This chapter provides a mapping of risks within Romania’s public procurement system, offering insights into vulnerabilities at various stages of the procurement cycle and across different sectors. The development of the risk registry on which this mapping is based involved a systematic methodology, which included an analysis of procurement data, consultations with key stakeholders, and a review of relevant audits and reports. The chapter begins with an overview of the development of the risk registry and its intended use. It then provides an overview of risks by procurement stage and explores sector-specific risks. Potential mitigation measures are also identified. By mapping these risks, the chapter aims to guide future reforms and improve risk management practices in Romania's public procurement system.
Managing Public Procurement Risks in Romania
Abstract
Romania’s NAS (2021-2025) has committed to developing a national public procurement risk map. The risk map, developed with the support of the OECD, is designed to serve as a valuable reference for public procurement policymakers and practitioners, guiding them in the development of risk management strategies and the implementation of mitigation measures. By using the risk map, stakeholders can identify the functions, areas, and stages of the procurement process that are most susceptible to risk.
The risk map is organised according to the public procurement lifecycle, starting with high-level phases (pre-tender, tendering, post-tender) and then breaking down into more detailed stages. It classifies risks into one of five categories (see Figure 4.1), identifies potential root causes, and suggests possible mitigation measures, with a particular focus on corruption and fraud. However, not all mitigation measures will be feasible or appropriate in every situation. Authorities are expected to assess the likelihood and severity of risks, their tolerance for risk, and the cost-effectiveness of mitigation efforts.
Source: Authors’ elaboration
The development of the risk map took a comprehensive approach, encompassing a broad definition of public procurement risk. While it emphasises risks related to corruption and fraud, the risk map aims to cover all potential risks associated with public procurement. The development process involved a questionnaire distributed in November 2023 to Romanian contracting authorities across various sectors, CPBs, and control bodies, asking respondents to share risks and mitigation measures from different stages of the procurement process. Additionally, reports and studies from control bodies, civil society organisations, the European Commission, and public procurement authorities were reviewed. Stakeholder input was sought throughout the process to ensure the inclusion of diverse perspectives.
To remain effective, the public procurement risk map will require ongoing maintenance and periodic updates to reflect the changing context and new information. This will ensure that the map remains a relevant and practical tool for managing public procurement risks.
The remainder of this chapter provides an overview of the public procurement risk map, outlining the main findings by stage of the public procurement cycle. The risk mapping exercise revealed that risks in public procurement in Romania occur at various stages of the procurement process and underscored the need for a comprehensive approach to risk management.
Integrity risks, such as corruption and fraud, were identified as significant concerns throughout the process, particularly in the tendering phase, where the manipulation of bid evaluations, conflict of interest, and bribery can undermine the fairness and transparency of procurement. The pre-tender phase also exhibited integrity risks, where compromised needs assessments or biased technical specifications could skew the process in favor of certain economic operators, compromising the integrity of the entire procurement cycle. This finding was confirmed by other research, such as a National Anticorruption Directorate (DNA) study of convictions for abuse of office, which identified mechanisms for fraudulent use of public money at all stages of the public procurement process (National Anticorruption Directorate, 2017[1]).
Compliance risks emerged as critical issues and were often linked to a lack of knowledge or capacity, as well as the changing legal framework. According to data shared by the Court of Accounts, cases of non-compliance with public procurement regulations were found in 43% of entities audited in 2018, rising to 51% in 2022. Of a total number of cases of non-compliance of approximately 19,000 in 2018, 9.5% were related to public procurement. This rose to 13.3% of a total of approximately 15,000 cases of non-compliance in 2022.
Operational risks were also common, often stemming from poor planning and inadequate resource allocation. These risks could lead to delays, failed procurement processes, cost overruns, and substandard performance during contract implementation. Additionally, the risk mapping exercise highlighted sustainability risks related to the long-term environmental and social impacts of procurement decisions, such as the selection of suppliers with poor environmental practices or the procurement of goods and services that do not meet sustainability standards. Economic risks, including price volatility and supplier insolvency, were identified as potential threats across all phases of procurement.
4.2.1. Mitigation in the pre-tendering phase can prevent risks through the procurement process
The pre-tendering phase involves the initial planning and preparation stages of the procurement process, before the publication of the call for tenders. This phase is crucial for defining the scope, budget and requirements of the procurement, ensuring that the tendering process is aligned with organisational needs and relevant strategies. Risks in the pre-tendering phase can often have far reaching impacts through the entire procurement process. The risk map divides the pre-tendering phase into six stages (see Table 4.1).
