This blog covers Afghanistan’s progress so far in opening up public procurement. Starting from a ‘fantastically corrupt’ environment, reformers have put due processes in place and are working to create a transparent, integrated procurement environment that now covers all above- and below-threshold procurement. However positive, reforms have been volatile and faced continuous challenges against mafia networks, vested interests and security risks. But early results are promising, suggesting a total of AFN 58 billion (US$740 million) in savings. Where accompanied by civil society monitoring – now a component for the second wave of open contracting reforms – studies have shown that scrutiny of public procurement has an impact on service delivery.
“Fighting corruption, playing with crocodiles,” reads the Skype status of Afghan anti-corruption campaigner Ikram Afzali.
For a decade and a half, Afzali has been working to root out graft in one of the most corrupt countries in the world. With a budget hemorrhaging money, a fragile government, and a four-decade-long conflict with no end in sight, it’s hard to overstate how challenging the environment is. But Afzali isn’t deterred.
“If you have to live among the crocodiles, you’re going to have to tame them if you can,” he explains on a call from his office in Kabul.
Afzali is the head of Integrity Watch Afghanistan, an organization that uses transparency to help “tame» the so-called corrupt crocodiles that threaten the country’s future, shining a light on their predatory behavior and the murky swamps in which they breed.
Improving public procurement is key to his work. The reason? “Crocodiles eat the big meat,” says Afzali. Public procurement accounts for a massive amount of Afghanistan’s public spending, up to 50% of its budget or as much as 33% of its GDP. For over a decade, Integrity Watch has been monitoring the implementation of public contracting projects at the community level, checking the quality of new roads and smaller construction works like schools and clinics, and where possible, their adherence to the original project specifications.
“We saw a lot of bad procurement, especially by international forces,” says Afzali. “A lot of Provincial Reconstruction Teams [or PRTs, which were responsible for rebuilding efforts at the local level] were doing all these contracts and nobody knew about them. In some places, they were just handing over money to people to do projects. So the construction quality was very, very low most of the time. People were complaining about the quality and the fact that buildings… were already falling apart immediately after they were constructed.”
His assertion is backed up by a litany of investigations into failed projects by the US Special Inspector General for Afghanistan Reconstruction (SIGAR).
And it’s not just buildings; the highway ring road project connecting northern Afghanistan to the western provinces is perhaps one of the most vivid examples of the country’s problems with procurement. In 2002, after the fall of the Taliban government, there were just 50 kilometers of paved roads in Afghanistan. Building roads was put at the heart of the strategy to rebuild the economy. The north-west section of the ring road, a project funded by the Asian Development Bank, had the potential to link underdeveloped but important farming regions to the Central Asian market. But the contract was canceled and the road was never built. The American-Turkish firm outsourced almost the entire project to subcontractors. After complaining about security issues, they left Afghanistan without completing the job, reportedly pocketing an advance of US$107 million, 25% of the total contract value. The continued lack of roads affects almost every aspect of Afghan lives, from the war effort and trade, right down to the distribution of medicines. In 2014, the newly formed National Unity Government, as a first case, took the American-Turkish joint venture to the Singapore International Arbitration Centre; the case is now in its last stages of arbitration.
Around five years ago, Integrity Watch began dealing with procurement at the central level, after President Ashraf Ghani invited them to become civil society observers of the newly established central oversight body, the National Procurement Commission (NPC). The NPC reviews all government contracts over US$1 million and includes as members the heads of key ministries and the Chief Executive Officer Dr Abdullah Abdullah, with Ghani as Chair. Meeting on a weekly basis, the commission jointly decides whether to approve or reject each contract, and all their decisions are made public. In the past, says Afzali, whilst civil society groups focused on the technical issues in public procurement, all the policy decisions were mainly made by international donors and the Afghan government. It seems a positive step that civil society is now invited to observe the decision-making process, even if they do not feed directly into the decisions themselves. Although, with the NPC being led by politicians, critics say its decisions are prone to being influenced by political considerations as well as technical, legal and economic ones.
Sweeping transparency reforms
When running for office in 2014, Ghani promised to reform public procurement to boost economic growth, effectively manage public spending and root out corruption, saying these factors were critical to addressing Afghanistan’s security challenges. The procurement commission was one of a series of changes introduced by the government during President Ghani’s first term (with the results of the recent elections disputed, it remains unclear whether he will secure a second term).
The job of reforming the procurement system was entrusted to Yama Yari, a former civil engineer in his mid-thirties. Yari trained in the UK after fleeing from the Taliban as a teenager, returning in 2012 to set up Afghanistan’s first railway authority. After witnessing the widespread corruption in government, Yari proposed launching the country’s first ever national procurement authority (NPA) to regulate state purchases, and did so successfully over a period of six months along with other industrious young Afghans. He has described it as “the most strenuous and difficult experience” of his life.
