When and How to Open Contracts: Transparency and Engagement through World Bank Projects

Kristina M Aquino, The World Bank & Kathrin Frauscher, Open Contracting Partnership​

Procurement is the bellwether of how a government is stewarding its public resources. The ultimate goals of procurement are driving economic value; supporting entrepreneurship; and delivering better goods, works, and services. Without open, fair, and responsive government contracting there can't be sound public financial management and effective service delivery.

The World Bank has long recognized the power of public procurement and is assisting governments around the world to transform antiquated, paper-based systems, into modern electronic procurement systems. Yet often these reforms are solely focused on the use of technology and not on the goals.

For these goals to be achieved, public procurement reforms need to engage citizens from the onset and lead to the publication and use of high-quality, user-friendly, and timely contracting data and information.

At the recent World Bank's conference "Foundations and Frontiers of Open, Participatory, and Accountable Government" it was discussed how to open up public contracting to make it more transparent, accountable and therefore more effective.

Open Contracting in World Bank Projects

Open contracting is the practice of (1) publishing and using open, accessible and timely contracting data to drive performance and (2) engaging citizens, businesses, and government to identify and fix problems. It has been integrated into 11 World Bank projects, such as operations in Bangladesh, Nigeria, and Afghanistan. Globally, open contracting is being implemented by over 40 government agencies with huge demand coming from the Latin America and Europe and Central Asia regions. In fact, open contracting is so popular that 61 of the 79 countries that signed up to the Open Government Partnership have had at least one open contracting-focused commitment in their national action plan.

Countries that are implementing open contracting have seen impressive results. For instance, Ukraine has saved billions of dollars, lowered prices for chemotherapy drugs, and increased public trust through its procurement reforms. The City of Bogota improved the quality of 35000 school meals while lowering prices by 10%. A 2017 World Bank study surveying 88 countries found that the places with both a high degree of transparency and effective oversight mechanisms in procurement reported the lowest incidence (and smaller) kickbacks.

One of the things TTLs and governments leading the open contracting procurement reform often ask is: Do we need to disclose everything? The quick answer is: No. The Open Contracting Data Standard (OCDS) provides a recommendation of how to treat procurement data so that disclosure is more meaningful and useful, but the litmus test for proactive disclosure is simple: If in doubt, go back to how the use case or desired outcome from the reform is being served.

Integrating Open Contracting in Three Steps

How can World Bank TTLs working on public financial management (PFM), procurement or sector projects integrate open contracting into their projects? Here are some ideas:

1. Identify goals and desired outcomes of the contracting reform by engaging key stakeholders and asking them about their needs. When government center their reforms around that, they can ensure that procurement laws, data systems and contracting processes are structured to realize those goals. For instance:
   1. oIn the Kyrgyz Republic, the reform team surveyed small and medium-sized businesses to understand what barriers they were facing to bid on public contracts.
   2. In Uganda, there is a multi-stakeholder working group that collaborates with the procurement agency on its reform agenda.
   3. Ukraine has a public business intelligence tool with KPIs (Key Performance Indicators) such as savings, number of bidders, and competitive vs. non-competitive procedures.
2. Use the Open Contracting Data Standard (OCDS) to collect, publish and use procurement data. Public procurement is probably one of the most valuable datasets in government as it reveals trends and information in how public money is spent and gets converted into roads, schools, and medicines. Some examples:
   1. Zambia introduced several standardized monitoring reports when it introduced OCDS as part of its new electronic procurement system.
   2. In Paraguay, a visualization platform includes an interactive map of tenders and distribution of contracts by volume per procuring entity. Students monitored how royalties from a hydroelectric dam were allocated to schools in their region. In 2017, 80% of the most needy schools received funding, compared to less than 20% in 2015.
3. Integrate citizen feedback mechanisms. UK and Zambia prove that new IT systems and publication of open contracting data alone may not be sufficient to achieve impact. Involving stakeholders and integrating feedback are essential to achieve results:
   1. In Colombia, the procurement law (law 850 of 2003) allows citizens' oversight organizations to supervise public management, especially in relation to awarding and implementing public contracts.
   2. In Honduras, the local CoST multi-stakeholder group carried out an assurance process (which highlights the accuracy and completeness of infrastructure data) on a sample of General Roads Directorate projects. It revealed that 60% of projects were based on outdated designs. This led to excessive cost overruns, ranging from 157% to 197%, and time delays of 18 to 60 months. The government has since introduced new policies that require all projects to provide up-to-date designs before construction can start.
   3. In Chile, civil society organizations and government agencies are working together in a public-private working group to monitor corruption and red flags in procurement.
   4. In Ukraine, the reform team launched DoZorro, a tool for identifying corruption risks, where citizens can submit feedback and report violations across the procurement cycle. More than 133,000 citizens have visited the platform and recorded 14,000 feedback reports, since its launch in November 2016. So far, around 50% of these cases have been resolved, including over 1,200 cases where vendors were changed as a result of feedback. The platform is also strengthening accountability. 22 criminal charges and 79 sanctions have been issued.

To summarize, open contracting is not just about increasing the volume of procurement data that is made public. It is crucial to ensure that citizens are engaged in the process and can derive results from contracting - including companies and civil society groups from reform goal formulation through implementation and monitoring. We are here to help you make your PFM and procurement projects more open and effective. Reach out to Kristina Aquino at kaquino@worldbank.org (Governance GP Solutions and Innovations in Procurement team) or Kathrin Frauscher at kfrauscher@open-contracting.org (Open Contracting Partnership).