, mostly to those defence industry firms close to President Erdogan [3].

According to Interviewee 3, when it comes to the major defence procurements conducted by the SSB, oversight agencies have no power to question single/sole or restricted competition procedures about the procurement cycle presented above [1]. Interviewee 6 suggested that the state-owned Turkish Armed Forces Foundation firms in Turkey (for instance, Aselsan in communications, radar and information technology; Roketsan in rocket and missile production; Havelsan in electronic warfare; Isbir in electric and power systems; and Aspilsan in military-type batteries) have always dominated their sector and are mostly preferred by the Turkish military as single sources for procurements [2]. Furthermore, open-source research shows that, in the past two years, firms very close to President Erdogan (called ‘President’s firms’ within the sector) have emerged, such as Baykar in drones, BMC in land systems and TRMOTOR in engines [3]. Laura Pitel’s piece provides good insights into this [4].

There is not enough information to score this indicator. No percentages are provided here becuase it is not possible to access such information from the ministry of defence. Most purchases are classified and therefore subject to being single-sourced. However, Section 79 of the Public Procurement and Disposal of Public Assets (PPDA) Act (2003) [1] provides the different choices of procurement methods. It states that:
“(1) A procuring and disposing entity shall in respect of: (a) the procurement of goods, works and non-consulting services, use any of the methods in sections 80, 81, 82, 83, 84, 85 and 86 and the conditions for their use specified in the Fourth Schedule to this Act; and (b) the procurement of consulting services, use section 88A and the conditions for procuring consultancy services specified in the Fourth Schedule to this Act. Specific conditions for the bidders are normally well spelt out in the calls for bids. PPDA[2] audited a sample of 40 procurement contracts and there were few cases of restricted domestic bidding compared to open bidding. However, as one MP[3] noted, major procurement deals involving weapons are classified and its costs and total percentages are not known to the public” [1].

The PPDA [1] carries out procurement and disposal audits to monitor the compliance levels of the ministry [1]. Even classified expenditure are audited, and the findings are submitted to the ministry and the Committee on Defence and Internal Affairs chairperson[2,3]. If there is any scrutinising for justfications for single and restricted competition procurements, this takes place between the Speaker of Parliament, the Chairperson Budget Committee, and the Chairperson, defence and internal affairs committee. Their findings are not made public.

With the MoD’s budget of 59.42 bn. UAH in 2016 [1], MoD public procurements (uniform, medical supply, food etc.) equalled 10.15 bn. UAH and classified procurements (ammunition, military equipment etc.) were 8.39 bn. UAH. This makes 45% of all MoD procurements classified or 14.5% of the whole MoD budget (18% in 2017 and 19.6% in 2018) [2, 3]. Public procurement of goods and services, which constitute state secrets, are conducted without open competition [5]. At the same time, some of the MoD’s public procurement can be single-sourced as well since that opportunity is stipulated in the law and is applicable for both the “special period” (started in Ukraine after the call for partial mobilization in 2014) and the “ATO period” [4]. According to the e-procurement system Prozzoro, 27,637 lots were worth 31.4 bn. UAH (1.2 bn. USD) organized by the MOD and its subdivisions (particular garrisons, hospitals, universities, armed forces quartering units, etc.). Out of these, 22,340 lots worth 12 bn. UAH (0.5 bn. USD) were single-sourced MoD public procurements from the beginning until May 2, 2018. This makes 38.2% of all MoD public procurements single-sourced.

Classified procurement:
Justification of classified procurements is based on state policies and requirements of the General Staff of the AFU [1]. After an annual State Defence Order is approved by the CMU, State Defence Order procurements can only be altered by the CMU. The Accounting Chamber is the only public authority empowered to scrutinize classified procurements [2], but it cannot reject the procedure.
Non-classified procurement:
Non-classified, MoD public procurement single-sourcing can take different forms, for instance, the procurement of goods worth less than 200,000 UAH and works and services worth less than 1.5 million UAH (this kind of procurement can happen also only with one bidder; however, there is no provision that such procurement must be single-sourced), negotiation procedure and procurement for guaranteed defence needs [5]. The Antimonopoly Committee of Ukraine controls the protection of economic competition, prevents, detects and terminates violations of legislation on protection of economic competition. The Committee has powers to reject tenders [3] as well as to reject competition procedures [4].
There are also safeguards in place to prevent requirements from being shaped such that there can be only one supplier. Technical specifications for products can be determined by:
• Technical regulations and state standards of Ukraine – at the same time the requirements for products are the same for all suppliers;
• Technical specifications (Technical requirements, Technical descriptions) of the MoD – at the same time requirements for products are the same for all suppliers;
• Technical specifications (Technical requirements, Technical descriptions) of producers;
• Requirements of specific contracts – including by reference to technical specifications.

