Making public procurement truly public

Riga, 25.2.2015

Mathias Huter

Email: mathias.huter@gmail.comTwitter: @mathiashuter

Entrance hallway of the Georgian State Procurement Agency, 2010

Transparency in PP matters

• Public procurement in the EU represents 20% of GDP– More than € 2.4 trillion/year

• PwC report on EU procurement: maximum transparency is a good practice against fraud and corruption

• Transparency in procurement allows– Civil society & media to identify systematic problems

(policy solutions) and individual cases – Encourages businesses to participate in PP, if they trust

the process and can see why they lostSource: http://ec.europa.eu/anti_fraud/documents/anti-fraud-policy/research-and-studies/identifying_reducing_corruption_in_public_procurement_en.pdf

Open EU procurement data

• Tenders Electronic Daily (TED) data is quite difficult to search, process and analyze (PDF-files)

• Activists have used algorithms to make TED data better searchable and more accessible: – http://ted.openspending.org/ – https://spendnetwork.com/

• They have started to link TED data with other information (lobbying spending, EU contracts, EU experts)…– http://openinterests.eu/

• … and have started looking for trends in the data– http://tt.spendnetwork.com/index.html

Case study: Slovakia

• Pro-actively publishes all contracts since 2009– Meta data and scanned contracts available on one central website– Including data on small purchases and receipts– A few exceptions: labor contracts, tombs,…– Sensitive personal or commercial data in contracts is redacted, but

this is only the case in less than 5% of contracts– Contracts only come into force once they are published

• Ensures high compliance

– Increased competition: from average 2.3 bids in 2009 to 3.6 bids in 2013 per tender

– People care: some 9 per cent of the population said they had looked at contracts (TI Slovakia survey)

• Introduced full e-procurement in 2011, conducted through a central platform, used by more than 3,500 state bodies

• All tender documentation accessible online for everybody– All bids, all documents, contracts & amendments, payments,

all procurement budgets of 3500+ public bodies– Transparent, anonymous Q&A between suppliers and

procurers • Publication of all awarded contracts, including small purchases • Blacklist of banned companies, Whitelist of privileged companies

public • Tenders can be appealed and frozen online

– Review within 10 days, appeals and complaints published

Case study: Georgia

Georgia: Single-source contracting

• Analyzed data for 430,000+ single-sourced contracts & receipts

• Cross referencing data – Contracting data, https://tenders.procurement.gov.ge– Scraped company registry,

http://corpsearch.tigeorgia.webfactional.com/en/ – Scraped asset declarations of public officials, http://

declarations.gov.ge– Scraped donations to political parties, http

://sao.ge/monitoring-service-of-finance/declaration/contributions

The power of open contracting

• Found more than EUR 100 million in single-sourced contracts going to companies officially owned by Members of Parliament, high-level public officials and their spouses (2011-2013)

• Found that in 2012: the ruling United National Movement party had received about 58% of its reported donations – EUR 3 million – from individuals who were linked to businesses that received single-sourced contracts with a total value of more than EUR 72 million that year (4.125% of contract value)

• Report available at: http://transparency.ge/en/simplified-procurement

The case for open contracting• Stronger trust in the procurement process

– Increased participation from bidders, fosters competition – Lower prices, better value for money

• Public scrutiny deters wasteful spending and corruption• Allows government to better understand the companies it is dealing with

– Detect cartels, collusion, conflicts of interest• Small reduction in fraud & corruption can result in massive savings for the

public– Investment in procurement pays off

• Cutting of red tape and savings on administration Good for citizens Good for governments, Good for companies with integrity• More information at http://www.open-contracting.org/

Thank you for your attention!

Mathias HuterConsultant on good governance

Email: mathias.huter@gmail.comTwitter: @mathiashuter