An independent think tank is urging the Bulgarian government to introduce a code of conduct for its buyers, as corruption within public procurement remains widespread, supplymanagement.com reported.

The Center for the Study of Democracy (CSD) found corruption is costing the country 1 billion levs (£349 million) each year and made a number of suggestions to improve the purchasing process.

A report from the group said: "Ethical rules should fill in the gaps in the Bulgarian public procurement legislation as well as encourage their efficient application."

The CSD said the government needed to enhance transparency, competition and trust in the process. It added the lack of criminal prosecution for those found breaking procurement law meant there was no deterrent for corruption.

Bulgaria's public procurement law was altered when it joined the EU in January, increasing the thresholds required for contracts to be put out to tender. The CSD is concerned that corruption in the country has moved from middle management "to higher political levels" and is now institutionalised.

The group suspects that as fewer bidders are taking part in tenders, it means firms are only bidding if they believe they will win. It found the size of bribes being paid to win contracts is increasing. More than 7 per cent of companies now pay over 20 per cent of the contract value, compared with just over 1 per cent in 2004.

The call to reduce corruption was supported by the US ambassador to Bulgaria, John Beyrle. He said: "Concerns about corruption have scared away hundreds of millions of euros of potential investment.