The Covid-19 pandemic has reminded us just how vital procurement is to the delivery of goods and services to Europe’s citizens and a series of scandals (see examples from Europol and OCCRP here and here) showed just how fragile and easily abused the rules still are.
As the EU moves from the COVID-19 crisis response to economic recovery, a coalition of leading open procurement champions including OCP has written to the European Commission to lay out how further procurement reforms can unlock innovation, improve competitiveness, and support the devastated small business sector whilst protecting public integrity.
Read the full letter here. Signatories include: Open Contracting Partnership, Access Info Europe, Epanstwo Foundation Poland, Fundación Ciudadana Civio Spain, Funky Citizens Romania, K-Monitor Hungary, Open Knowledge Sweden, Parliament Watch Italy, Tenders Exposed Netherlands, Transparency International Lithuania, Transparency International Portugal.
Our recommendations are:
The European Commission (DG CONNECT) should mandate Member States to publish all procurement-related data (from planning to implementation, including all bids and information below TED and national thresholds) in consistent, standardized and comparable open formats by including it under the Annex I of the Public Sector Information Directive, currently under development. More detailed information can be found in this public letter.
The European Commission (DG GROW) should do everything within its power to ensure that the newly introduced Tenders Electronic Daily (TED) e-forms are implemented in the fullest scope possible, allowing the Member States to collect full, high-quality and structured procurement information. This should include encouraging countries to use e-forms for below threshold procurement as well as collecting and publishing as many optional data fields as possible. For publication purposes, we recommend using the Open Contracting Data Standard (OCDS) and accompanying guidance on using OCDS for TED data publication.
The European Commission (DG ENVI) should urge all Member States to use open data to promote and implement Green Public Procurement (GPP). The GPP is fully aligned with the European Green Deal and the 2014 Procurement Directiveswhich enable public authorities to take environmental considerations into account. Transparent and open data will allow public authorities to procure goods, services and works with a reduced environmental impact, and provide ﬁnancial savings and reduce contracts’ costs. The GPP can be applied to contracts both above and below the threshold for application of the procurement directives.
The European Commission should support the efforts to analyze the currently existing COVID-19 related information to be able to draw all the lessons about procurement from the current crisis. One example of best practices are the four joint EU procurements for medical equipment.
The European Council should include open contracting data as an additional anticorruption mechanism, included in the Digital Europe program for the period 2021-2027, under paragraph 2.3. Measures to prevent fraud and irregularities. Accessible and published data can also assist in identifying red flags from the early procurement stages.
This post summarizes Portugal’s transparent e-procurement reform and Open Contracting Data Standard publication. It discusses the key procurement performance gaps that open data might help close, and recommended next steps that the Portuguese government and local partners can take to improve government buying habits for better outcomes.
After the 2007 economic crisis, Portugal reformed its public procurement, putting technology and transparency at the system’s heart. The radical digitization led to measurable improvements, including total savings of up to 12%, price reductions of up to 20%, and increased efficiency and effectiveness. Since then, Portugal has earned a reputation for being a leader in digital procurement transformation in the European Union, and in centralizing the publication of its procurement data.
Key features of the reform
The government revamped the institutional arrangements of the procurement system; for example, it created a Central Purchasing Body (ANCP), which would be driven by the values of transparency and economic efficiency, and put another new entity, the Shared Services Entity for the Public Administration (ESPAP), in charge of e-procurement. From November 2009, e-procurement became mandatory for all institutions for tenders above a threshold of EUR 5000. The Institute of Public Markets, Real Estate, and Construction (IMPIC) also runs a centralized database that collects all public procurement information in one place. These efforts were anchored by a thorough legislative reform that consolidated EU requirements in a new public procurement law in 2008. Unlike its EU peers, Portugal’s e-procurement system operates exclusively on privately run platforms, which compete against each other to offer e-procurement services to contracting authorities.
What data is available and what we learned from it?
The centralized database links to a register of available contracts. Information about four stages of procurement — tender, award, contract, and implementation — is also available in the Open Contracting Data Standard (OCDS) format. Portugal will soon add the publication of data on payments to suppliers and launch an Application Programming Interface (API) for easier access. No other country in the EU publishes as much information, making Portugal’s the most complete contract register in the EU, with a notable shortcoming of data around planning.
Although Portugal publishes data across four stages of procurement, the coverage of data in terms of fields published has room for improvement. The most complete information is related to parties of procurement (buyers, suppliers) and the poorest is the one around contracts.
