Corruption Prevention Commission of the Republic of Armenia

The Conflict of Interest in the Procurement Procedure with the Involvement of High-Ranking Officials

05.06.2018


The Commission on Ethics of High-Ranking Officials conducted a research on the conflict of interest issues among high-ranking officials within the period of October 2017 to March 2018.
Data regarding 841 commercial organizations with the participation of high-ranking officials and their related persons have been taken out through the examination of 2181 declarations and other sources.
It was detected, that within the period of 2014-2017, 91 commercial organizations with the participation of high-ranking officials and their related persons were recognized as the winners of the procurement competition. 709 procurement contracts were signed with them.
Out of the examined 709 contracts, there is alleged conflict of interest situation in 99 contracts (14%): the commercial organizations, with the participation of high-ranking officials or his/her related persons, were recognized as the winners of the procurement competitions, where the latter held a position. Though, the signature of the high-ranking officials were missing from the mentioned contracts, the possibilities of their interested intervention in the conducting and the decision making process for the winners of the competition should be excluded both through partnership relations and the implementation of the superior’s powers. The latter is conditioned by the general deviations.
Thus, 469 contracts (66%) were signed within negotiation procedures without any announcement. Comparing this statistics index with the medium index of the procurement procedure (about 12%), an essential diversity was detected, which is illegal and facts about conflict of interest risks.
Moreover, 96 contracts (15.5%) from 709 contracts fell to the procurement procedure from single person (the documents were often not published).
Similarly, if approximately 49% of the whole volume of the procurement falls under this procurement procedure, in case of the procurement contracts of high-ranking officials or their related persons, that index is only 1.8%.
It should be mentioned, that in case of “Quotation Request”, the procedure assumes competition of pricing recommendations and high level of expense efficiency.
The results of the research fact, that the current legislative regulations on conflict of interest are very narrow and do not completely reflect the real risks. In the outcome, a number of situations are not identified as conflict of interest and do not lead to any legal consequence.
The outcomes of the research were discussed with the interested state bodies and specialized non-governmental organizations on June 5 of 2018. After summarizing the outcomes of the research, the recommendations on the improvement of conflict of interest prevention to ensure the practical separation of political and business interests.