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2008 Assessment

Ecuador: Integrity Indicators Scorecard

Ecuador: Integrity Scorecard Report > Sub-Category: Procurement
Indicators		Score
51	Is the public procurement process effective?	68
52	Can citizens access the public procurement process?	42

Indicator and sub-Indicator Details

Is the public procurement process effective?

51a: In law, there are regulations addressing conflicts of interest for public procurement officials.

Score:

YES

Comments: This regulation states the general responsibility of procurement officials, but does not relate directly to conflicts of interests.

References: Ley de Contratación Pública Titulo III Disposiciones Comunes y Especiales de los Procedimientos de Licitación y Concurso Publico de Ofertas Capítulo I Disposiciones Comunes sobre los Documentos, Informes y Fases Art. 31

51b: In law, there is mandatory professional training for public procurement officials.

Score:

YES

Comments:

References: N/A

51c: In practice, the conflicts of interest regulations for public procurement officials are enforced.

Score:

100

Comments: Public procurement should be a technically managed procedure. This requires a specific expertise in public officials, who, in the best scenario, should be assigned exclusively to that function. In Ecuador, procurements are managed by a Committee of a variety of public servants, from legal and financial divisions mostly, who have to improvise a mechanism, under rather broad general obligations established in the applicable law, secondary norms and procedures. There is no supervision to assure the fulfillment of the scattered regulations regarding conflicts of interests. The enforcement of the regulations comes usually after the procurement has been concluded, and the Comptroller determines irregularities. The negative impact on the image of the procurement is costly, when an ex-ante supervision could prevent all the trouble.

References: Proyecto Regional Adquisiciones y Compras Públicas, Informe Ecuador, Transparency International [ LINK ]

Ecuador - Public Sector Financial Management Project, The World Bank [ LINK ]

51d: In law, there is a mechanism that monitors the assets, incomes and spending habits of public procurement officials.

Score:

YES

Comments:

References: Constitución de la República del Ecuador, Título V de las Instituciones del Estado y la Función Pública Capítulo 2 de la Función Pública Art. 122

Ley que Regula las Declaratorias Patrimoniales Juramentadas Art. 1

51e: In law, major procurements require competitive bidding.

Score:

YES

Comments:

References: Ley de Contratación Pública Titulo I Ámbito de la Ley Capítulo II de los Procedimientos Precontractuales Articulo 4.

51f: In law, strict formal requirements limit the extent of sole sourcing.

Score:

YES

Comments:

References: N/A

51g: In law, unsuccessful bidders can instigate an official review of procurement decisions.

Score:

YES

Comments: This review process is limited because unsuccessful bidders have to issue a warranty bond supporting their complaint.

References: Ley de Contratación Pública Título V de la Contratación Capítulo IV de las Garantias Art. 72

51h: In law, unsuccessful bidders can challenge procurement decisions in a court of law.

Score:

YES

Comments: The efficiency of this challenge is rather limited. If a bidder wants to challenge the process or its result, he is forced to issue a warranty bond (7 percent of the amount of his/her bid) to support his/her claims, which can be cashed by the public institution if the claim is considered as "unsustainable".

References: Ley de Contratación Pública Título V de la Contratación Capítulo IV de las Garantías Art. 72

51i: In law, companies guilty of major violations of procurement regulations (i.e. bribery) are prohibited from participating in future procurement bids.

Score:

YES

Comments:

References: Ley de Contratación Püblica Título 5 de la Contratación Capitulo I de las Capacidades, Inhabilidades y Nulidades Arts. 55, 56

Titulo VII del Registro de Contratistas Articulo 112

51j: In practice, companies guilty of major violations of procurement regulations (i.e. bribery) are prohibited from participating in future procurement bids.

Score:

100

Comments: Even though the Comptroller General created a blacklist mechanism, this has not been sufficient to prevent that companies who have violated procurement regulations to continue to participate in future bids. In fact, the mechanism is oriented to ban companies who have not fulfilled public contracts, rather than companies with proven violations in procurement processes; and in many ways, the system has created the opportunity for major companies to negotiate their withdrawal from that list.

The other problem is precisely the ability to legally prove and sanction these sorts of violations. First of all criminal law is ambiguous when defining active bribery, and proving this activity has always been challenging. Second, in major procurements, companies are represented by individuals with limited capacities, and companies can not be held responsible for the wrongdoings of an agent. Finally, when these activities are detected, the bidder is usually disqualified, without any further legal action taken by the procuring public institution.

References: Proyecto Regional Adquisiciones y Compras Públicas, Informe Ecuador, Transparency International [ LINK ]

Ecuador - Public Sector Financial Management Project, The World Bank [ LINK ]

Can citizens access the public procurement process?

52a: In law, citizens can access public procurement regulations.

Score:

YES

Comments:

References: Ley de Transparencia y Acceso a la Información Pública

52b: In law, the government is required to publicly announce the results of procurement decisions.

Score:

YES

Comments:

References: N/A

52c: In practice, citizens can access public procurement regulations within a reasonable time period.

Score:

100

Comments:

References: Proyecto Regional Adquisiciones y Compras Públicas, Informe Ecuador, Transparency International [ LINK ]

Ecuador - Public Sector Financial Management Project, The World Bank [ LINK ]

52d: In practice, citizens can access public procurement regulations at a reasonable cost.

Score:

100

Comments:

References: Proyecto Regional Adquisiciones y Compras Públicas, Informe Ecuador, Transparency International [ LINK ]

Ecuador - Public Sector Financial Management Project, The World Bank [ LINK ]

52e: In practice, major public procurements are effectively advertised.

Score:

100

Comments: There are two main mechanisms to publicize public procurements in Ecuador. The first one is through the electronic procurement service (Contratanet) which has been managed by the Civic Anti-Corruption Commission. The main limitation of this platform is that the incorporation of institutions and procurement processes is voluntary, so the number of procurements included is still marginal to the universe of procurement processes in the country. During 2008, the government has launched a new system with improved capabilities.

The second mechanism of advertisement is through the publication of the public notice, or call for bidders, through newspapers. Even though the Law states that this publication has to be done in one of the major newspapers of the country, it is a common malpractice that highly relevant and expensive procurements are publicized in local newspapers with a reduced circulation.

References: Proyecto Regional Adquisiciones y Compras Públicas, Informe Ecuador, Transparency International [ LINK ]

Ecuador - Public Sector Financial Management Project, The World Bank [ LINK ]

Peer Review Comments: In the Correa government, major economic and social sectors have been declared to be in a state of emergency in order to bypass any type of procurement procedures or guidelines. In Correa's words, this was to accelerate public works endeavors under his administration. Instead, the opposite has occurred: most public investment is behind schedule and there are accusations of corruption at all levels of government.

52f: In practice, citizens can access the results of major public procurement bids.

Score:

100

Comments: As in the case of advertisement, only the procurement processes that have been voluntarily incorporated by the procuring institution to the e-procurement platform can be accessed freely by the citizens. In the case of other institutions, the result of their procurement should be posted in their web pages, in compliance with the Access to Information Law. In a country where 93 percent of the population does not have access to Internet, web pages are not an effective way to publicize procurement results. The same law allows any citizen to request access to the information regarding any procurement, but that entails investing time, money and patience, which is only done by interested parties or organizations with specific interest in the procurement or working on access of information.

References: Proyecto Regional Adquisiciones y Compras Públicas, Informe Ecuador, Transparency International [ LINK ]

Ecuador - Public Sector Financial Management Project, The World Bank [ LINK ]