There is no evidence to suggest that defence procurement is conducted as an open competition. There is no evidence on the internet of any call for bids or tenders on any of the government’s official websites (1), (2). Additionally, defence procurement is managed by the Tawazun Economic Council, a private company that is part of Tawazun Holding LLC. It has become apparent that the country’s defence procurements are not conducted as an open competition. Instead, it is clearly stated on the official webpage of Tawazun Economic Council that ‘a defence contractor is informed of the requirement to enter into a Tawazun Economic Program Agreement during the bidding process’, which indicates that tenders are not publicised on tender boards and the whole process is carried out in secret. It is important to note here that with the lack of oversight bodies in the defence sector, there is also a lack of oversight over defence procurement in general (3), (4). Federal Resolution No. 43 of 2016 concerning government procurements explicitly exempts the defence and security sectors from its regulations.

There is no open competition in defence procurement, and no oversight agencies are governing the sector in the first place (1), (2). This sub-indicator has been marked as Not Applicable, as with the lack of oversight body and the absence of any scrutiny over the defence sector, an assessment of scrutiny over single/restricted competition procedures is not relevant in this context.

Despite the desire for greater competition, the proportion of contracts let competitively has remained largely unchanged for five years at around 50%, while the remaining 50% is single-sourced [1]. A Public Accounts Committee report found that despite having a commitment to make competition the “default option” for contracts where this was possible, there was concern that MoD buyers “may still be specifying requirements to dictate single-source procurements with a preferred supplier” [2]. The report added that there was also suspicion that buyers may seek to rely on an existing supplier for additional work, even when requirements differed fundamentally from an existing Contract [2].

In January 2015, the UK government established the Single Source Regulations Office (SSRO) as an independent body responsible for ensuring fairness to government (value for money) and suppliers (paid a fair price) in relation to defence single source contracts. In the absence of market competition, the SSRO reviews the profit margins on single source defence contracts to try to ensure fairness to the state [1]. In December 2016, Marcine Waterman, the SSRO’s chief executive, told MPs that of the 860 requests for information made by the watchdog to the MoD and the industry, only about 200 had been answered. Equally, the SSRO is often excluded from examining entire contracts, while all procurement deals signed with foreign governments, such as the UK’s acquisition of the P8 submarine hunter aircraft worth more than £2bn, are exempt from regulatory scrutiny [2].

It is worth noting, however, the MOD has taken steps to improve scrutiny within the approvals process, including the decision on whether a procurement needs to follow a competitive or non-competitive path. The MOD has implemented a new Approach to Investment Decisions (MAID) and Acquisition Transformation, aligning with the cross-government 3-stage approvals model, i.e. a Strategic Outline Case, an Outline Business Case and a Full Business Case. The new Strategic Outline Case will give decision-makers the earliest visibility and opportunity to influence all aspects of programmes, including the procurement route [3]. Scrutiny by decision-makers will be aided by a more consistent and transparent approach, with the introduction of tools like the Generic Evidence Table (GET) and the Specific Evidence Table (SET). All decisions taken are subject to external scrutiny by the NAO and parliamentary committees like the PAC [4].

Between 2015 and 2019, 53.7% of contract dollars awarded by defence agencies were awarded competitively [1]. The GAO undertakes an annual assessment of the DoD’s major weapons systems, and its analysis of the DoD 2018 portfolio found that 67% of the 183 major contracts awarded for 82 major programmes were awarded non-competitively. Moreover, of these 183 contracts, 47% were awarded to just five defence corporations and their related entities [2,3]. In 2017 and 2018, the Defense Pricing and Contract department published competition reporting metrics [4]. In the 3rd quarter of FY 2018, 10 of the 23 contracting agencies failed to meet their assigned competition goal [5].

