Ensuring competition between suppliers is fundamental to preventing corruption in the procurement of defence equipment. There are circumstances in which competition is unwieldy – for example, if time is particularly scarce. Typically, however, a specific provider is used either for political gain, to support a previous acquaintance, or even simply out of bureaucratic convenience. Single sourcing can often denigrate the value of the deal, seeing governments pay more money for less effective equipment. The propensity to incite further corruption, however, is the most sinister result. For example, companies providing services in defence often have a unique supplier position in that country, and have too close a relationship to the defence establishment. This is borne out by research from Svensson (2005), and Shleifer and Vishny, (1993), which suggests that “government regulations that raise barriers to entry are often enacted because they give public officials the power to demand and collect bribes.” There is a remarkable lack of competition in a wide range of defence procurements in many countries.

TI-DSP's research into single sourcing found that in a dozen major governments, some 50% of all defence procurements were being carried out through single source and not competitive procurement. The result was similar whether looking at number of procurements or value of procurements. A summary of the main results is presented in the graph below.

Single-source contracting is one of the easiest media for corruption to slip into the defence procurement process. As Steven A. Shaw, Head of the Department for Contractor Responsibility at the US Air Force, has pointed out in an interview with TI-DSP, single-source contracts are 'intuitively more prone to corruption.'

Overcoming Single Source Corruption

Despite being a major corruption risk, single sourcing is an easy problem to address, both functionally and in respect of external monitoring.

Functionally, the first step is to identify the single-source percentage in defence procurement to date. This should be done in respect to both number of procurement contracts and value of procurement contracts each year. Defence contracts should also be separated into civilian purchases that would be common to all government departments (e.g. stationary, food, computers and non-sensitive office software, uniforms and boots), and purchases that have a military element.

The second step is to review the single-source contracts to identify why it was single-source, and analyse the frequency of the principal reasons given (for example urgent requirement, no alternative supplier, highly secret, administratively convenient, etc).

Third, an independent interviewer needs to be arranged, in order to survey a number of the suppliers in the competitive contract, particularly those who fail to win the business. The interviewer should gain an understanding of what they regard as the reasons for failure. This is important because even when contracts are competitive, it may be the case that the competition has in fact been biased to one favoured contractor and the competition is largely a sham.


The final step is to bring the results together, and from this analysis develop a set of actions geared to raising the competition percentage. 
 The huge benefit of outsiders is that the result is likely to provide more credibility both internally and externally, and contractors who fail to win contracts are more likely to trust them and to be confident that their comments will remain anonymous. 

TI-DSP's analysis in Colombia can be viewed in the report Defence Procurement and Integrity Pacts in Colombia Report 1 (2006).

Corruption example: USA

Problems with single-source procurement have emerged in the eyes of the public, leading to calls for reform and greater transparency. The high-profile scandal around former             US Congressman Randy “Duke” Cunningham has illuminated the sole-source and blanket contracts commonly employed by the Pentagon and the US Department of Defense. MZM, the company implicated in that bribery scandal, won a blanket contract worth up to $225 million over five years as a sole bidder, when in fact Pentagon requirements necessitated at least three competitive bids to award such a contract.

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