Governments spend and receive vast sums of money —some US$9.5 trillion, a whopping 15% of global GDP— every year on deals to build infrastructure, deliver goods, and provide services to their citizens or to rent out state assets (Kenny, 2014).
Governments buy these goods and services through contracts. This contracting may not be a topic that immediately gets the heart racing, but it is vital. Contracts are the bricks and mortar of public benefit, where taxpayers’ money gets converted into tangible products that citizens care about: schools, roads and hospitals.
It is critical that public contracts should be fairly awarded and offer good value-for-money. When government and business meet, rules need to be clear and deals open to the public. Governments need to show how they spent money, with whom, and on what. Put simply, they need to show both the dollars and the deals.
All too often deals happen in secret, are badly executed, or are technically so complicated that no one can understand them. Only 6% of 86 countries surveyed publish open data on government contracts (Open Data Barometer, 2015). This is bad for business, bad for taxpayers, and lethal for public integrity.
The OECD, the European Commission, the World Economic Forum and UN Office of Drugs and Crime all agree that public contracting and procurement is the government activity most vulnerable to wastefulness, mismanagement, inefficiency, and corruption. Some 57% of foreign bribery cases prosecuted under the OECD Anti-Bribery Convention involved bribes to obtain public contracts (OECD, 2014).
Scandals and human tragedy from contracting disasters abound: 'tofu' schools, constructed to substandard specifications in an earthquake zone, that fell down on their students; billions of dollars misappropriated through secret deals and asset flips in the oil and mining sectors;, provision of fake medicine and medical equipment that kills patients; outrageous overcharging or spectacular service delivery failures, including charging for services to dead people;, and huge Olympic construction boondoggles.
Even in more prosaic projects there can be huge differences in costs: a detailed comparative study by the World Bank showed that the same piece of road, built to the same specifications, can cost almost half as much in a corrupt country than a better governed one (Kenny, 2010). These costs are almost always disproportionately borne by the poor.
Openness pays huge returns on investment. South Korea’s transparent e-procurement system KONEPS saved the public sector US$1.4 billion in costs (OECD, 2015). It also saved businesses US$6.6 billion. Time taken to process bids dropped from 30 hours to just two.
Open contracting provides publicly accessible, timely and comparable data on government contracts. This data on infrastructure projects and vital goods and services allows citizens and business to engage with government on the issues they care about. Through integrating feedback, government becomes accountable. This process will unlock innovation once it becomes routine.
 OECD website.; European Comission (2014). EU Anti-corruption Report.; OECD (2012). Progress Made in Implementing the OECD Recommendation on Enhancing Integrity in Public Procurement.; UNODC (2013). Guidebook on anti-corruption in public procurement and the management of public finances.
- Open Contracting Partnership
- Open Contracting Data Standard Helpdesk
- World Bank Governance Global Practice
- Deutsche Gesellschaft für Internationale Zusammenarbeit, GIZ
- Construction Sector Transparency Initiative
- Affiliated Network for Social Accountability East Asia and Pacific
- Development Gateway
- Young Innovations
- Quinta Group
- Open Data Services
- Public and Private Development Centre
- Transparency International, including local chapters in Mexico, Georgia, Czech Republic, Ukraine, and Slovakia
This topic has been developed by Gavin Hayman and Lindsey Marchessault from the Open Contracting Partnership.
Examples in Practice
In Colombia citizens’ oversight organizations can supervise the entire public contracting process
In Colombia, Law 850 of 2003 allows citizens’ oversight organizations to supervise the entire public contracting process, from resource allocation to the oversight of the execution and technical quality of the contracted good or service.
The Law states that citizens have the right to constitute “veedurias ciudadanas” or citizen oversight committees, which can be temporary mechanisms for CSOs to control public administration, procurement, processes, etc. The veedurias enable citizens and/or CSOs to oversee public management and the performance of administrative, judicial, electoral and political authorities, public and private entities, or nongovernmental organizations. They are responsible for executing programs, contracts, or public services.