According to the DFARS, the DoD is prohibited from entering into contracts on the basis of an unsolicited proposal without full and open competition, unless: the head of contracting determines that only one source is qualified to perform the work; a senior civilian official of the DoD (whose appointment was determined by the Senate) determines that the award is in the interest of national defence; the contract relates to the improvement of equipment already in production [1]. The DFARS Procedures, Guidance and Information (PGI) provides further context: for example, under circumstances deemed ‘unusual and compelling urgency’, single-sourcing is permitted [2]. According to DFARS PGI 206.303, a contract award that is not conducted via full and open competition has to be justified. A memorandum from the Office of the Under Secretary of Defense for Acquisition, Technology and Logistics (OUSD(AT&L)) in 2015, responding to a 2014 GAO report, emphasised that justifications must be in compliance with the FAR, that approval signatures must be obtained and that an oversight mechanism must be developed for cases where the value of non-competitive contracts awarded on the basis of urgency increases considerably [3]. There is not much information that follows up from this memorandum.

Some scrutiny of non-competitive contract awards is undertaken by the DoD Office of Inspector General (DoD OIG). For example, in 2015, the DoD OIG published a report assessing whether Information Technology contracts issued without competition were properly justified [4]. In 2011, the DoD OIG conducted an audit of all DoD contracts awarded without competition, however, the results were not published and there doesn’t seem to have been a follow-up audit on the same issue since then [5]. The Government Accountability Office produces annual assessments of government-wide trends in contracting, which include reflections on the DoD open competition statistics [6]. However, neither the GAO nor the DoD OIG seem to have the power to reject the competition procedure, as most of the scrutiny seems to be retroactive. It is also not clear that all restricted/non-competitive contract awards are scrutinised.

This indicator is marked ‘Not Enough Information’. There are currently no records of open tenders on the part of the Ministry of the People’s Power for Defence (MPPD), nor are audits carried out by the Office of the Comptroller General of the National Bolivarian Armed Forces (CONGEFANB) on contracting by the Defence Sector Procurement Committee (CCSD) made public [1]. It is therefore not possible to determine the exact amount of contracts awarded, or the different modes of recruitment used.

It is worth noting that no calls for tenders have been published for any type of service required by the MPPD in recent years [2]. The lack of available information on this issue prevents scoring.

By law, the choice of procurement methods involving limited competition, such closed tender and direct recruitment, must be justified. However, the controls established in law to require this justification are lax, and have been especially limited in recent years.

According to the Public Procurement Law (LCP), in cases of direct procurement, the contracting unit must justify why direct procurement was chosen on the exceptional grounds referred to in Article 101 [1]. This justification must be submitted to the CCSD, which will issue its opinion but does not have the power to approve or reject the use of this method [2]. In this sense, although it must be justified, the choice of method cannot be managed by the CCSD. The limitation in CCSD controls could be supplemented by fiscal control from the CONGEFANB, which could monitor procurement procedures and sanction the use of direct contracting [1] that has not been submitted to the CCSD. However, there are no provisions in the law clarifying the review process for these justifications, beyond the fact that they must be submitted. Likewise, there have been no reports published that indicate that this scrutiny is being carried out by CONGEFANB.

In practice, these external controls of the defence sector have been weakened by the closed-off nature and secrecy of the sector’s internal management [3], as well as by the blocking of parliamentary control, which has led to a lack of knowledge of official information on defence procurement and allows for no monitoring of direct awards. Under previous administrations there was minimal information on the justifications for and monitoring of direct contracting, especially in cases where secret tenders were held for the acquisition of special safety systems; currently this type of contracting applies to most contracts, without any oversight whatsoever [4].

According to studies carried out by civil society organisations and academia, the secrecy around defence procurement and acquisitions [5] – together with the opacity of public procurement in general [6] and the recurrent use of direct procurement [7] – shows a serious deterioration in the limited oversight mechanisms established by law.

Defence procurements are not publicised, and it is difficult to ascertain the percentages of purchases that are done through open competition. This is except for estimations for procurement of ‘non-sensitive’ goods such as food rations, uniforms, sundries, etc., which are usually handled through the state procurement board in consultation with, and under the direction of, the Department of Procurement Research and Administration in the Ministry of Defence [1]. There are allegations reported in the media and some made in interviews that personnel in the procurement department take bribes to shortlist companies bidding to supply goods and services in the defence sector [2, 3]. Given the insufficient evidence regarding this issue, the indicator is not assigned a score and is marked “Not Enough Evidence.”

The Public Procurement and Disposal Act requires scrutiny of all procurements by the Procurement Authority under the terms of Section 6 [1]. However, in practice, it is the military command which makes procurement decisions and authorisations with very little information submitted to the Public Procurement Board, thus limiting the information presented for the overall procurement report. The report is eventually reviewed by the auditor general and tabled before Parliament [2, 3].

Country Sort by Country 64a. Open competition Sort By Subindicator 64b. Scrutiny of single/restricted competition procedures Sort By Subindicator
Albania 50 / 100 25 / 100
Algeria 0 / 100 0 / 100
Angola 0 / 100 25 / 100
Argentina 0 / 100 75 / 100
Armenia 75 / 100 50 / 100
Australia NEI 25 / 100
Azerbaijan 0 / 100 0 / 100
Bahrain 0 / 100 0 / 100
Bangladesh NEI 0 / 100
Belgium 75 / 100 75 / 100
Bosnia and Herzegovina 75 / 100 75 / 100
Botswana 75 / 100 25 / 100
Brazil 25 / 100 25 / 100
Burkina Faso 0 / 100 25 / 100
Cameroon 0 / 100 0 / 100
Canada 75 / 100 50 / 100
Chile NEI 25 / 100
China 50 / 100 0 / 100
Colombia 25 / 100 25 / 100
Cote d'Ivoire 0 / 100 0 / 100
Denmark 100 / 100 0 / 100
Egypt 0 / 100 0 / 100
Estonia 75 / 100 50 / 100
Finland NEI 50 / 100
France 50 / 100 50 / 100
Germany 50 / 100 50 / 100
Ghana 0 / 100 0 / 100
Greece 75 / 100 25 / 100
Hungary NEI 25 / 100
India NEI 50 / 100
Indonesia NEI 25 / 100
Iran 0 / 100 0 / 100
Iraq 0 / 100 0 / 100
Israel 50 / 100 100 / 100
Italy 0 / 100 100 / 100
Japan 25 / 100 75 / 100
Jordan 0 / 100 0 / 100
Kenya 25 / 100 50 / 100
Kosovo 75 / 100 25 / 100
Kuwait 0 / 100 25 / 100
Latvia 100 / 100 50 / 100
Lebanon NEI 25 / 100
Lithuania 25 / 100 25 / 100
Malaysia NEI 0 / 100
Mali 25 / 100 25 / 100
Mexico 25 / 100 0 / 100
Montenegro 25 / 100 25 / 100
Morocco 0 / 100 0 / 100
Myanmar NEI 0 / 100
Netherlands NEI 75 / 100
New Zealand NEI 75 / 100
Niger 25 / 100 0 / 100
Nigeria NEI 0 / 100
North Macedonia 100 / 100 75 / 100
Norway NEI 25 / 100
Oman 0 / 100 0 / 100
Palestine 75 / 100 25 / 100
Philippines 25 / 100 50 / 100
Poland 25 / 100 25 / 100
Portugal NEI 100 / 100
Qatar 0 / 100 0 / 100
Russia 0 / 100 0 / 100
Saudi Arabia 0 / 100 0 / 100
Serbia 25 / 100 0 / 100
Singapore 50 / 100 75 / 100
South Africa NEI 100 / 100
South Korea 0 / 100 25 / 100
South Sudan NEI NEI
Spain 25 / 100 25 / 100
Sudan NEI 0 / 100
Sweden 50 / 100 25 / 100
Switzerland 50 / 100 50 / 100
Taiwan 25 / 100 25 / 100
Tanzania NEI NEI
Thailand 0 / 100 0 / 100
Tunisia 0 / 100 25 / 100
Turkey 25 / 100 0 / 100
Uganda NEI 50 / 100
Ukraine 50 / 100 25 / 100
United Arab Emirates 0 / 100 0 / 100
United Kingdom 50 / 100 50 / 100
United States 50 / 100 50 / 100
Venezuela NEI 0 / 100
Zimbabwe NEI 0 / 100

With thanks for support from the UK Foreign, Commonwealth and Development Office (FCDO) and the Dutch Ministry of Foreign Affairs who have contributed to the Government Defence Integrity Index.

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