Open Contracting explained
Open contracting, the use of data, disclosure and engagement throughout the full procurement cycle. It is the pro-active disclosure of contract information with open access to the public. According to the Open Government Partnership, Open Contracting can be defined as the publication of government contracts from the awarding process, to the monitoring and evaluation of contract implementation. Open Contracting principles call for the timely, current and proactive disclosure of documents and data related to public contracting. This is to empower the public to understand and monitor public contracting as a safeguard against inefficient, ineffective and corrupt use of public resources.
Open Contracting Data Standard
At the core of open contracting is the Open Contracting Data Standard (OCDS) which is an internationally accepted standard. There is a set of global principles for improving disclosure, data and engagement across the entire chain of public procurement, from planning through delivery. This means that various countries can share the approaches to monitoring and measuring improvements in relation to open contracting. The OCDS model was created to support organizations to increase contracting transparency and allow deeper analysis of contracting data by a wide range of users.
The OCDS approach:
- Publish early, and iterate: improving disclosure step-by-step
- Simple and extensible JSON structure
- Publish data for each step of the contracting process
- Create summary records for an overall contracting process
- Re-usable objects: organizations, tender information, line-items, amounts, milestones, documents etc.
- Recommended data and documents at basic, intermediate & advanced levels
- Common open data publication patterns
- Guidance on improving data collection and data quality
- A growing community of users and range of open source tools
Benefits of Open Contracting
Corruption continues to hamper development and puts lives of millions at risk when vital services fail to materialize. With open data at the core, government contracting information can be made actionable by developing tools to analyze and sift through contracts, improve access and notifications for companies who want to grow their business with government, and, finally, monitor that contractors deliver on what they are paid for. Open Contracting plays an in important role in governance as:
- Open contracting delivers better deals for governments, provides a level playing field for the private sector, and high-quality goods and services for citizens.
- Boost integrity & prevent corruption
- Detect and defer fraud and corruption
- Enable citizen engagement and public oversight
- Create better value for money and save taxpayer money
Open Contracting is an approach to improving public procurement through three core elements: 1. Public disclosure of open data and information about the planning, procurement, and management of public contracts. 2. Participation and use of contracting data by non-state actors at appropriate points in the planning, tendering, awarding, contracting and monitoring of contracts. Participation involves appropriate communication, consultation, and collaboration to make sure increased information is used to create changes and also involves input into policy to make sure that contracting follows a set of clean, widely understood rules. 3. Accountability and redress by government agencies or contractors acting on the feedback that they receive from civil society and companies, leading to real fixes on the ground, i.e. better public goods, services, institutions or policies.
Access to Information legal framework is recognized to advance disclosure of procurement data and an enabler of public participation which are two components of the open contracting approach. In the other way around, open contracting movement and initiatives have triggered more reflection around access to information and push for adoption and implementation of the access to information legal framework.Transparent and participatory procurement can cut costs, ensure better value-for-money, reduce fraud and corruption, provide more opportunities for businesses, and empower citizens to hold local and national government accountable.
Public contracting has been identified as the government activity most vulnerable to wastefulness, mismanagement, inefficiency, and corruption. Corruption has significant costs. According to the UN Office of Drugs and Crime, corruption and fraud may amount to 20-25% of procurement budgets. 57% of foreign bribery cases prosecuted under the OECD Anti-Bribery Convention involved bribes to obtain public contracts. This is wasted taxpayers money. The distorting effect of lack of transparency and corruption in contracting processes occurs to the detriment of the tax payer who ends up paying more for less (Evenett, S., 2003).
In Kenya The President signed the Executive Order 2, Effective the 1st of July 2018, that all public Procuring Entities shall maintain and continuously update and publicize ( through the website of the Procuring Entity, e-Citizen, Public Procurement Regulatory Authority platforms, public notice boards and/or official government publications; complete information of all tenders awarded as per the Executive Order .
Public contracting should be conducted in a transparent and equitable manner, in accordance with publicly disclosed rules that explain the functioning of the process, including policies regarding disclosure. Governments shall require the timely, current and routine publication of enough information about the formation, award, execution, performance and completion of public contracts to enable the public, including media and civil society, to understand and monitor as a safeguard against inefficient, ineffective or corrupt use of public resources. Information disclosure is a characteristics of governments, companies, organizations and individuals that are open and transparent in information, rules, plans, processes and actions. As a principle, public officials and civil servants have a duty to act visibly, predictably and understandably to promote participation and accountability. Simply making information available is not sufficient to achieve transparency. Folscher (2010)
Evidence from Japan indicates that improved transparency reduced procurement costs by (only) a maximum of 3% and that the existence of corruption and market collusion is likely to weaken the effect transparent practices may have on government expenditures (Ohashi, H., 2006). In Slovakia, where a government contract is not legal until it is published. This includes putting an unambiguous public disclosure clause in all government contracts and publishing data on contract milestones and performance
In East Africa, scandals of grand corruption schemes in government and the private sector have shown a lack of transparency in establishing the real owners and beneficiaries of companies. Countries like Kenya were the first to commit to the Open Government Partnership (OGP) principles on anti-corruption. Specifically, at the Anti-Corruption Summit, Kenya stated they will take measures in line with its new company regulatory framework to establish public central registers of company beneficial ownership (BO) information and publish this data online, as confirmed as well in it’s OGP National Action Plan.
INFONET through Usajili has been keen on accelerating the use of beneficial ownership to create an open, usable and publicly accessible beneficial ownership register. These efforts are all geared to prevent and uncover corruption in Kenya’s governance institutions and the private sector. INFONET has made progress with Kenya’s National Treasury with the agreement of a MoU. The MoU will enable the institution to publish actionable information on public procurement contracts and assess the companies and individuals who get these contracts. This is a significant step towards establishing Kenya’s first Beneficial Ownership Registry. In Nigeria, The Public Private Development has developed a web platform to monitor government spending. This platform, called Budeshi which means open it in Hausa, is tracking contracts for health centers and school construction(World Bank).
The Open Contracting for Health Initiative by Transparency International directly targets procurement across a number of low and low-middle income countries to address inefficiencies, thus more access to health care. According to World Health Organization, five of the ten leading causes of inefficiencies in the health sector are procurement related.
Better public procurement through data, disclosure and engagement means better deals and lives for everyone. That’s why open contracting is so central to open government. We believe that a commitment to opening up government contracting in Africa is going to be a powerful tool towards ensuring that public expenditures will be spent better and deliver better results in the future.