Red Flags to Identify Corruption

Red flags indicate potential corruption risks in procurement processes. They can be defined as red flags, clues, or indications of possible irregularities. This does not imply the existence of corruption, but it does signal that a particular procurement process needs special attention.

Its objective is to provide project staff and managers with a guide to increase their vigilance to the processes. It also seeks to have contracting bodies and managing authorities clear up any doubts that have raised the red flag.

The procurement agencies of each country usually define some red flags applicable to their jurisdictions, which allow them to identify the types of irregularities that may exist in the procurement phases, determine the most common corruption schemes and establish mechanisms to identify them in time.

The way to determine the most useful and automatable red flags with large numbers of contracts is to contrast them with existing variables in public contracts and other complementary data sources that may be useful. In its classification of red flags, the Open Contracting Partnership (OCP) proposes that the Open Contracting Data Standard (OCDS) be used to determine the parameterization of red flags from contracting fields and processes. Therefore, for each red flag identified by OCP, some columns and fields taken directly from the standard are indicated and recommended. These are published in a red flag mapping database during public procurement phases for classification and identification.

Some red flags established by the Open Contracting Partnership that have a direct bearing on OCDS are:

• The time between contract advertising and bid opening is low, an indicator that ties directly to a time standardization for different procurement methods.
• Similarities in bid documents submitted by different bidders, which have to discard purchase specifications and focus on contractors' ranks and suppliers.
• Awards to a single bidder in contravention of the provisions of the procurement plan of the contracting agency.
• Splitting of the same procurement process to circumvent procurement amount thresholds for each process.
• Numerous contract procurement were awarded to a single bidder.
• Payment of unjustifiably high prices relative to the historical average.
• A large difference between the contract price and the winning bid price.
• Complaints of changes to bids once received.
• A close relationship between a bidder and a buyer.
• Certain goods remain on contracts that were never solicited in the past and/or will not be solicited in the future.