Key Points

• Comparative data analysis by the International Security Ligue of public agency tenders finds good procurement practices are followed less often in contracts for security services than in contracts for other—arguably less consequential—services.

• Data from the Government Transparency Institute indicate that the state of integrity and transparency in public tendering of guard services is at its lowest level since 2015.

• Risks exist at every stage of the public procurement process, a market that is worth US$13 trillion annually and demands comprehensive solutions to prevent corruption and protect both businesses and the public interest.  

What Does Data on Public Tenders Show?  

While there should be a high standard of integrity and transparency in all public tenders—to prevent corruption, ensure quality, and deliver good stewardship of taxpayer money—it is especially vital in security services where negative consequences and contract failures can pose a risk to public safety. Thus, it is troubling to see, for example, that integrity and transparency in public tenders for pest control services is markedly better than in public tenders for guard services.

The data set is thousands of public tenders in Europe compiled by The Government Transparency Institute, a non-partisan think tank that seeks to improve government accountability. Procurement criteria include 10 transparency indicators, such as the share of tenders where award criteria information is available) and 10 integrity indicators, such as the length of the decision period, which can be either suspiciously short or suspiciously long (details on the scoring criteria is below).

It is evident from the Ligue’s review of GTI data that public tendering for guard services must substantially improve, as practices in those tenders receive poor marks compared to the nine other types of services that were examined. Below are “good procurement scores” given to public tenders in Europe in 2023 for the services indicated (followed by the number of tenders that scores are based on).

1. Library Services: 70.3 (613)

2. Advertising Services: 68.12 (12,295)

3. Pest Control Services: 67.79 (555)

4. Installation Services of Sound Equipment: 66.61 (474)

5. Fumigation Services: 64.32 (46)

6. Waste Analysis Services: 63.26 (29)

7. Filing Services: 61.5 (80)

8. Computer-related Professional Services: 60.89 (205)

9. Refuse Recycling Services: 56.72 (279)

10. Guard Services: 54.86 (1,326)

In What Areas Are Public Tenders for Security Lagging?

Deeper analysis of public tender scores suggests several areas that may need improvement, including the advertising period for security services contracts. Since January 2020, out of nearly 2,000 public tenders examined, nearly half (48%) of contracts in the business services category that includes guard services were awarded without a sufficiently long advertising period. Additionally, more than one-third of these contracts had a decision period that the GTI deems risky.

Are Public Tenders for Guard Contracts Getting Better or Worse?

Ratings of public tenders for guard services are at a 5-yearlow, falling from a high of 57.72 in 2020 to 54.86 in 2023. A longer look, since 2009 when data in the opentender.eu database begins, shows that public tenders for guard services are currently at their lowest point since 2015; however, procurement scores were worse between 2009-2012.

Which Countries Have Better Tendering Practices for Guard Services?

Comparison is challenging because of the limited number of tenders in the database at a country level, however, three countries did have more than 100 tenders for guard services in 2023 on which to base scores. Spain, France, and Germany ranked in that order.

1. Spain: 62.91 (190)

2. France: 56.36 (153)

3. Germany: 55.48 (228)

Hungary is moderately represented in the database (with 40 public tenders for guard services in 2023) and received and average 40.99 good procurement score. Croatia, based on 36 tenders, had score of 50.09.

How Big a Concern is Poor Public Procurement Practices?

Estimates are that the global public procurement market is worth US$13 trillion annually, and integrity risks exist at every stage of the procurement process.

In the pre-tendering phase, risks include undue influence of external actors on officials’ decisions during needs assessment; failure to budget realistically during the budgeting phase; and failing to objectively define selection criteria in advance during specifications phases, and a lack of justification in the choice of procurement procedure.

In the tendering phase, risks include the absence of public notice for the invitation to bid; lack of competition or cases of collusive bidding, conflict of interest and corruption in the evaluation process; and corruption in the approval process, including a lack of effective separation of financial, contractual and project authorities. — OECD

Finally, even the post-award phase is fraught, with risks such as a deficient separation of financial duties and/or lack of supervision of public officials.

“Public procurement is one of the government activities most vulnerable to corruption,” notes the Organisation for Economic Co-operation and Development (OECD) in their report, Preventing Corruption in Public Procurement. “In addition to the volume of transactions and the financial interests at stake, corruption risks are exacerbated by the complexity of the process, the close interaction between public officials and businesses, and the multitude of stakeholders.”

Improving the integrity of public tenders is in the public interest. The OECD notes that direct costs of corruption include loss of public funds through misallocations or higher expenses and lower quality of goods and services. Exactly how much money is wasted is hard to calculate, says the OECD, but it notes studies of construction projects that suggest up to 30% of the investment in publicly funded construction projects may be lost through mismanagement and corruption.

Indirect costs may be even more substantial, as corruption in public procurement leads to distortion of competition, limited market access, and a reduced business appetite for foreign investors.

Because there are risks throughout the public procurement process, the OECD says a holistic approach for risk mitigation and corruption prevention is necessary. For example, in addition to standards that apply to the whole of public service, specific standards for procurement officials can help mitigate the specific risks related to public procurement complexity. In addition to procurement-related standards, the OECD notes the good work of some countries to develop standards to fight particular forms of fraud, as part of a broader corruption prevention framework in the public sector.

What Criteria are Good Procurement Scores Based On?

The overarching integrity in score is an average of composite scores for transparency and integrity, which each have 10 indicators:

For indicators of integrity in the tendering process, scoring is based on:

• The number of bidders, which can signal a risk in the case of single bidding (when only one bid is submitted in a tender in a competitive market).

 • Call for tenders, which may signal a risk when no call for tender or prior information notice for a procedure is published.

• Procedure type, as types which are less open for competition and make directly contracting connected companies easier (e.g., negotiation without publication) signal a risk.

• The length of the advertising period, which can indicate a risk with suspiciously tight bidding deadlines or when the advertising period is excessively long.

• The length of decision period, where risks are indicated when the decision period is either suspiciously short or suspiciously long.

• Whether the supplier is in a tax haven country (based on Tax Justice Network’s Financial Secrecy Index), as that may indicate a risk.

• The percentage of supplier’s contract of a buyer's spending, as a high spending concentration on one or few suppliers can signal that those suppliers are favored in the award process.

• Adherence to Benford’s law, as inconsistency indicates a higher risk that the price was manipulated and not driven by market pricing dynamics.

Transparency Indicators are based on the share of tenders where:

• the regional codes of the implementation location are available.

• information on subcontracting is available,

• information on funding is available,

• award criteria information is available,

• product code information is available,

• contract duration information is available,

• eligible bid languages information is available,

• selection method information is available,

• the name of the bidder is available, and

• the contract value is available.

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