Here is an example of the coverage of particular fields in each section, in total, Portugal published 136 OCDS fields:
*Coverage of parent
The procurement process became more efficient after digitization, although academic research and media reports have also highlighted critical areas where the country’s efforts are still falling short.
A recent analysis of the available OCDS data shows that more than 80% of government procurement procedures are direct awards. They are considerably faster than open procedures but are associated with a higher risk of corruption. A staggering 8% of all procedures were tendered and awarded in less than six days, and 20% in less than 10 days. In terms of efficiency, those are impressive figures. However, in terms of competition within the procurement market, the situation can only be described as disastrous.
Among tenders that must be shared with the EU through the centralized European tender register (TED), only 10% were open, according to research published on opentender.eu.
An analysis we conducted of cultural heritage procurement data from two sample institutions (Fundação Centro Cultural de Belém,Direção-Geral do Património Cultural) found that 92% of tenders were direct awards and 61% of the rest received only one bid. In the words, only 5% of tenders received more than one bid, showing virtually no competition in the sector.
Notably, Portugal was the first country in the EU to publish contracts related to COVID-19, by putting them under a separate emergency legal procedure. We hope this feat will not go unnoticed and local researchers and watchdogs will help the Portuguese and other governments to develop knowledge on handling emergency procurement.
What does this all tell us?
The achievements and the reputation of Portugal’s procurement system certainly reflect how an ambitious reform can help a country weather an economic crisis. Its architecture and robust technological design provide a useful model for others looking to transform their procurement systems.
However, there are obvious challenges. First and foremost, there is practically no competition. In a country where more than 99% of the market is SMEs, there is room for improvement. In comparison, around 35% of tenders in the EU receive a single bid.
Fortunately, Portugal recognizes this challenge. As part of its OGP national action plan, it set a concrete goal to reduce direct contracting and increase opportunities for smaller businesses.
Corruption remains a challenge too. The European Commission recommended further focusing on reducing corruption levels. According to a 2017 Special Eurobarometer on Corruption, 92% of Portuguese respondents said there is widespread corruption in Portugal, 55% believe public officials who award public tenders are corrupt, and 21% reported that corruption prevented his or her company from winning a public tender or awarding a public contract in the last three years. How can one expect otherwise with such high levels of direct contracting?
What can the government and local partners do?
First and foremost, IMPIC is rightly investing resources in improving the publication of procurement data by developing an API and expanding the quality and amount of data disclosed. The government should also consider creating business intelligence tools & analytics to help local procurement stakeholders engage with that data.
Secondly, procurement is not only the government’s business. It takes conversations and collaborations to improve the system for all. What we have seen working in other countries is local actors (including business, academia, media, civil society, and other government agencies) getting together to talk about their expectations from the procurement system, setting achievable goals (i.e. reduction of direct contracting, growth of trust in the system, etc.) and discussing how to collaborate and measure the progress.
Only then does it make sense to talk about the technical aspects of improving the system. Do civil society organizations require a feedback channel? Do businesses want better tender alert mechanisms? Have academics requested data in more formats fit for analysis? The technology is about serving these needs and not about top-of-the-line IT projects.
Often, a small pilot works better than large projects. For example, the Ministry of Culture is currently considering how to scale its practices with Integrity Pacts to start more systemic data-driven procurement monitoring. It does sound like an excellent testing ground for a larger system to learn from.
With its admirable digital procurement system, Portugal has a great opportunity to employ stakeholder monitoring and analysis along with further technical improvements to become a leader in open, intelligence-driven procurement in the EU. It is well-positioned to combine the transparency requirements of the EU with local market demands and make its procurement more competitive, leading to better outcomes for the Portuguese.
It will take more than open data and engagement to make Portugal’s procurement clean and competitive. However, there is a clear opportunity to use good quality data to engage market participants in helping the government to fix the issues they most care about. We are convinced that whatever strategy and tactics the Portuguese Government chooses to improve its procurement, high quality open data will be at the core of its success. And we hope we can help in that journey.
Procurement accounts for 14% of the EU’s gross domestic product and, in some member states, over a third of government spending. Businesses, especially small and medium-sized enterprises (SMEs), who are looking for lower barriers to sell to governments, are after more efficiency and value for money. Residents, like you and me, want the very best services, works, and goods for their tax money.