One of the main objectives of the “veedurias ciudadanas” is to strengthen mechanisms to control corruption in public procurement and public management. The Law 489 of 1998 states that the public administration is obliged to provide support to citizens when they constitute a veedurías. This Law also establishes that controlling authorities and the judiciary should support the veedurías in order to investigate and respond to their denunciations.
In Mexico “social witnesses” oversee public procurement
In Mexico, since 2004, the federal government of Mexico has required the involvement of “social witnesses” in public bidding for goods, works, and services over a certain threshold value. Since 2009, participation of a social witness has been mandatory in procurements valued at more than $23 million for goods and services and US $43 million for public works. Non-government organizations and individuals may be selected as social witnesses by the Ministry of Public Administration. Their function is to propose strategies for improving transparency, impartiality and compliance with the legal framework, and must issue an alert if they detect any irregularities in the course of the procurement. At the conclusion of the procurement proceedings, the social witness issues a publicly available statement including observations and, as appropriate, recommendations. The statement is posted on the government’s central procurement website and in the file of the tender.
The “Social Witness” program is the result of an initiative of the NGO Transparencia Mexicana to facilitate the participation by civil
society as external observers in public procurements. Originally, social witnesses par!cipated as a result of guidelines issued by Ministry of Public Administration (MPA) in 2004. The guidelines stipulated that MPA keep a registry of individuals and non-governmental organizations which may participate in all stages of a procurement conducted by any institution of the Federal Public Administration.
in Mexico”, Transparency Interna!onal USA, CIPE, Transparencia Mexicana, 2011,
According to Transparencia Mexicana, the Social Witness program has signiﬁcantly reduced the costs of public contracts and has increased the
number of bidders participating in the procurement process in Mexico.
In Mongolia,civil society and professional organizations play a formal role in bid evaluation and contract monitoring
In June 2011, the Government of Mongolia amended the Public Procurement Law of Mongolia (PPLM) to include a new formal role for civil society and professional organizations in bid evaluation and contract monitoring. Private and specialized non government organizations can be selected according to the provision 35-39 of this law to perform monitoring, evaluation and auditing of customer’s activity, contract performance and quality progress and execution.
Mongolia is at the threshold of a major socio-economic transformation driven by the exploitation of its vast mineral resources. Since 2004 when the mining boom began, the economy has grown at an average rate of over 8 percent each year. Sound infrastructure is particularly critical for this vast, land-locked, sparsely populated, country In order for it to both develop and benefit from the huge new Southern mines Mongolia’s infrastructure investments will need to increase at an unprecedented pace, placing great demands public procurement systems. Procurement in Mongolia has been characterized by the familiar problems of political interference and lack of transparency, which are particularly pronounced given the small size of the formal sector and the close ties between politicians and the construction industry. As a result, time and cost over-runs in infrastructure projects are ubiquitous.Increasing the technical capacity, transparency, and accountability of public procurement is an urgent need for government systems to keep pace with the staggering transformation that is underway.
The rationale for involving CSOs in monitoring procurement emphasizes the ability of CSOs to provide feedback to government on bid evaluations and contracts and to disseminate their findings to the public. Through disseminating its observer reports, CSOs can help to inform citizens and thereby strengthen citizen ability to reward or sanction politicians and officials for their management of public resources. It is hoped that greater citizen awareness of procurement-related problems will increase public officials’ incentives to respond to CSOs’ feedback, including holding contractors accountable for their performance.
Implementing the PPLM, especially the requirement for CSO oversight of bid evaluations and contract performance, will be challenging for both the Government and CSOs. Sustainable funding arrangements that are shielded from political interference will be essential for the success of civil society monitoring will be crucial. Mongolia has also opted into the Global Partnership for Social Accountability (GPSA) to enable Mongolian civil society groups to apply for financial support from the international donor community to monitor public contracting In addition, Mongolian agencies have entered into memoranda of understanding with civil society groups to monitor their public contracting.
