New UN Guidance: Using incentives to strengthen business integrity in public procurement
Public procurement is one of the most significant areas of government spending worldwide, estimated at up to US$ 13 trillion annually. But with high financial stakes and complex processes, it is also one of the most corruption-prone areas. Corruption in procurement inflates costs, reduces the quality of public goods and services, erodes public trust, and discourages fair competition.
To tackle this challenge, the United Nations Office on Drugs and Crime (UNODC) has released a new paper: “Using Incentives to Strengthen Business Integrity in Public Procurement”. This guidance offers governments a practical framework to encourage ethical practices among companies bidding for public contracts, addressing corruption risks before they occur.
Why incentives matter
Governments have traditionally relied on sanctions to deter misconduct. While accountability remains essential, international frameworks such as the United Nations Convention against Corruption (UNCAC) highlight the complementary role of incentives to encourage practices that enhance good governance. Incentives can make integrity a competitive advantage rather than just a compliance requirement by rewarding responsible corporate behavior. They encourage businesses to adopt strong anti-corruption measures proactively, creating a level playing field and fostering trust in procurement systems.
What’s in the Guidance?
Drawing on good practices from governments, the private sector, civil society, including Open Contracting Partnership, and international organizations, the paper outlines three core recommendations:
- Set clear integrity standards: Design risk-based, transparent, and sector-specific standards as the foundation for granting incentives. These should be tailored to company size and context.
- Assess anti-corruption ethics and compliance programs: Use a risk-focused assessment framework to evaluate companies’ anti-corruption ethics and compliance programs. Integrate technology and data for effective monitoring and prevention.
- Offer meaningful incentives: Examples include preferential treatment in procurement, performance-based contracting, reward and recognition programs, participation in integrity pacts and collective action, and exemptions from prosecution for self-reporting or cooperation with investigations.
Rewarding responsible businesses incentivizes better governance practices and also sends a signal to the market by showing a visible, credible government commitment to upholding integrity and anti-corruption standards. These measures help governments meet UNCAC requirements and implement Conference of the States Parties to UNCAC resolutions 10/12 and 10/9, which promote incentives for business integrity and transparency in procurement.
Why this matters for you
Punitive measures, such as sanctions imposed after corruption has occurred, are important signals that governments will hold businesses accountable and that violations of the law carry consequences. However, it is challenging to detect every instance of corruption. There is damage that cannot be fully reversed through ex-post accountability measures alone. Recovering stolen public funds is often only partially possible, and the loss of public trust in both government and the private sector may take considerable time to repair.
For governments, incentives provide a mechanism to encourage broader behavioral change and help prevent corruption in the first place by strengthening procurement systems and reducing incentives for corrupt practices. For businesses, they offer tangible benefits for investing in integrity, turning ethical behavior into a competitive edge. Ultimately, these approaches build trust, improve efficiency, and ensure public resources serve the common good.
Learn more
States can request technical assistance from UNODC and partners to design effective incentive frameworks. Explore the full publication and additional tools, such as “A Resource Guide on State Measures for Strengthening Business Integrity”, on the UNODC Business Integrity Portal.
Please note that opinions expressed in this blog are the opinions of the author and do not necessarily reflect the official position of UNODC
Photo credit: UNODC 2024: Experts participating in a consultation to provide inputs in the paper held in October 2024