Just imagine how great it would be to know that your government builds the best possible quality kindergartens, schools, parks, roads, and hospitals for your quality of life. Or, if you are more of a pessimist, at least expect that the newly-built infrastructure is safe to use. Remember the horrific scenes of that bridge in the Italian city of Genoa collapsing in the summer of 2018? At the OCP, we help governments use open data, open government principles, and technology to make better, smarter purchasing decisions.
2020 is a big year for Europe as the Commission and member states lay out a coherent vision for the next five years. A fair, level playing field for public contracts has been a core part of their vision for a single market: we think that vision now has to evolve to the next level, moving beyond relying on governments sharing basic notices about upcoming tenders to being a smart, integrated digital marketplace that fosters innovation and economic opportunity. This is especially important for the EU Cohesion funds for regional development: they are one of the most visible signs of pan-European collaboration and Commission spending (indeed, about 30% of its budget) and they’ve rightly drawn a lot of flak as a vector for mismanagement and opacity by local elites.
The story so far
Most EU countries already publish lots of procurement information, either through so-called contract registers or open data initiatives (both supported by the Commission). But there is no shared agreement across the EU about the scope of required publication, data formats, accessibility, usability, etc. Governments publish as they choose, often satisfying minimum publication requirements. Those registers are more of a dead drop, information quality can be poor and is often entered across parallel systems that don’t talk to each other.
The good news is that, in contrast to a few years ago, many countries, including Finland, France, Italy, Lithuania, the Netherlands, Poland, Portugal, and Slovenia, use or have confirmed plans to use the Open Contracting Data Standard (OCDS) to address these challenges. I am particularly encouraged by Portugal, which started publishing in OCDS in 2019, after developing a procurement system that is arguably the most advanced in the EU. A lot remains to be done to see more countries implement open contracting more solidly, but the increase in interest in OCDS from at least half of the EU countries signals a positive change.
The European Commission has been supportive too: promoting contract registers or open data projects more widely. The Commission requires member states to publish every tender above EUR 110,000 in a standardized format on its Tenders Electronic Daily (TED) service, although compliance is patchy. The new TED forms have adopted a lot of the same reporting ideas as the OCDS and should further improve the quality and transparency of member state procurement data in the next two to three years. But member states will have the final say as to whether they publish around 20 mandatory fields or up to 250 optional ones. To ease the link between eForms and OCDS, we mapped the current eForms to OCDS and will do the same with the new eForms, once the eForms schema is finalized in the next few months.
Beyond procurement data publication, the Directorate-General for Internal Market, Industry, Entrepreneurship and SMEs (DG GROW) is embarking on work to collect and analyze procurement data and look at its quality and completeness (hopefully to be announced soon). The Directorate-General for Regional and Urban Policy (DG REGIO) is supporting the civil society monitoring of Cohesion funds through its Integrity Pacts project with Transparency International and organizing events and conferences to scale up its support for civic engagement. Europe’s civil society and academia are hotbeds of innovation in this regard, with projects such as Digiwhist (on digital whistleblowing on corrupt contracts), Elvis (visualizing the networks behind public spending), TheyBuyForYou, Redflags.eu and many others.
So far so good. Now comes the real opportunity to embed a step change in how business with government is done in Europe, moving beyond compliance with minimum standards to unlock innovation and global best practices. For the single procurement market to thrive, high-quality, standardized open data must be at its core.
What to expect in 2020?
We think the European Commission can do much more to encourage the creation of unified and standardized procurement data infrastructure.
First of all, the Directorate-General for Communications Networks, Content and Technology (DG CONNECT) is currently defining a list of datasets that will mandate governments to publish certain datasets as open data under the PSI/Open Data Directive. In a recent public letter, 80 civil society organizations, companies, universities and individuals made a compelling case as to why publishing procurement data offers considerable benefits.
This is not a crazy idea to believe. Recent research from Yale and others showed that publishing open data on procurement led to significant increases in competition, access for more new vendors and decreased prices. These savings could run into potentially billions of Euros given the size of the EU’s procurement market, especially if contract management is further improved. Not everything was perfect though: the study suggested increased competition may have come at the expense of lower contract performance, particularly if suppliers were new, procurement projects were complex, and contracts were awarded solely based on price but these could be addressed with better policy making.
Secondly, the Publication Office can start using OCDS to make TED data more accessible and user-friendly. This will not singlehandedly solve the data quality issues but we believe it will boost the usability of the TED data. The same consortium of CSOs, academics, businesses and thinkers have also made this case to the Publication Office.
Thirdly, DG GROW can push very hard to make sure countries implement eForms to the fullest scope possible.
To make procurement simpler and smarter at the country level, we need to see more solid implementations of the OCDS embedded in systemic reforms. Governments must start assuming the responsibility of engaging stakeholders in data reuse. This should not be a transparency effort alone. Many governments (such as Italy, Portugal, and Slovenia) are thinking about how to improve their own businesses processes using open data. Together with the Ministry of the Interior of the Netherlands and Hivos, we are organizing a two-day workshop in May to help up to 10 EU governments on that journey. Stay tuned and drop us a line if you want to get involved.
As for OCP, our focus in the EU in 2020 will be:
Advocating for public procurement to be a “high-value dataset.” We’ll work with DG Connect to make the case for the purposes of the PSI Directive (on the re-use of public sector information)
Aligning data standards and open data to increase re-use and comparability. We’ll support DG GROW on eForms & Procurement Ontology projects
Supporting EU civil society – which leads the way in innovation – to make EU citizens’ needs heard and ensure better accountability. We’ll support cross-regional exchanges and support DG REGIO in showcasing civil society engagement in procurement projects, potentially in Portugal (to be confirmed)
Directly supporting the implementation of the OCDS and open contracting strategies to increase data quality at the country level. As part of this, we’ll assist EU member states in their OCDS implementations: a service we provide free of charge through our open data helpdesk.
The EU machinery is certainly not known for its efficiency and speediness. But I anticipate, eagerly, that we will see major strides this year to open up public procurement across the EU. Even a slight shift of 1% in efficiency would save the EU around EUR 20 billion per year. So every small win means a lot for EU citizens.
The World Trade Organization (WTO) may be facing its fair share of criticism at the moment but its Government Procurement Agreement (GPA) is a crucial piece of international law between over 50 countries to open up and ensure mutual, fair access to their procurement markets. The success of the Agreement largely depends on the encouraging cross-border competition that should lead to better prices and quality of goods, services, and works for citizens.
So can we tell if it is working?
I’ve personally attended several of the GPA’s meetings at the stunning WTO headquarters on the shores of Lake Geneva over the last few years. Everybody at these events agrees that good data is central to good procurement performance, but almost no one agrees on unified approaches to publish and share that information to boost GPA objectives. Incredibly, the community can hardly assess the levels of cross-border procurement between their countries because they struggle with data collection and analysis.
The new guidance that we’ve just published explores exactly this issue. We think that an open contracting approach — and crucially the use of standardized open data — should not only increase the visibility of cross-border opportunities but also measure their impact.
Our guidance shows how collecting and publishing standardized open public procurement data, and tracking useful metrics, can improve procurement performance, including cross-border participation. This approach can also help boost market access. Multiple studies show that transparency and competition are very closely correlated (see some of the latest research on this here).
With the help of our smart colleagues at both the European Bank for Reconstruction and Development (EBRD) and the WTO GPA (with a special nod to Eliza Niewiadomska and Dmitry Palamarchyuk at the EBRD who first put us onto this topic), we realized that implementing the Open Contracting Data Standard can be transformative in how countries perform under the GPA Agreement. So we compiled new guidance to make the case to GPA member states.
I want to emphasize that implementing OCDS satisfies and goes beyond the GPA publication requirements in our experience. Also, rather than a huge year-end bureaucratic exercise in compliance reports, members can have a live statistical dashboard that can substitute regular reporting to the GPA Secretariat (as allowed under Article 16 of the GPA). This would save governments a lot of time and money.
I’m also convinced that, by making the open contracting approach useful for government reporting, GPA members will understand just how important it is to collect good data and share it with their stakeholders more generally to drive improvements in all their contracting processes.
I hope that with our guidance, governments can go beyond statements like “data is important” and do a better job of creating a transparent environment in which companies feel welcome to participate.
Open contracting expands across Europe, from the southern edges of Messina in Sicily to Finland in the far north, Georgia in the East, and Portugal in the West. I have probably talked to a thousand people last year, crisscrossing the continent, and all of them with one purpose: transforming the biggest market in the region. But also exploring the very concrete process, such as constructing a new courthouse in Messina.
Open contracting has taken hold in unlikely places – Ukraine’s powerful transformation of public contracting has now spread to Moldova, one of the newest countries to adopt more open public procurement practices.