[Source: World Bank]
In Peru public land for sale must be advertised for a minimum of 90 days
In Peru, a land auctioning process has been in place since the 1990s and since then 235,500 ha of public land has been auctioned for nearly US$50 million.About 20 of the country’s 50 main agro-export companies have received land through these auctions.
Where a government agency, ministry, regional or local government wishes to divest public land, the intention to divest the land is published, along with the minimum investment required and the minimum bid price for the land, in the official gazette, local and international newspapers, and a government Web site for a minimum of 90 days. Likewise, if an investor approaches the government, the evaluated proposal is published for a minimum of 90 days to allow other potential investors to present offers.
Bids are ranked by price offered and the amount of projected investment. Each auction takes 4-5 months and data on the minimum bid value of the land, the investment commitment, and data on land size are publicly available. Business plans are also made public Redress can be remedied if the property was expropriated. If within one year of the conclusion of the court process the expropriated property is not used for its planned purpose, it automatically reverts to the original owner.
Peru’s success in divesting public land through auctions is credited to the transparency of the process as well as to oversight from a high-powered and independent technical committee representing private and the public sectors.Competitive bidding for land provides a mechanism by which the host government achieves better terms and is able to extract some of the surplus created by the project, while eliminating direct negotiations between private buyers and public officials. However, the extent to which business plans incorporate community benefits, or how social and environmental concerns are considered during the awarding of investment projects, remains unclear.
In Slovakia, government contracts are published online
Corruption in public procurement in Slovakia has been a long-standing problem. Problems in public procurement occur through the manipulation of tenders before or after the awarding of the bid, for example by limiting competition through setting unreasonable conditions, or not fully enforcing contracts, or changing them significantly after tendering. One key example was the ‘Notice Board Scandal,’ a high profile procurement scandal which took place in 2007 when the Ministry of Development published a tender request for construction services totalling 119.5 million Euros on a small notice board in the hallway inside the ministry building where few could see it. A firm that was known to have close ties to the head of the ruling party won the contract. More than a year after the fact, the scandal came to light and was invalidated by the Slovakian Office of Public Procurement.
Slovakian law was overhauled in response to the 2011 update of the EU Procurement Directives and the concern over high profile public procurement scandals. Major reforms included:
- The introduction of e-procurement, in which dissemination of tenders, tender documents, the submission of bids and the publication of notification of awards is done publicly through a single portal;
- The introduction of reverse auction mechanisms for procuring goods and services
- Mandatory publication of all public contracts on a centralized online government contract repository.
The Slovak Republic, Act No. 546/2010 Coll. supplementing Act No. 40/1964 requires all public contracts, with certain limited exceptions, to be published online. To avoid secret contracts, any unpublished contracts are declared to be unenforceable. The Government Public Procurement Office manages Slovakian procurement rules. This office publishes the official Public Procurement Journal, legal interpretation of the Public Procurement Act, maintains a register of procurement documents and operates the procurement portal, which is called EVO.
These reforms have made it significantly easier for organizations and people outside the government to access public data about procurement. Previously access tender documents and other procurement data was granted primarily through requests under Freedom of Information Laws (FOI). If requests were not granted and appeals could take so long that the information was no longer relevant. Now, through EVO all of that information is published including the contract itself and information on the bids received and the process of contracting.
The availability of data has lowered the barriers to entry for participating in the oversight process. This has enabled much greater public participation in uncovering suspect procurements. Before the reforms, exposing corruption relied on whistleblowers alerting journalists or watchdogs of suspicious proceedings. Now more tips come from local activists and individuals. For example teachers, highlighted information about large Ministry of Education procurements for flowers and alcohol and the Ministry of Finance conducted an audit.
Opening up the information makes it possible compare contractors and look at patterns across cities and institutions. Local people who may know who the mayor is friends with, and which local businesses have relationships with people of influence are able to spot issues that a researcher farther removed from the process might not be able to.
