Integrity: Vendor’s role in enhancing integrity

1. Integrity: Vendor’s role in enhancing integrity Marco Tanferna ConsipSpa marco.tanferna@tesoro.it Santiago - Chile, 14th September 2011

2. Vendor’s role in enhancing integrity Doubleactiveroleof the vendor in the Italian PP system through the wholeprocurementcycle Monitor and supervise the conductof the CAs (directlylinkedto the reviewprocedures) Adoptinternal and externalmeasures and behaviourswhichdirectlyenhanceintegrity and improve the public interest. Pre-tendering Tendering Contractual Contract management Tender documents development, publication and Supplier selection Feasibility study and definition of procurement strategy

3. Legalentitiesresponsibilityformisconductofhisemployees (1/4) According to the Law, the relevant punished conduct is “that of a member of the top management or an employee of a legal entity who, in the context of his professional activities, intentionally solicits or receives, for himself or a third party, directly or through an intermediary, an undue advantage of any kind, or accepts the promise of such advantage, provided that such conduct will or could distort competition in relation to the acquisition of goods and commercial services”. Such conduct is relevant when committed by the top management or employees of the legal entities concerned,providedthatthoseoffences are committed in the interest or to the advantageof the legalentities. The administativeliabilityof the legalentityisindipendentof the criminal liabilityof the personwhocommitted the offencewhowillbepersecuted on hisown. The Decree n.231 hasintroducedintoItalianlegislation a newformofadministrativeliabilityoflegalentitiesfor the commissionofcertain corporate and criminal crimeswhendealingwith the PA (forexamplecorruption).

4. Legalentitiesresponsibilityformisconductofhisemployees (2/4) The followings penalties are provided for the aforementioned legal entities’ misconduct: • FINANCIAL PENALTIES • INTERDICTIVE SANCTIONS for a period of not less than 3 months and not more than 2 years Including amongst others: • Suspension from carrying on the activities; • A ban on contracting with contracting authorities; • Exclusion from benefits, loans, contributions or subsidies and possible revocation of those already granted; • CONFISCATION OF PROFITS OF THE CRIME • PUBBLICATIONOF THE JUDGEMENT i

5. Legalentitiesresponsibilityformisconductofhisemployees (3/4) • the management has adopted and efficiently put into practice, before the offence was committed, “organisational and management models” designed to prevent the offences committed; • The entity has implemented an ad hoc internal independent body with the precise duty to control that the internal models function, are updated and are fully respected, • The individuals who carried out the offences did so by fraudulently ignoring the implemented organisational, management and control models in question; • There was no insufficient or lack of supervision on the part of the department referred to in point b) above. exemption from the responsibility if the legal entity can demonstrate that:

6. Legalentitiesresponsibilityformisconductofhisemployees (4/4) • identify the risks that could result in crimes defined by the law as well as the current controls in place to mitigate such risks. The map of the activities at risk shall be constantly updated to reflect changes to corporate processes. • Perform a Gap analysis between the existing organizational model and the ideal model, in order to realize necessary improvements on organizational, management and control model which assist in preventing the crimes defined by the Law. (ex:.: implementation of protocols of behavior, system for sanctioning employees; training and education of personnel members, especially those in charge of managing the activities at risk. • Realize the company’s customized organizational model which assists in prevent the crimes.

7. Pre-tendering Tendering Contractual Tender documents development, publication and Supplier selection Feasibility study and definition of procurement strategy Contract management First stage: Pre-tendering Draft a “Market Consultation Document” published on Consip’sweb-site where it is given evidence of the methodology and the issue of the tender procedures Consultation with vendor’s Associations Meetings with vendors made in public meetings with full evidence given in minutes and report The aim is double: 1) guarantee transparency of the tender strategy as a complex process where the interests of all the actors involved is guaranteed andcollect information about the market, the nature of the market, focus on the problems vendors faced in the previous tenders (both Consip’s tenders or other Contracting authoritiessimilar tenders) in order to keep it in consideration, in full respect with transparency and non-discrimination principles, in the upcoming tender procedures

8. Pre-tendering Tendering Contractual Tender documents development, publication and Supplier selection Feasibility study and definition of procurement strategy Contract management Second stage: Tendering • The vendor, in some specific tenders that better adapt to introduce such experimental tools (i.e. credit cards, mobile calls, ticket restaurants), is due to offer mechanisms aimed to prevent frauds which will be evaluated by the CA in order to award the contract; • Maximum participation of the vendors in the selection phase by providing publicity for all the Commission meetings concerning the opening of the administrative documents, the technical and economic offer; possibility for the vendors to access the docuements even during the public meeting • Possibility for the vendor to adopt corrective tools (both judicial and administrative) where integrity, because of the failure of the general principles governing tendering, is assumed to be violated. CA adopt corrective measures (corrigendum, amendments or cancelation of the tender);

9. Pre-tendering Tendering Contractual Tender documents development, publication and Supplier selection Feasibility study and definition of procurement strategy Contract management Third stage: Contractual Traceability of financial flows (1/2) • Law 136 of August 13, 2010, article 3, introduces new obligations for public authorities and economic operators involved in public procurements. • All the economic operators (contractors and sub-contractors) have the obligation to indicate bank accounts specifically«dedicated» to the contract awarded (one or more) and sub-contracts stipulated. All the payments related to the aforementioned contracts shall be made on the indicated bank accounts • All transactions should be arranged by bank transfer or other means of payment ensuring the transparent tracking of the transaction and shall indicate the procurement they refer to by indicating a specific identification code previously assigned by the contracting authority and referable exclusively to that contract (the so-called tender identification code). • Payment through cash money and other means unable to guarantee traceability are no more admitted

10. Traceability of financial flows (2/2) • Every invoice, both referring to a public contract or sub contract or successive contracts pertaining to the procurement shall indicate the reference code • In Every public contract and sub-contract it shall be inserted an express clause providing that the parties of the contract and sub-contract assume the obligations of tracking financial flows in compliance with law 136. In absence of this, the contract is declared as void. • The economic operator shall notice competent authorities of any irregularities in tracking financial flows, and shall resolve any contract where the counterpart does not respect traceability duties.