Source: Authors’ elaboration
Integrity risks
Romanian stakeholders identified significant integrity risks in the pre-tender stage of public procurement, particularly during needs analysis, market engagement, market analysis, and procurement planning. One key risk is the manipulation of the needs analysis to favour specific economic operators or to exaggerate the actual needs of the contracting authority. During market engagement and analysis, there is a risk of undue influence from economic operators, the introduction of incorrect information, and inadequate documentation of the process. In the procurement planning phase, risks include splitting contracts into smaller lots to bypass procurement rules, using non-competitive procedures without valid reasons, and disclosing confidential information to benefit certain economic operators.
These integrity risks stem from several root causes identified by Romanian stakeholders. Corruption and conflict of interest are major issues, where personal relationships or financial incentives can influence the procurement process. The risks are further exacerbated by insufficient transparency in decision-making, a lack of effective internal managerial control (despite extensive processes and regulations), and a lack of capacity within contracting authorities. For example, contracting authorities often lack the capacity or competencies to identify incorrect, incomplete or misleading information provided by economic operators during market consultation processes. Overreliance on external consultants, who may have their own conflicts of interest, also contributes to these problems. A general lack of a strong culture of integrity within the public procurement system allows these practices to continue and hinders efforts to combat them.
Stakeholders suggested several potential mitigation measures to address these integrity risks. Enhancing capacity-building efforts in public procurement, including training on ethical standards and codes of conduct, was seen as essential. Promoting whistleblowing mechanisms can also help in the detection of unethical behaviour by increasing opportunities for officials and the private sector to report wrongdoing. More concrete steps include adding clauses in market consultation processes that penalise the submission of false information, such as disqualification from future tenders or legal action. Improving oversight through validating technical specifications, conducting regular audits, and establishing clear guidelines for procurement procedures can further reduce risks. Increasing transparency in the procurement process, particularly in information disclosure and decision-making, is also crucial.
Other risks
Romanian stakeholders identified numerous non-integrity risks during the pre-tender stage of public procurement, spanning the compliance, economic, operational, and sustainability categories. These include failures to conduct thorough market engagement, the creation of non-compliant tender documentation, incorrect estimation of contract values, and a lack of specialist knowledge when handling complex procurements. Despite existing guidance and templates, contracting authorities face difficulties developing tender documentation due to limited in-house technical expertise (World Bank, 2021[2]). Additionally, limited competition is a recurring issue, often caused by overly restrictive technical specifications, inadequate market engagement, or contract terms that are unappealing to economic operators.
The root causes of these non-integrity risks largely stem from insufficient capacity and capabilities within contracting authorities. A lack of adequate training and support leaves procurement officials ill-equipped to manage the complexities of certain goods, services, or works. This gap in knowledge often results in poorly prepared tender documents, incorrect contract value estimations, and technical specifications that inadvertently restrict competition. Furthermore, failures to coordinate and consult effectively with stakeholders, such as end users, technical experts, and legal or finance departments, contribute to these risks by leading to procurement decisions that do not fully address the needs of the project or comply with regulatory requirements. Stakeholders identified the reluctance to consult with stakeholders as partially resulting from a fear of non-compliance with integrity provisions.
To address these non-integrity risks, stakeholders proposed several mitigation measures. Building capacity across a range of topics is crucial, including providing clear instructions and ongoing support for procurement officials. Where internal expertise is lacking, engaging external experts to fill these gaps can help ensure that complex procurements are handled appropriately. Adopting a category management approach1 was also suggested, which could help build specialised knowledge within procurement functions in larger contracting authorities. Building CPB capabilities and coverage could play a similar role. Increasing stakeholder involvement is another key measure, including by establishing cross-departmental procurement teams for large or complex projects. This approach ensures that procurement decisions are informed by all relevant expertise, reducing the likelihood of errors and enhancing the overall quality of the procurement process.
4.2.2. Ensuring transparency and fairness can reduce risks in the tendering phase
The tendering phase is the time the procurement is in the market, the evaluation of bids, and the selection of the winning supplier. In Romania, as in most OECD countries, this phase is the most heavily scrutinised and regulated. Many risks in this phase relate to transparency and fairness as contracting authorities assess bids and award a contract. The risk map divides the pre-tendering phase into six stages (see Table 4.2).
Source: Authors’ elaboration
Integrity risks
Romanian stakeholders identified integrity risks throughout the tendering phase. One significant risk involves the manipulation of bid evaluations, where criteria may be inconsistently applied or deliberately skewed to favour certain bidders. This was echoed in the findings of a DNA report, which found irregularities in the evaluation of firms’ financial and technical capacity, resulting in contracts being awarded to firms that did not have the minimum experience or capacity to carry out the contract (National Anticorruption Directorate, 2017[1]). Additionally, there were concerns about the misuse of the PREVENT integrity forms, which are designed to prevent conflict of interest; these forms may be completed inaccurately or manipulated to conceal improper relationships. Another risk is the unjustified cancellation of procurement procedures, potentially to favour or disadvantage specific economic operators. Furthermore, the failure to maintain accurate and complete records throughout the tendering process undermines accountability and can facilitate unethical practices such as the unauthorised sharing of confidential information, giving certain bidders an unfair advantage. Finally, collusion among bidders remains a concern, where economic operators may conspire to rig bids, leading to inflated prices and reduced competition.
The root causes of these integrity risks are connected to corruption, conflict of interest, and insufficient oversight mechanisms within the tendering process. Procurement officials may be influenced by personal or financial ties to certain bidders, leading to biased decision-making and the manipulation of bid evaluations. The lack of stringent controls around the use and verification of PREVENT integrity forms allows for potential misuse, while weak oversight also enables unjustified cancellations of procurement procedures, often to the detriment of fair competition. Inadequate record-keeping further exacerbates these risks, as it hinders transparency and makes it difficult to trace and address unethical actions. Additionally, the absence of robust monitoring systems contributes to the persistence of collusion among bidders. Weak capabilities within contracting authorities, for example to detect bid rigging and collusion, and a general challenge of low levels of competition in many sectors contribute to these root causes.
Over the course of the project, stakeholders indicated that the introduction of e-procurement (through the SEAP system) has had a significant mitigating effect on integrity risks during the tendering stage. This view is corroborated by a DNA study which found that prior to the implementation of SEAP, corrupt officials exercised their influence internally, such as by organising the award procedure to favour certain economic operators. Following SEAP’s introduction, they were forced to switch to more complex forms of manipulation, for example by ensuring that only one economic operator bid for the tender (National Anticorruption Directorate, 2017[1]).
To mitigate these integrity risks, stakeholders suggested several measures. Strengthening oversight throughout the tendering phase is crucial, including implementing rigorous checks and balances in the bid evaluation process to ensure consistency and fairness. Enforcing the accurate and transparent completion of PREVENT integrity forms can help prevent conflict of interest. Establishing clear protocols to prevent the unjustified cancellation of procurement procedures is also essential to maintain fairness. Improving record-keeping practices, with a focus on maintaining comprehensive and accurate documentation, can enhance accountability and deter unethical behaviour. Finally, introducing advanced monitoring mechanisms to detect and prevent collusion among bidders, combined with fostering a strong culture of integrity through training and ethical guidelines for the public and private sectors, would contribute to a more transparent and fair tendering processes.
Other risks
Romanian stakeholders identified a number of non-integrity risks that could significantly affect the tender stage. These include the failure to publish required notices, which can limit transparency and reduce competition, as well as delays in publishing calls for tender. Communication issues are also prevalent, with limited or inefficient exchanges between contracting authorities and the market, which can lead to misunderstandings and unclear expectations. Technical challenges associated with the SEAP platform, including difficulties experienced by both economic operators and contracting authorities in using the system, pose additional risks. Numerous non-compliance issues were highlighted, such as failing to adhere to deadlines, not maintaining accurate records, and tenderers not respecting bid submission deadlines. During the clarification of tender documents stage, ambiguous requests for clarification from economic operators and unclear responses from contracting authorities can complicate the process. These risks can contribute to low competition, either due to a lack of bidders or an insufficient number of compliant bids, and can result in the cancellation of procedures, either because of non-compliant processes or the withdrawal of the winning bidder.
The root causes of these non-integrity risks are closely linked to gaps in understanding public procurement legislation and regulations, particularly in areas such as transparency, the publication of notices, and the proper use of the SEAP platform. Many of these issues arise from a lack of capacity, capabilities, or time on the part of contracting authorities, as well as insufficient oversight and a failure to establish effective communication channels between stakeholders. The problems often begin in the pre-tender phase, for example where inadequate market engagement leads to a weak market response, setting the stage for low competition and other challenges during the tendering phase.
To mitigate these non-integrity risks in the tendering phase, stakeholders recommended a range of potential interventions. Proper planning is essential, including accounting for the time and capacity required at all stages of the procurement process and establishing contingencies to handle potential delays or issues. The use of standardised templates (already developed by ANAP) can help ensure consistency and compliance with legal and regulatory frameworks. Capacity building for contracting authorities is also crucial, particularly in the practical application of procurement laws and the effective use of the SEAP platform. Establishing clear processes for communication and collaboration between procurement and legal departments within contracting authorities can help prevent ambiguities and ensure that all parties are aligned. Putting in place systems within contracting authorities to oversee contract implementation can strengthen compliance and the detection of integrity breaches. More specific measures include considering the implementation of incentives for timely contract signing, such as early signing bonuses or penalties for delays, and maintaining regular, transparent communication with economic operators to address concerns or issues promptly. Additionally, conducting thorough reviews of contract terms by legal and procurement specialists before signing can ensure that they align with the tender documentation, reducing the risk of disputes or cancellations.
4.2.3. Post-tendering risks often originate in earlier phases of the procurement process
The post-tendering phase focuses on the delivery of the goods, services or works. This includes ensuring that the terms of the contract are fulfilled and that the procured goods, services or works are delivered as specified, as well as the process of making payments. This phase is generally overlooked when identifying risks. Risks in this phase often have their root causes in earlier phases of the procurement process, making them particularly challenging to address by the time they arise. The risk map divides the post-tendering phase into four stages (see Table 4.3).
Source: Authors’ elaboration
Integrity risks
In the post-tendering stage, stakeholders identified a number of integrity risks. These risks include the preferential treatment of certain suppliers, such as the inconsistent application of monitoring standards and the unequal enforcement of contract terms. This is related to the risk of a lack of transparency, particularly in how contracts are managed and how penalties are enforced. In some cases, there are delays or refusals to accept goods or completed works that meet the contract specifications, or conversely, the acceptance of goods, services, or works that do not comply with the contract. In the ordering, invoicing, and payment stages, risks include placing orders selectively with certain suppliers, making advance payments without a legal basis, and the submission and acceptance of invoices with false or inflated information. This aligns with a recent DNA study, which found that where the award procedure was open and transparent, fraud was still sometimes detected during contract execution. This included public authorities paying large sums for products or services that were not delivered or executed or were partially executed, on the basis of fictitious invoices and acceptance documents (National Anticorruption Directorate, 2017[1]).
These integrity risks in the post-tendering stage are rooted in a lack of transparency and a failure to instil a strong culture of integrity within public procurement processes. Corruption also plays a role, as does the absence of effective tools or measures to identify and address conflict of interest during contract management and the invoicing-payment stages. These issues are exacerbated by the lack of robust systems for detecting and preventing unethical practices and inefficient internal managerial control in the post-tendering phase, allowing corrupt behaviour to persist.
To mitigate these integrity risks, stakeholders suggested several measures. Regular training on ethical considerations and procedural integrity should be provided to procurement officials to reinforce the importance of fairness and transparency in contract management. Additionally, capacity building on integrity in public procurement should be extended to economic operators, with the potential requirement for suppliers to conduct similar training for their staff. Developing a comprehensive code of conduct that clearly outlines expected behaviours and consequences for violations can help set a standard for integrity. Promoting whistle-blowing channels where individuals can report unethical practices without fear of retaliation is also crucial. Finally, performing regular audits and reviews during the post-tendering phase can help detect and address issues.
Other risks
Romanian stakeholders identified numerous non-integrity risks in the post-tender phase. These include the failure to thoroughly verify the information provided by contractors, which can lead to operational or sustainability issues, and inconsistent or unclear communication with contractors that can cause misunderstandings and delays. Other risks involve the failure of suppliers to deliver goods, services, or works according to the specifications of the contract, sometimes coupled with a refusal to remedy these shortcomings. Additional risks relate to subcontractors or partnerships managed by the supplier, such as collaboration issues, assignment of intellectual property rights, and relations with third parties, which can result in damages or disputes. There are also risks related to the absence of contractual clauses addressing damages, interest, guarantees, and penalties, as well as risks from contract amendments that are either improperly approved or excessively frequent. Specific to works contracts, delays can occur due to external issues, such as the failure of utility operators to comply with permit deadlines or legal issues related to the status of the site.
Specific to compliance risks, figures provided by the Romanian Court of Accounts indicated that non-compliance is primarily an issue in the post-tendering phase: from 2018 to 2022, cases of non-compliance in the post-tendering phase ranged from 73% to 82% of total cases of non-compliance (see Table 4.4).
Note: Totals may not sum due to rounding.
Source: Romanian Court of Accounts
These risks are often rooted in earlier phases of the procurement process, such as during market engagement, procurement planning, or the development of contracts (e.g. where ambiguous contract terms fail to clearly define the required quality levels or the processes for managing changes). They often stem as well from a lack of capacity, capabilities, or time on the part of contracting authorities, inadequate understanding of the legal framework, and poor communication with suppliers. Additionally, the lack of clear processes with appropriate internal controls over contract modifications, ordering, and payment increases the likelihood of problems during contract execution. In some cases, these risks are exacerbated by unforeseen events or conditions that neither the contracting authority nor the supplier can control. However, proper planning and risk identification can help contracting authorities anticipate these events.
To mitigate these non-integrity risks, stakeholders recommended several measures. Establishing clear processes to document decisions related to contract monitoring, payment, and other post-tender activities, and communicating these decisions clearly to suppliers, can help prevent misunderstandings. Building strong working relationships with contractors through regular meetings can improve coordination and address issues promptly. Contract documents should specify how to resolve disputes that may arise during contract execution and include clear termination clauses that outline the conditions and procedures for ending a contract. Capacity building and support, such as checklists for verifying goods, services, or works against contractual specifications, can enhance the ability of contracting authorities to manage contracts effectively. Using existing contract templates with standard clauses for common issues can help ensure consistency and reduce risks. Implementing robust controls and procedures for invoicing and payment, including verifying receipt of invoices, is also crucial. Finally, better coordination and information sharing between finance, procurement, and technical departments can help manage contract modifications and upcoming orders or invoices more effectively.
4.2.4. Public procurement risks vary by sector
Public procurement risks in Romania appear in all sectors of public administration, but can vary significantly based on the specific challenges and market dynamics. While sector-specific risks at various stages of the procurement lifecycle are more difficult to identify, certain trends can be identified, particularly around integrity risks. These risks can be influenced by the complexity of the sector, the number of economic operators, and the capacity of contracting authorities. These differences highlight the potential benefits of sector-specific reforms in Romania’s public procurement system, though further analysis would be beneficial to gain a more detailed understanding of specific risks and challenges within each sector.
The energy and infrastructure sectors have been highlighted as areas with higher risks of collusion and bid-rigging. Stakeholders suggested that these sectors, with fewer economic operators, may be more prone to collusive behaviour. Additionally, in infrastructure, there are concerns that project selection may not be based on a comprehensive needs assessment or market analysis, potentially leading to inflated costs and inefficient procurement practices. These risks may be partially offset by the larger size of contracting authorities in these sectors, as interviews with stakeholders suggested they generally have larger, more sophisticated procurement and risk management functions.
Health and education have been identified as priorities for strengthening integrity in the past two NAS (2021-2025 and 2016-2020) (Ministry of Justice, 2021[3]). In the health and education sectors, a lack of procurement capacity can often result in delivery and implementation challenges. In health, this can lead to delays or inefficiencies, as plans may not align with the resources available to deliver services. Weak integrity management systems and cultures in the health sector are also seen as increasing risk in procurement processes. A lack of transparency can lead to overpayment for drugs, devices and hospital construction (OECD, 2023[4]). Measures under the NAS (2021-2025) include the centralised publication of data on procurement procedures in the health sector and strengthening the standardised publication of public procurement information in the education sector (Ministry of Justice, 2021[3]).
Stakeholders indicated that local administrations may present additional risks due to their more limited resources and capacity compared to central authorities. This vulnerability is reflected in the NAS (2021-2025), which also includes local administration as a priority area for strengthening integrity (Ministry of Justice, 2021[3]). Some stakeholders noted that capacity building initiatives discussed in Chapter 2. generally target central government contracting authorities, while local contracting authorities often struggle to attract and retain procurement staff, which affects their ability to manage procurement risks. The maturity of internal audit functions also tends to be higher at the central level, particularly in sectors like defence and law enforcement, where central bodies experience fewer resource challenges. Integrity issues are often linked to capacity gaps, especially at the local level, where municipalities face more significant challenges.
References
[3] Ministry of Justice (2021), National Anti-Corruption Strategy 2021-2025, https://sna.just.ro/en/c/sna-2021-2025.
[1] National Anticorruption Directorate (2017), Abuse of Office in the Field of Public Procurement, https://www.pna.ro/obiect2.jsp?id=331.
[4] OECD (2023), Strengthening Romania’s Integrity and Anti-corruption Measures, OECD Public Governance Reviews, OECD Publishing, Paris, https://doi.org/10.1787/ff88cfa4-en.
[2] World Bank (2021), Report on the overall assessment of the public procurement system, http://documents1.worldbank.org/curated/en/099011924055530012/pdf/P169141169909e0a21b09b1c19edc005458.pdf.
← 1. Category management involves taking a strategic approach to commonly procured goods and services. Individuals or teams are given responsibility for actively managing procurement within a specific category of goods or services, including engaging with users and the market, conducting needs and market analysis, developing procurement strategies, and conducting procedures.