Risk categories and mitigating measures

• Author: Mélissa Campagno - Goya Razavi - Brian Kessler - Léna Bonnemains - Olga Mala
• Pages: 27-48

DG REGIO

Study on the implementation of Article 125(4)(c) of the CPR in the Member States

27

6. Risk categories and mitigating

measures

6.1 Conflict of interest

Article 24 of the 2014 Directive on public procurement defines conflict of interest as “any situation

where staff members (…) have, directly or indirectly, a financial, economic or other personal

interest which might be perceived to compromise thei r impartiality and independence .”35 This risk

category covers potential conflicts of interest in specific institutions e.g. MAs and CAs, as well

as co nflicts of interest at specific stages of the project cycle e.g. conflicts of interest within the

evaluation board and undisclosed conflict of interests or bribes and kickbacks dur ing

implementation and verification of the project.

Level of risk

Most authorities in t he selected OPs ass ess the risk of conflict of

interest as high or medium. For 83% of the OPs, authorities assess the

risk of conflict of interest to be high or medium. Compared to other risk

categories, conflict of interest was more frequently assessed as a high risk

than other categories across OPs in the sample.

Authorities in countries where perception of corruption is

higher assessed the risks associated with conflict of interest as

lower than authorities in other countries. When relating the self-

assessed risk level for this risk category to the Transparency International

MS-level CPI score, we identified a discr epancy (Figure 8). More OPs from the sample from MS

with a low CPI (i.e. those in which corruption is perceived as a larger issue) assess ed the risk of

conflict of interest as low compared to the OPs from countries wit h a medium or high CPI (i.e.

lower perceived levels of corruption). On the other end of the scale, OPs from more low CPI MS in

the sample assess conflict of interest as a high risk than OPs from medium CPI countries.

This discrepancy indicates that authorities of the OPs from the low CPI MS may be underestimating

the risk of conflict of interest by comparison with their peers.

Figure 8: Level of risk of conflict of interest per group of MS

Source: PwC

35 Available at https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex%3A32014L0024

27 % 27 %

46%

7 %

43%

50%

23%

54%

23%

0%

10%

20%

30%

40%

50%

60%

low risk medium risk high risk low risk medium risk high risk low risk medium risk high risk

Low CPI Medium CPI High CPI

DG REGIO

Study on the implementation of Article 125(4)(c) of the CPR in the Member States

28

Use of EC-recommended measures

The EC recommends a set of 19 mitigation measures to address the risk of conflict of interest. These

19 measures are split between hard, soft and verification measures (see sect ion 5 for more details).

The largest number of EC-recommended measures (9) are soft measures, focusing on:

 Composition and rotation of evaluation boards;

 Trainings and awareness raising on ethics and integrity for personnel;

 Increased transparency (e.g. publication of calls for tenders);

 Multiple-stage approval of payments.

Seven out of 19 measures suggested by the EC are hard measures, emphasising:

 Availability of conflict of interest policy, including declarations and conflict registers;

 Strong controls on bidding procedures for direct procurement;

 Use of applicable criteria to evaluate applications;

 Communication of results of evaluation to the bidders;

 Implementation and publication of whistle blowing mechanism.

In addition, three verification measures are

recommended by the EC FRA template, highlighting

the need for a secondary panel to re view the

decisions of primary evaluation panels and to verify

that the procurement procedures were followed.

Most (13 out of 19) of the EC-recommended

measures for conflict of interest described above are

preventive, suggesting an important role for

prevention mechanisms in fighting this fraud risk.

The EC-recommended measures least implemented by authorities include:

 MA ensuring that individuals are aware of the consequences of unethical behaviour;

 Rotation of members of evaluation committees;

 Publication of calls for tenders and communication of evaluation results to all the beneficiaries;

 Measures related to requirements for beneficiaries to implements eleme nts of conflict of

interest policy;

 Reviews of tendering processes and payment process.

The findings below reflect the most significant trends in the usage of EC-recommended and

additional measures for tackling the risk of conflict of interest.

Use of additional mitigation measures

Authorities in the sample of OPs commonly use additional hard and soft measures to

mitigate high risk and additional tailored h ard and verification measures when the

risk is low. The share of EC-recommended measures implemented is at similar level for the OPs

with different level of risks (on average, 64% of EC-recommended measures across all OPs). In

most cases, authorities have replaced some EC-r ecommended measures that were not implemented

with additional measures that vary in focus and scope (Figure 9). Moreover, the type of those

additional measures used by authorities is linked to th e level of risk. Notably, OPs with high risk of

conflict of interest imple ment slightly f ewer EC-recommended soft and hard measures compared

with OPs with medium a nd low risk for this category, but compensate for it with additional

measures of soft and hard types.

Authorities from six of the selected OPs

put in place a ll EC-recommended

measures. The majority of other

Authorities used a combination of EC-

recommended and own additio nal

measures.