A series of due diligence failures highlight the risks of public procurement in times of COVID-19

28 Sep 2020 4:37 pm by Mark Dunn

The current global COVID-19 pandemic has presented our society with countless social, economic, and political challenges. Several reports have emphasised the difficulties individuals, as well as private and public entities, face when it comes to the procurement of necessary personal protective equipment (PPE) for healthcare workers and other frontline personnel. At the margins of the second global wave of COVID-19, governments around the world are bracing for the next challenge: swiftly procuring sufficient doses of a vaccine against the coronavirus, as soon as an effective one is available. Unsurprisingly, such public procurement challenges underline the need for a comprehensive due diligence regime within government entities.

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PPE Procurement in Times of COVID-19: Origin Unknown?

The issues surfaced with early reports of well-intended—but unsuitable—medical supplies en route to Italy from Russia. More recently, allegations were raised over the UK’s procurement of 50 million masks for healthcare workers, only to discover the masks were unusable. The list of questionable public procurement operation amidst the current pandemic is growing by the day. While some examples—such as the public procurement of ventilators in Bosnia secured by a raspberry farm—might sound amusing at first, the overall development indicates a growing opaqueness of COVID-19 related procurement contracts around the world.

Open Contracting Partnership, a US-based public-transparency NGO recently published a report highlighting ineffective and obscure contracts related to the procurement of COVID-19 resources such as PPE and medical supplies. According to the organisation, governments around the world spent more than $100 billion on pandemic related goods and services in the first seven months of 2020.

The heightened pandemic-related tension, as well as the overall pressure to act decisively, have made the decision-making processes for these overwhelmingly public contracts substantially more prone to compliance failures, and to widespread lack of due diligence.

Governmental due diligence during a pandemic and beyond

Mistakes were made. No doubt increased public scrutiny and formal inquiries will soon follow. Taxpayers rightfully want to know where their money is going and are keen to hold governments accountable. How could enhanced due diligence have helped mitigate such system failures in the short and long term?

While particularly important  when faced with elevated risk, supplier due diligence is a crucial component of managing risk for public and private entities alike. With a robust due diligence process, government entities seeking to procure resources with public funding mitigate the risk of engaging with unreliable suppliers. Improved due diligence also helps minimise the risk of corruption, bribery, or any other sort of illicit act during the procurement process. This includes fact-checking potential suppliers for their operational resilience, financial soundness, and overall reputational history.

In the end, sound and robust due diligence strategy can help governments rebuild public trust—which has been in short supply in recent years. On the contrary, official involvement with opaque and illicit suppliers can lead to a significant setback in a public entity’s credibility.

What’s next?

1. Learn more about the advantages of Nexis® Diligence

2. Explore how Nexis® Solutions can support you in addressing and mitigating PEPs risks with efficient and comprehensive risk management technology.