Despite these positive developments corruption in Slovakian public procurement remains a challenge. While the availability of data has been a positive step, there remain barriers to using it, and where there is no real threat of enforcement, transparency and disclosure are limited in their ability to bring about effective change. Researcher using the data say that rationalizing the manner in which the data is released and formatted would make it easier to use, reducing the cost of finding corruption and increasing the likelihood that improper processes will be uncovered. The NGOs TI-Slovakia and Fairplay Slovakia maintain an online Open Contracts website built off the procurement data scraped and structured from public sources. This portal visualizes procurement expenditures by procurers, suppliers, sectors and regions as well as provides downloadable structured procurement data in bulk. Having data available in these formats also enabled TI-Slovakia to conduct broader analyses than were previously possible.
Standardised data formats, bulk downloading, structured formats like XML would make it easier to use the data. Another key problem is that there are no data licenses attached to public data so it is not clear how it can be used. Additional information about pre-tender requirements would also be valuable.
Formal mechanisms and institutional means of sanction also need to be strengthened. The Sunlight Foundation concludes that “Most significantly, transparency alone, it appears, cannot change deeply ingrained corrupt practices in a short time span. Transparency can only highlight the problem, and provide tools for oversight and investigation. Enforcement mechanisms, both formal and informal, must be brought to bear to sanction those whose transgressions are revealed by transparency-enabled oversight.”
[Source: Sunlight Foundation case study]
In the Philippines, citizens participate in all stages of the procurement process and may also observe implementation
The Philippines Procurement Law mandates citizen participation in all stages of the procurement process, from pre-bid conference, opening of bids, bid evaluation, post-qualification and award of contract. Under this system, procuring entities are required to invite outside organizations to sit in on meetings of their Bid and Awards Committees (BACs). Observers may also observe contract implementation, and citizens are able to file complaints with the local ombudsman if they suspect irregularities.
In the extractives sector, although there is currently a moratorium on new mining operations, the Philippines Mining Law requires a “multi-partite monitoring team” to be operational before the mining project can receive an environmental compliance certificate. This body is to be composed of representatives of the national government, affected communities, indigenous communities, an environmental civil society organization, and the project proponent. In addition Philippine agencies have entered into memoranda of understanding with civil society groups to monitor their public contracting.
However the system has struggled to respond to the volume of procurements, because of resource limitations for the CSOs involved and the lack of trained staff. According to some estimates civil sector oversees less than 1 percent of procurement proceedings and are not likely to see the misconduct, since they are not present during the pre-bidding parts of the process where misconduct most likely occurs. The degree to which CSO observers are granted a meaningful and participatory role varies greatly depending on the procuring entity.
To date the civil sector observer system has been seperate from the ICT enabled e-procurement of PhilGEPS. ICTs can enable asynchronous and remote observation, which can significantly ease the resource burden of observation and allow for more targeted risk assessment.
Open contracting is at the heart of Vietnam’s procurement reform
Vietnam’s Public Procurement Authority (PPA) has embarked on an ambitious Open Contracting initiative on the heels of the 2013 Procurement Law coming into force.
The PPA, in collaboration with the World Bank, conducted an assessment in April 2015 of the current situation in Vietnam against open contracting principles. The findings of the assessment and the related recommendations laid the groundwork for developing an Open Contracting Action Plan. The Action Plan emphases the development of a strong monitoring and evaluation strategy based on open contracting principles to track the performance of the procurement system against its objectives.
In May 2015, a delegation from the PPA, along with a representative of the Contractors Association, attended a regional technical workshop on open contracting in South Korea hosted by the Korean Public Procurement Service and attended by delegations from the Philippines, Indonesia, as well as experts from World Bank, Mongolia, and Hungary. During the workshop, participants exchanged ideas across international teams and worked in country groups to outline long-term objectives for improving public contracting and to develop concrete short-and medium-term activities to achieve those objectives.
