Normative Reconstruction of Blacklists in Government Procurement as an Instrument for Building Legal Awareness and Preventing the Practice of ‘Flag Borrowing’

Abstract

Background: Government procurement of goods and services is a strategic instrument in state financial management that must be implemented based on the rule of law, fair competition, and integrity. However, flag-borrowing practices (manifested in bid rigging, the use of falsified documents, and contract management by parties outside the official corporate structure) reveal distortions in the legal identity of business entities within the procurement system.

Objective: This article examines the alignment between the conception and practice of blacklists and the principle of the rule of law, and formulates a normative reconstruction based on responsive regulation to sustainably prevent flag-borrowing practices.

Methods: This study employs a normative juridical method using statutory and conceptual approaches, enriched by a socio-legal perspective through a case study of the Ministry of Law and Human Rights.

Results: The analysis shows that the absence of a limitation period, the lack of an explicit obligation for proportionality review, and issues of enforcement temporality create disharmony between the objective of regulatory guidance and the principle of legal certainty.

Conclusion: The reconstruction of blacklists should be directed toward five pillars: affirmation of a system-integrity orientation, temporal limitation of sanctions, proportionality review, beneficial ownership transparency, and a compliance-based rehabilitation mechanism. Through this approach, blacklists can be repositioned as a responsive, constitutional, and effective legal guidance instrument for preventing flag-borrowing practices in Indonesian public procurement.