In April, we requested proposals from researchers around the world to investigate the effectiveness and integrity of COVID-19 emergency procurement. One month later, 12 research grants were awarded to researchers from Argentina, Colombia, Ecuador, Georgia, Guatemala, Kenya, Lithuania, Nigeria, Nepal, Paraguay, Philippines, and Uruguay. These research projects were carried out with support from Hivos and other development partners.
During the pandemic, a firm in Guatemala specializing in construction materials was awarded public contracts to supply N95 masks at a higher price than its competitors. According to the Anticorruption Institute, in Colombia around 30% of firms that won contracts during the emergency had a similar characteristic: they started supplying all kinds of different goods and services, even if they had no experience of selling them in the past. These findings, from new research on emergency procurement in 12 countries, illustrate how governments, civil society, and development organizations around the world are struggling to ensure that the COVID-19 emergency response spending is being used effectively, efficiently and accountably.
“What shocked me the most, when analyzing emergency procurement in the Philippines is that only a small fraction of the posted tenders have been approved for the present fiscal year,” said one researcher, John Raymond Barajas.
Many of the researchers also discovered serious issues with the quality, timeliness, and completeness in the published data.
We are pleased to share a synthesis report of their insights and recommendations to improve the response to the pandemic, which includes links to each country report.
In total, the 12 research projects reviewed over 1,350,000 contracts and found:
- Higher prices paid during emergency procurement than historical averages. Daniel de Leon found that prices were up to 8.8 times higher in Guatemala.
- Disparity in unit prices paid by different buyers for similar goods and services during the same period of time. For instance, in Paraguay a respirator was bought at a price 176% higher than in the past.
- High usage of ‘multipurpose firms’ who have no specialization or prior experience selling the purchased items. For example, in Colombia, the Anticorruption Institute created an index to assess the participation of multipurpose firms.
- Low rates of budget utilization. John Raymond Barajas in the Philippines found that lower capacity procuring entities were less able to procure successfully and that budget utilization increased from 17 to 47% after changes to procurement rules enabled more direct procurement.
- Use of firms less than 6 months old and firms created during the emergency. For example, in Georgia, Natalia Baratashvili found that 62 contracts (5% of the total value) went to 32 companies established just six months before the pandemic. 8 were registered between 2 March – 1 May. “This was the most shocking discovery, finding public agencies which awarded direct contracts to one- or two-month-old companies,” said Baratashvili.
Among the serious issues with the quality, timeliness, and completeness identified in the published data, researchers in Guatemala discovered that without item classifications, 62 different descriptions were used for face masks. In Buenos Aires, some contract information was published more than 60 days late due to lax deadlines and enforcement of publication requirements. Access to information requests by Transparency International Lithuania revealed 73 contracts worth EUR 5.5 million that were not proactively disclosed.
Perhaps less surprisingly, the best analysis emerged in places where published data was standardized, timely, and of good quality.
“Open and standardized open data reduces the time to search and structure the information,” said Félix Pedro Penna from Buenos Aires. “It allowed me to automate processes and to focus exclusively on extracting findings and offering recommendations on emergency purchases.”
The projects in Argentina, Colombia, Ecuador, Paraguay and Uruguay used OCDS data. The projects in Georgia, Guatemala, Kenya, Lithuania, Nepal and the Philippines used non-OCDS data.
“Procurement data published as open eliminated the need to undergo the tedious process of legally acquiring such data for further use and analysis,” said John Raymond Barajas from the Philippines.
In Kenya, Timothy Kiprono found that only 125 out of 40,000 procuring entities published any information during the emergency on the national procurement portal, and only a single non-competitive contract was published linked to COVID-19 emergency spending, despite rules requiring disclosure.
In Paraguay, because of the high quality of OCDS data published, researchers IDEA and Centro de Desarrollo Sostenible (CDS) were able to create an interactive platform to explore emergency procurement, including:
- Item details, including a comparison of emergency price to historical average. Prices were up to 176% higher.
- A list of the suppliers and if they have been sanctioned. One supplier secured 70% of the value awarded during emergency.
- An interactive view of the relationships between the suppliers, that highlights if suppliers have the same address or the same contact information. Two companies were found to have the same owner and had been previously sanctioned.
“This platform allows to easily detect suspicious cases that even came to light in the press, by viewing the data from different perspectives,” explained Arturo Volpe, one of the researchers from CDS.
Most of the research teams offered specific recommendations to improve the quality and completeness of the data. For example, Anticorruption Institute in Colombia recommended more transparency for procurement carried out under special regimes and by state-owned enterprises: “We understand that emergency public procurement needs to be faster than usual, but efficiency in the allocation of emergency contracts must not sacrifice transparency.”
Datalat in Ecuador and Natalia Baratashvili in Georgia both called for improved tagging of COVID-19 procurements. Cívico in Uruguay and IDEA/CDS in Paraguay called for improved publication of unit prices. Timothy Kiprono in Kenya, FollowTaxes in Kaduna State, TI Lithuania, and Natalia Baratashvili called for publication of key data points as open data with improved standardization.
Several researchers called for the establishment, improvement, or digitization of supplier registries (including Felix Pena from Buenos Aires, Anticorruption Institute in Colombia and Natalia Baratashvili in Georgia).
Another prominent recommendation was to centralize the coordination of procurement to consolidate needs, improve competence, and reduce price disparity (made by TI Lithuania, Datalat in Ecuador and Felix Pena in Buenos Aires).
Daniel de Leon in Guatemala called for the establishment of standardized requirements for key items and Cívico in Uruguay called for the establishment of reference prices and suppliers.
In Nigeria, FollowTaxes recommended to train government procurement officers and build their
capacity on open procurement, open procurement data and the available systems and tools in the state.
John Raymond Barajas in the Philippines created an index to classify the capacity of procuring entities and match them with suppliers with capacity to supply in different regions in order to pair procuring entities with bidders best suited to their contexts. He recommended that procuring entities pilot use of the tool and that the national government support and assist the lowest capacity procuring entities to effectively execute procurement.
The next steps
We will work with the researchers to socialize their findings for local change and impact. So far, in Buenos Aires the findings and recommendations were shared with the local government to evaluate if they could be implemented.
In Colombia, the research and the index have been featured in local media and mentioned by the International Monetary Fund as an example of a good tool to monitor public contracts.
In Ecuador, Datalat hosted feedback sessions with the public procurement agency SERCOP to improve the data publication of emergency contracts.
In Nigeria, FollowTaxes will share the findings at a multi-stakeholder forum of the Kaduna Open Government Partnership’s Open Contracting Technical Working Group.
TI Lithuania has advocated for more transparency on emergency contracts and participated in roundtables with stakeholders. “TI Lithuania inspired the public procurement office in Lithuania to open the COVID-19 related procurement data and it keeps updating data on COVID-19 procurement since then, and very recently initiated amendments to the law needed to have an official list of reliable suppliers,” said TI Lithuania.
Finally, we want to work with you! We will soon announce a call for proposals for the next round of action research looking at how open contracting approaches can support efficient and effective spending during the global recovery from the social and economic impacts of COVID-19.
Photo: A new laboratory for COVID-19 testing in the Philippines. Eric Sales/ Asian Development Bank. (CC BY-NC-ND 2.0)