South Africa has conducted an in-depth assessment of its procurement system
South Africa has embarked on an ambitious public sector reform agenda targeting improved efficiency, effectiveness and integrity of its supply chain management system.
As part of the process, the Government of South Africa – in collaboration with the World Bank Public Integrity and Openness team, the Open Contracting team and the GIZ South Africa Governance Support Programme – conducted an in-depth assessment of the existing procurement system. The assessment team looked at the national development planning priorities, the legislative framework, systems and structures, and spoke with practitioners and stakeholders from the private sector and civil society to get an understanding of the tough challenges that were undermining the efficiency and integrity of the system. The assessment team generated a series of solutions aimed at harmonizing legislation, building capacity of practitioners, raising public awareness, and adopting digital and open data solutions.
The Government has subsequently identified several priority activities:
- Develop and prescribe a public disclosure framework that governs transparency within the supply chain management process. This should result in institutionalising disclosure.
- Prescribe that all information in the bid process be disclosed publicly, including bid committee reports, minutes and contracts.
- Improve the accessibility of information. All government entities will be required to publish information on their respective websites in line with a public disclosure framework prescribed by the Office of the Chief Procurement Officer, and all information will be housed on its website.
- Improve the quality of information and encourage its strategic use.
- Create an environment conducive to stakeholder participation in the different stages of the supply chain management process.
- Build the capacity of the private sector, civil society and relevant stakeholders to take part effectively in enhancing transparent public supply chain management.
The City of Montreal publishes open data related to municipal contract awards
In 2015, the City of Montreal began publishing open data related to municipal contract awards. The files are pulled from municipal financial systems and published on the open data portal of the city (http://donnees.ville.montreal.qc.ca/). In addition, the city launched a public portal: http://ville.montreal.qc.ca/vuesurlescontrats/ as a visualization tool to view the contracts and grants awarded by the City of Montreal since 2012 in a simple and user friendly way.
The system has an API that automates queries for citizens who want to conduct their own analysis with the data (http://ville.montreal.qc.ca/vuesurlescontrats/api/). The API documentation is also available in the Open Data Portal (http://donnees.ville.montreal.qc.ca/dataset/contrats-et-subventions-api/).
The Philippine National Textbook Delivery Programme uses citizen participation to improve accountability in public procurement
The National Textbook Delivery Program (NTDP) in the Philippines is a civil society-led initiative supported by state institutions that has focused on improving transparency in the delivery and distribution of textbooks. Civil society organisations were spurred into action because of the low level of accountability in the education sector with 40 percent of textbooks deliveries not being accounted for and 21 percent of textbooks procured by the Department of Education not being delivered to the designated schools. By effectively monitoring textbook delivery at the community level, the initiative has been able to reduce the average cost of textbooks, reduce the time spent on the process of getting textbooks to schools, and improve the quality of textbooks.
In light of the problems facing textbook procurement, senior officials at the Department of Education initiated the NTDP in order to improve transparency and accountability. They ensured the assistance of G-Watch – an independent monitoring project that undertakes research and advocacy on themes related to governance and public management – and its network of civil society organisations around the country. Several civil society organisations agreed to participate in the NTDP, for example by providing volunteers doing the monitoring work at the local level. These organisations were expected to be the government’s eyes and ears as they observed and ensured the transparency of the bidding process, inspected the quantity and quality of the textbooks being produced, and monitored that the right number of books were delivered at the right time. They reported to G-Watch as the national coordinator if textbooks were not of the right quantity or quality. G-Watch, in turn, reported that information to the Department of Education who had the power to make the contractor abide by its contract.
Monitoring actual delivery forced the publishing companies to be more efficient since failure might result in a loss of business the following year. The participation of locally based civil society organisations also invited community participation in the transparency mechanism, adding to the pressure for the Department of Education and the publishing companies to get their act together as more than one set of eyes were scrutinising their performance.
