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Risks in Procurement and Construction: Bid-Rigging, Collusion, Tailored Specs, Front Companies

 

Bid-rigging and collusion in climate projects
Bid-rigging and collusion in climate projects

Where the biggest losses happen (and why)

Procurement and construction are the two stages with the most significant value at risk. In many countries, between 13% and 20% of the GDP is allocated through public procurement. Estimates suggest 10–25% of contract value is lost to corruption in some settings. These losses result in thinner concrete, undersized culverts, and shorter-lived assets (World Bank; UNODC-cited figures). 

  • Bid-rigging & collusion: A narrow circle of firms takes turns “winning,” chilling competition.
  • Tailored specs: Requirements subtly exclude honest competitors (brand-name materials, unrealistic timelines, unnecessary certifications).
  • Change-order abuse: Lowball to win; profit on variations.
  • Front companies: Real owners hide; sanctions lists fail to bite.
  • Supervision capture: The same insiders sign off on their own work.

Evidence from open contracting reforms indicates that publishing end-to-end data, encompassing planning, tender, award, contract, and implementation stages, increases competition, lowers prices, and improves quality. This only happens when paired with civic monitoring (Open Contracting Partnership impact/evidence). 

The climate-spending “results chain” (what to demand in documents)

A credible climate project should clearly document the chain from inputs to activities, outputs, outcomes, and impacts. Each step needs measurable indicators. Here’s what to look for:

  • Inputs: budget, materials, staff, equipment.

    • Red flags: vague bill of quantities (BoQ; a detailed statement listing materials and work for a project); “provisional sums” (budget amounts reserved for unspecified items) without detail.

  • Activities: what will be done (e.g., dredge 3 km of channel; plant 50,000 mangroves; retrofit 20 schools; install 10 sirens).

    • Red flags: activity lists without schedules, unclear site selection.

  • Outputs: tangible deliverables (km dredged, saplings planted, shelters reinforced).

    • Red flags: count-based incentives divorced from quality (e.g., paying for planting, not survival).

  • Outcomes: the protection people feel (reduced flood days, reduced travel disruption, and evacuation times).

    • Red flags: no baseline or method to measure outcomes; targets that can’t be verified.

  • Impacts: longer-term welfare gains (lower disaster losses; higher attendance in flood season; reduced illness).

    • Red flags: impacts asserted but unlinked to data.

The IPCC’s synthesis emphasizes that the effectiveness of adaptation depends on its inclusive and equity-aware implementation. That requires traceable, public indicators—not just spend-and-move-on (IPCC, 2023).

Typical project types—and their specific integrity traps

Flood control & urban drainage

  • Legitimate complexity: Correct sizing requires consideration of hydrology, hydraulics, and up-to-date climate projections. Urban systems fail at their weakest link.
  • Common traps: under-designed outfalls; using lower-grade cement; skipping compaction; dredging once with no O&M plan; “beautification” over function.
  • Integrity fixes: publish designs (cross-sections, elevations), material specs, and As-Built drawings. Require independent materials tests and public O&M schedules.
  • What success looks like: fewer street-flood hours at measured rainfall intensities. Other signs are pump run-time logs and citizen flood-reporting apps linked to maintenance crews (CoST & open-contracting examples). 

Cyclone/typhoon shelters & resilient schools

  • Legitimate complexity: Siting and accessibility (especially for women, children, older adults, and people with disabilities) matter. Ventilation, water/sanitation, and power backup are also critical.
  • Common traps include: retrofits that are “on paper,” inferior doors and fixings, missing ramps, and infrequent maintenance.
  • Integrity fixes: public asset registries with geotagged photos; community maintenance committees with micro-budgets. Keep drill logs and uptime records.
  • What success looks like: verified accessibility features and energy-system checks before storm season. Real usage during evacuations also signals success.

Reforestation, mangroves, and watershed rehabilitation

  • Legitimate complexity: Land tenure, species selection, and tidal regimes all matter. Community stewardship and survival tracking are also important.
  • Common traps include paying for seedlings but not for survival, planting in the wrong substrate, elite capture of benefits or land, and falsified survival surveys.
  • Integrity fixes: contracts pay on survival over time (payment only when planted trees continue to thrive); community rights and roles are codified (made official in documents); independent survival audits are conducted using satellite/drone imagery (checks are performed with remote sensing tools); open geodata (public access to mapped data).
  • What success looks like: canopy gain and coastline stabilization; co-managed protection rules and documented local benefits. UNDP corruption-risk mapping aligns with these fixes. 

Early-warning systems & emergency logistics

  • Legitimate complexity: sensor networks, communications redundancy, last-mile alerting, shelter linkage.
  • Typical traps include purchasing hardware without maintenance contracts, coverage gaps, and systems that perform well in demos but fail in real-world conditions.
  • Integrity fixes: service-level agreements (SLAs), public drill calendars, after-action reviews, and open uptime dashboards.
  • What success looks like: measured lead time and reach, verified during storms.

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