On May 26, the Open Contracting Partnership and USAID Civil Society Support Program in Central Asia organized a joint community call ‘Viral Procurement’. Over 90 participants from 10 countries joined to find out more about COVID-19 procurement in the region. Speakers from Kazakhstan, Kyrgyzstan, Mongolia, Moldova, and Ukraine shared practical insights, and discussed problems with public procurement in Tajikistan and Uzbekistan too.
Every country in Eastern Europe and Central Asia faced major procurement challenges when the COVID-19 pandemic hit. They grappled with questions like how to quickly redirect resources to fight the virus, how to calculate local needs for protective and medical equipment, and how to procure supplies efficiently from a chaotic and severely depleted market. And every choice could help or hinder efforts to curb the crisis.
“We are all in the same boat,” said Veronica Cretu, envoy to the Open Government Partnership in our recent community call with procurement and transparency experts from the region. “And we all want to know where the boat is headed and what’s underneath. That’s the only way we can make the right decisions to overcome COVID-19.”
Despite the challenges, successful strategies have emerged for preventing inefficient government spending and ensuring accountability in coronavirus-related procurement in places across the region. Simplified procurement rules have helped deliver supplies to hospitals quickly. Data platforms have been developed to improve decision making by authorities and identify irregularities. And citizen oversight has even stopped suspicious deals from going ahead. In many cases, these initiatives were the product of collaborative partnerships between government, businesses and civil society. We’re convinced that these and other strategies summarized in this blog, from Kazakhstan, Kyrgyzstan, Moldova, Mongolia and Ukraine, will prove to add value well beyond the crisis.
Why timely and transparent procurement planning is vital
Although Kyrgyzstan shares a border with China, and the government claimed to be preparing for the fight against the coronavirus back in February, procurement plans were not reviewed, according to Kyrgyz public finance expert Bakytbek Satibekov. It turns out, in February and March, the government did not buy enough personal protective equipment and many healthcare professionals contracted the virus.
Satibekov believes one big problem in Kyrgyzstan is that open data is only published about signed contracts, while there is no information on procurement plans and agreement implementation.
“If we had seen procurement plans back in February, the public could have warned the authorities: you have to prepare for the epidemic and buy personal protective equipment (PPE) for medical workers. Instead, they were persuading us that they were getting ready, but it was not true,” he says.
When public institutions rushed to buy PPE in spring, they encountered another problem: the market was virtually empty.
“We didn’t even have protective masks. There was no domestic production,” says Aybek Mukambetov from Soros Foundation-Kyrgyzstan. To make up for the lack of domestic PPE, the organization raised funds and procured goods from abroad. But they had numerous challenges in selecting suppliers quickly and accessing funds to pay upfront. Many countries had already banned the export of such products.
Indeed, every country in the region probably faced a similar free-for-all scramble for supplies. So how have they managed to handle it?
Simplified procurement rules
Like any crisis, the pandemic required a rapid response. Competitive but lengthy tender procedures may not make the most sense when health facilities need items quickly and there are shortages on the market. That’s why, in every country, the regular rules have been loosened for COVID-19 procurement, and public institutions have been granted the right to enter into direct contracts.
In Ukraine, activists urged the government to simplify COVID-19 procurement procedures.
“We analyzed the market and realized we had to act rapidly, since the duration of the procedures in this situation was problematic both for procuring entities and suppliers,” said Ivan Lakhtionov, Director of Innovation Projects, Transparency International Ukraine. “The prices were changing every day, and if we waited one extra day, the prices could be completely different, or the goods could be sold out.”
“The prices were changing every day, and if we waited one extra day, the prices could be completely different, or the goods could be sold out.”
At the end of March, the government decided on the list of goods and services which could be bought without competitive bidding. This empowered procuring entities to secure critical goods every day.
Kazakhstan followed a similar approach. On March 20, a week after the country’s first coronavirus case was diagnosed, the government adopted a special procedure for COVID-19 public procurement.
“A list of goods, works and services that could be procured without competition was defined,” explains Kuanysh Onalbayev, Executive Director of Zertteu Research Institute. “The payment terms were reduced to five days after contract fulfillment. The suppliers would not risk fines for failure to implement the agreement in time. In addition, all goods for COVID-19 could only be purchased from domestic manufacturers.”
This procedure will remain in effect throughout the summer.
Evidently, during an emergency, public contracts have to be as rapid and simple as possible, at least until all the necessary goods are available on the market and clear market prices are established. But even urgent procurement must be completely transparent.
Public records matter
Because coronavirus-related procurement has remained transparent in most countries in the region, say the speakers, citizens can monitor how the government spends their taxes during the crisis.
“The authorities must report on all procurement above USD 50,000. This rule also applies to coronavirus procurement,” says Tur-Od Lkhagvajav, president of Transparency International Mongolia.
In Kazakhstan, COVID-19 procurement data, like all other data, is collected on the government electronic procurement portal in a machine-readable format. Ukraine, with its Prozorro system, even created a new method for reporting on COVID-19 procurement. Each procuring entity can now use the tag “COVID-19”, and with one click of a filter, citizens or supervisory agencies can review all the relevant procurement procedures.
In some countries, though, the public had to fight for transparent procurement during the crisis. Take Moldova: it has a transparent electronic procurement platform MTender, but shortly before a state of emergency was announced, the government excluded all medical procurement from the system.
“As a result, we had no data on COVID-19 procurement. But we managed to unite over 30 civil society organizations, and thanks to public pressure and constructive dialogue with the Ministry of Health, authorities agreed to open up the data on combating the coronavirus,” says Constantin Cearanovski from the organization Positive Initiative about the origins of the e-platform Tender.Health.
Tender.Health enables rapid analysis of spending, including what has been bought by specific procuring entities and product prices. This serves as a useful tool not only for citizens, but also for public entities, since they can see the best prices and thus find the best suppliers. Activists plan to further develop this platform to use it for all under-threshold procurement in the future.
Civic oversight to spot and stop corruption
Another benefit of transparency is the ability of citizens and journalists to monitor procurement, identify possible violations or corruption and influence the situation.
In Kazakhstan, the public has been scrutinizing COVID-19 procurement since day one. They managed to stop multiple violations. For instance, activists revealed that a local health directorate procured protective masks from an unqualified company which was known for delivering flowers in a different city. Their article was widely publicized, which resulted in the anti-corruption agency terminating the agreement and inspecting the procuring entity’s other tenders. In total, investigations by the Kazakh organization Zartteu Research Institute led to the termination of agreements with violations worth USD 360,000.
In total, investigations by the Kazakh organization Zartteu Research Institute led to the termination of agreements with violations worth USD 360,000.
In Ukraine, activists, including the DOZORRO monitoring community, managed to stop violations when procuring entities attempted to purchase clearly irrelevant items using the COVID-19 procedure. The most outrageous case was the procurement of thermal facial-recognition cameras for over USD 2 million without competition in Kyiv. (The exhaustive list of goods that can be purchased under the COVID-19 procedure in Ukraine does not include any cameras whatsoever.) After a public outcry, the agreement was terminated.
“Journalists have a lot of influence in Ukraine. That’s why our organization decided to host webinars for media staff on how to investigate COVID-19 procurement,” says Ivan Lakhtionov. Over 60 journalists took part in their first session.
Unfortunately, both in Kazakhstan and Ukraine, journalists and activists are not always enough to stop violations. But transparency in coronavirus-related procurement can still assist subsequent audits and inspections by law enforcement and supervisory agencies.
In any case, without the deterrent of civic oversight, the risk of corruption in COVID-related procurement would be significantly higher.
Private and public sector cooperation
“The coronavirus has shown that, when a crisis occurs, it becomes possible to quickly unite the efforts not only of the government and the public, but also of commercial companies and donors in Moldova,” said Constantin Cearanovski. Speakers from other countries shared similar experiences.
Both in Ukraine and in Kyrgyzstan, a significant share of PPE and medical equipment procurement was paid for by businesses and charitable foundations. This was not just because there was a lack of budget funding, but also because businesses and donors have more flexible procedures. This experience is also valuable because it allows for businesses and governments to compare prices for particular items. For instance, in Kyrgyzstan, such analysis showed the government did procure goods at unreasonably high prices.
And yet, businesses and other donors quickly faced another challenge: deciding which facilities most needed the supplies they had procured. This problem, too, was resolved through public-private partnerships.
We developed a medical supplies map. It shows whether our primary hospitals for the coronavirus have enough PPE and medical equipment, and how many beds and doctors are available. You can see information about any hospital, and this data is updated every day.
“We developed a medical supplies map. It shows whether our primary hospitals for the coronavirus have enough PPE and medical equipment, and how many beds and doctors are available. You can see information about any hospital, and this data is updated every day,” explains the director and founder of the Ukrainian service for contractor verification YouControl Serhii Milman. The map was created together with the Presidential Office and other civil society organizations.
YouControl has also given all Ukrainian medical procuring entities free access to its analytics systems, so they can vet suppliers. This is essential when procurement takes place without competitive bidding.
A service to verify the needs of health facilities amid the coronavirus crisis has also been created in Kyrgyzstan. This online platform is called Tirek (which translates as “support”). It reflects the current needs of hospitals for medication, equipment and special clothing. Tirek was created as a joint project by authorities, the business community and public activists on a voluntary basis.
Sustaining effective procurement strategies beyond the crisis
While the pandemic has accentuated existing problems that plagued the procurement sector, it has also, out of necessity, been a catalyst for establishing effective partnerships that can quickly resolve complex and urgent issues in the procurement system. In the call, we discussed recommendations for supporting such efforts beyond the immediate health crisis.
- Publishing open data, not only on the concluded agreements, but also on procurement plans and contract implementation, is absolutely essential. These stages carry a lot of corruption and inefficiency risks.
- Civic monitoring needs to develop further. Without it, concerns over anomalous tenders, price gouging and other misuse of funds would not be acted upon. Practice shows that when it came to sensitive COVID-19 procurement, the government actively made the necessary decisions following widely publicized investigations. Can this effective cooperation stay with us even after the pandemic?
- During the discussion, we received multiple requests for training on open data use, procurement monitoring, work with indicators, advocacy, and communications. This shows a need to spend more time on strengthening civil society in the region.
- Partnerships established between the government, private companies and the public during the crisis need to be maintained and reinforced. Mutual trust between the government, the business community and civil society is still a rarity in the EECA region. But the coronavirus crisis can serve as the instigator for restoring trust and cooperation. The various stakeholders should develop their understanding of the benefits of partnerships, their types, roles and tasks. Partnerships work best when everyone understands their idea, values each other’s experience, and when there’s trust and respect. That is why it is key to provide stakeholders with an opportunity to learn how sustainable partnerships can be created.
The European Bank for Reconstruction and Development actively promotes open contracting principles in the region, helping to publish open data on public procurement in multiple countries, including Armenia, Kyrgyzstan, Moldova, Tajikistan and supporting Kazakhstan and Uzbekistan. Other organizations, such as USAID, Open Society Foundation, DFID, the European Union and Eurasia Foundation, contribute to this work in meaningful ways as well.
The Open Contracting Partnership will continue facilitating the development of such partnerships in the region and strengthening them, for the sake of fair and efficient public contracting that provides citizens with the goods, works and services they need.