The successful implementation of the NTDP has resulted in the Secretary at the Department of Education issuing Order No. 59, ‘Institutionalising NGO and Private Sector Participation in the Department’s Procurement Process’. Another initiative to institutionalise this participatory transparency initiative is the Textbook Walk, which invites an entire community to participate in the monitoring of textbooks when they are delivered to a given school. G-Watch has conducted training for event organisers and prepared educational materials to the textbook monitoring process, and has implemented the Textbook Walk in various districts across the Philippines.
The State of Minas Gerais, Brazil requires proactive disclosures about PPP projects
The State of Minas Gerais has been serving as a model for other states in Brazil on practices related to disclosure of project information, draft and final signed contracts, as well as bidding process documentation and technical background reports.
For PPP projects in Minas Gerais, Brazil, a preliminary project summary is published online during a public consultation period, along with the bidding documents, including selection criteria, and the draft of the contract, technical background papers and feasibility studies. Once the tender process is completed, full versions of contract documents are published and the project summary is updated (describing, inter alia, guarantees provided by the government). If the contract is renegotiated or amended, such variations are published once agreement is reached. Monthly performance reports are also published.
According to Resolution 72 of 2003, Article 5, web pages should be “easy to read and present content with clarity, coherence, relevance, timeliness, organization, simplicity, objectivity and truthfulness.”52 Article 7 specifies that all information contained in websites of the State’s public entities must be rigorously updated, while Article 9 establishes a communication service, “Talk to Us” (“Fale Conosco”), which facilitates the direct access to information held by public institutions.
Through this open channel, citizens can request information, and requests must be responded to within 2 working days, either by disclosing information, referring the public to another institutional source, or requesting more days to fulfil the request. All available information on projects is, however, extensively disclosed proactively.
All documents are disclosed in their original form in the public domain and are signed off by the original producer of the document. When information is extracted from the original documents and placed in a separate format, such as in the case of the project factsheet and guarantees or payment reports, the PPP Unit checks each piece of information.
[Source: World Bank, 2013, Disclosure of Project and Contract Information in Public-Private Partnerships]
The UK created a “Mystery Shopper” service to resolve complaints related to procurement processes
In 2011 The Prime Minister and Minister for the Cabinet Office announced a series of measures to open up public procurement to greater participation by small and medium sized enterprises. One of the announcements made was the launch of the Mystery Shopper service. This service exists to provide a structured mechanism for suppliers to raise concerns about public procurement practice and processes.
Suppliers can use this service anonymously to escalate issues about problems in Government supply chains to the Cabinet Office. The aim is to provide a clear, structured and direct route for suppliers to raise concerns about public procurement practice when attempts at resolving issues with a contracting authority or a first tier supplier have failed, and to help the Cabinet Office identify areas of poor procurement practice so it can work with the contracting authority to put them right and reduce the likelihood of similar issues arising in other authorities.
Reports of cases investigated are published on the Cabinet Office website.
Ukraine has launched a multi-stakeholder open contracting reform
Ukraine launched a new pilot procurement system in February 2015. The system, called ProZorro, was initiated through a public-private partnership made up of government, civil society, and the private sector. The system is based on the Open Contracting Data Standard and provides a key tool for structuring and analyzing contract data in Ukraine.
Any document and any information related to public procurement (annual plans, tender notices, tender documentation, bids, decisions of evaluation committees, contracts and their implementation, payments etc) is open and freely accessible online.
ProZorro has also developed a tool to monitor the performance of the procurement system using the available open data (bi.prozzo.org). The system has contributed to saving costs to public contracts. Within the first 3 months, US $1.5 million in public money was saved (averaging about 12% savings). The new system has also increased competition to averaging three participating bidding companies per tender.
Vietnam’s procurement law defines requirements related to publication and confidentiality
The Public Procurement Law of Vietnam (2013) includes a well defined list of documents to be published in the national e-procurement system and the procurement newspaper. In addition, the law specifically addresses the confidentiality of information at particular moments during the procurement process: