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

64a. Open competition


SCORE: 0/100

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64b. Scrutiny of single/restricted competition procedures


SCORE: 25/100

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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).

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].

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).

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.

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).

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].

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.

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).

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.

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.

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.

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).

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 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).

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).

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.

Country Sort by Country 64a. Open competition Sort By Subindicator 64b. Scrutiny of single/restricted competition procedures Sort By Subindicator
Algeria 0 / 100 0 / 100
Angola 0 / 100 25 / 100
Burkina Faso 0 / 100 25 / 100
Cameroon 0 / 100 0 / 100
Cote d'Ivoire 0 / 100 0 / 100
Egypt 0 / 100 0 / 100
Ghana 0 / 100 0 / 100
Jordan 0 / 100 0 / 100
Kuwait 0 / 100 25 / 100
Lebanon NEI 25 / 100
Mali 25 / 100 25 / 100
Morocco 0 / 100 0 / 100
Niger 25 / 100 0 / 100
Nigeria NEI 0 / 100
Oman 0 / 100 0 / 100
Palestine 75 / 100 25 / 100
Qatar 0 / 100 0 / 100
Saudi Arabia 0 / 100 0 / 100
Tunisia 0 / 100 25 / 100
United Arab Emirates 0 / 100 0 / 100

With thanks for support from the UK Department for International Development and the Dutch Ministry of Foreign Affairs who have contributed to the Government Defence Integrity Index.

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