In 2018, the European Union entered the picture as well. While it has been mostly in the spotlight for the General Data Protection Regulation (GDPR), I remember frantically renewing newsletter subscriptions on May 25, we’ve seen notable progress in open contracting.
The European Commission & open contracting
In the European Union, common procurement directives encourage open competition. Member states need to publish information about the opportunities and awards of public contracts valued over €144,000. The reporting and publication are centralized through the EU Publications Office and made available through the Tenders Electronic Daily (TED) portal.
The quality and completeness of TED data vary significantly. Businesses like the OpenOpps project have improved the usability for business looking for opportunities, using the Open Contracting Data Standard (OCDS) to standardize and aggregate tender notices from around the world.
The EU Commission has taken note and embarked on a project to improve the standardization and validation of the procurement notice forms (moving much closer to OCDS in the process and enabling an easier mapping and conversion process between the two formats). At OCP, we have developed OCDS Extensions to facilitate these goals. The new EU procurement notice forms are expected to come into effect in 2019 and hopefully improve the quality and completeness of opportunity and award data in line with OCDS.
But information is limited. Planning and post-award are not covered, neither are contracts under €144,000. To promote accountability and an open access to the market for SMEs and strategic procurement that is green, socially responsible and innovative (as laid out in the EU Procurement Strategy and Single Market Strategy) the Commission promotes public contract registers to manage and publish procurement data from the planning stage through to implementation in one single database. In 2017, the Commission released a series of recommendations for public contract registers and created financial mechanisms to support their creation in member states.
We have developed draft guidance on how the OCDS can be used to publish specific information about the planning, procurement, and implementation of public contracts relevant to the EU context and objectives, to support the implementation of contract registers.
What’s going on in the EU countries?
Implementation at the country level varies a lot. Digiwhist’s OpenTender.Eu has been a fantastic new resource to explore contracts across the EU, but I’d like to give a little overview of where we are at.
In the UK, as of writing still part of the EU, the OCDS is being used in the contract registry called Contracts Finder. It allows users to search for information about contracts worth over GBP 10,000 with the government and its agencies, including current and upcoming opportunities. Scotland has developed an open contracting strategy and seems on track to outpace the national government as they have begun to publish data. Hansel, Finland’s central purchasing body, has launched an impressive statistics portal that displays data on public buyers, suppliers, and purchases in a user-friendly way. Slovakia’s pioneering contract register solutions have been available for around 10 years already. Slovakia is now considering new e-procurement systems and hopefully will revamp its open contracting approaches accordingly, but worth mentioning that Slovakia’s contracting system inspired other efforts to translate more procurement information into better oversight and saw new organizations become procurement watchdogs, including Transparency International Slovakia and FairPlay Alliance. In France, progress at the national level continues to move slowly, with the first sample of French OCDS data published in November 2018. We’ve also seen growing interest in an open contracting approach for the City of Paris and the Paris 2024 Olympics, including co-hosting a hackathon “challenge” with the finance director of the Olympics Organizing Committee.
How about the countries that want to join the EU?
To be frank, we’ve seen the most exciting progress outside of the EU, with innovation from Ukraine, especially by integrating citizen monitoring into the process through a platform called DoZorro.org. Moldova has recently launched a new electronic OCDS-based procurement system MTender based on Ukraine’s ProZorro system. While the Georgian government, one of the influences of ProZorro, has reiterated its commitment to open contracting.
Serbia and Bosnia and Herzegovina are exploring the implementation of the Data Standard. Albania’s Public Procurement Commission has drafted an OCDS-based prototype of a complaint management tool and is planning to scale it over 2019. Kosovo has issued legislation mandating all government contracts to be published from September 2018, and the capital Prishtina is leading the way in implementation.
We’ve been proud to work with our partners at the United Nations Development Programme and European Bank for Reconstruction and Development who are scaling their engagement in the region to support these initiatives.
Our last major open contracting discussion of the year took place at the Paris Peace Forum. Coinciding with the centenary of the Armistice, it was a timely reminder of the power of an unprecedented block of countries working together to set policies to bolster peace and prosperity. It’s easy to see open contracting’s appeal in this market, which strives to break down barriers and simple rules to improve opportunities for everyone in it. The approach seems to be here to stay, providing more open and fair public contracting to ensure money spent provides value to citizens all over.