“We inherited, and I quote, a ‘fantastically corrupt’ system consisting of weak legal frameworks and fragmented institutions often parallel with government institutions,” Yari says. “These were the institutions set up by the international organizations to carry out procurement of the projects funded by them. At the same time, an intricate mafia network had formed over the years that colluded with corrupt elements within the government, taking advantage of an almost non-existing capacity in the civil service.”
The government also restructured some of the largest procuring entities, and introduced new legislation to make public procurement more efficient and transparent. Yari spearheaded the NPA’s adoption of open contracting and facilitated Afghanistan’s membership to international initiatives like the Open Government Partnership (OGP), often coordinating with Integrity Watch Afghanistan. These approaches became vehicles to increase transparency and actively involve business and community groups in public affairs. Other reforms included the creation of a radically transparent online procurement system, financed by the World Bank and launched in August 2018, which publishes data and documents on thousands of contracts for anyone to see, and a new access to information law that ranked as the best in the world in 2018. New regulations require all procuring entities to centralize their procurement via this portal.
Opinions are mixed on just how successful the ambitious reforms Ghani laid out in his election manifesto have been (as the president said himself, they’ve been “building a house while putting out a fire”). But there seems to be a general consensus that the procurement reforms are working, even in such a difficult environment, with the graft watchdog Transparency International describing the National Procurement Agency as a “bright spot” in Afghanistan’s efforts to fight corruption.
READ: Data deep-dive: Explore Afghanistan’s public contracting data
In the five years since the reforms were introduced, savings from procurement add up to around AFN 58 billion (US$740 million), according to government figures (calculated by subtracting the actual contract cost from the estimated cost). Authorities have published more than 3,000 contracts online and blacklisted 210 fraudulent companies. In 2019, the average number of bidders per tender for above-threshold projects facilitated by the NPA was 4.5 (on 377 tenders with 1,698 total bidders). For the first time, the public works ministry spends around 98% of its budget, up from around 47% over the last 17 years. Comprehensive figures on competition and other key performance indicators are set to be calculated by the NPA in the near future when Afghanistan introduces e-tendering. Over time, open contracting reforms will help to improve the accuracy of these estimates.
Open spending is wise & efficient spending
Yari believes the open contracting and open government approaches have fundamentally helped make the procurement reforms a success.
“It’s important to make sure that whatever resources we have, we spend them wisely, efficiently and transparently,” said Yari. “There are more than 30 million people out there and the money belongs to them. They have the right to know how the money is spent, and what difference it’s going to make in their lives.”
Having the OGP commitments and publicly tracking progress, he says, puts pressure on resistant partners to act. Transparency is also important for prioritizing realistic projects in a volatile environment, he adds, and winning the public’s support for them. He describes a case where these planning challenges were apparent.
«We have the money and the project and the contractor, but can’t implement. There was an incident last year; the Taliban attacked one of our contractors’ camps. They took 43 people, burnt down all the machinery, and we had to cancel the project. If we had factored in the security aspect [from the start]… we may have delayed the project for security reasons and spent the money somewhere else. Instead everyone lost,” says Yari, who served as director-general of the procurement agency for almost three years, before becoming Minister of Public Works in 2017, and subsequently Minister of Transport in December 2018.
Building relationships with businesses
Importantly, the NPA has brought a host of feedback and engagement approaches with Afghan stakeholders, particularly with the private sector to create incentives for companies to participate in public procurement and improve service delivery. This is a “total social change” notes the NPA’s Director for Private Sector Capacity Accreditation and Acting eGP Director Safiullah Kamawal, who says that in the past there was no way for public procurement officials to interact with the private sector in a formal and professional setting.
“I couldn’t even have a dialogue or a handshake; it was accused of being corruption,” Kamawal says.
The NPA has been working hard to build positive cross-sector relationships, establishing monthly business lunches in which business and industry representatives sit down with members of government and civil society. There is no set agenda for these three-hour meetings and each table includes a “procurement integrity director” to ensure the conversation remains above-board.
Another weekly event, “Transparency Thursday”, seeks to hold government leaders accountable, with the NPA’s chief executive answering questions from the private sector in the presence of civil society organizations and access to information commissioners.
“If there is something wrong, we try to fix it, and all those decisions are followed up,” Kamawal adds. “There has been a good shift in perceptions of procurement being limited to only a few companies, to the NPA being open to the private sector.”
AGEOPS: A powerful open data tool
The new procurement platform, the Afghanistan Government Electronic and Open Procurement System (AGEOPS), is a key tool in the government’s transparency arsenal. AGEOPS is modeled on a universal open data format, called the Open Contracting Data Standard (OCDS), which is being used in a range of other innovative procurement reforms around the world. The OCDS allows data to be collected, centralized and published in a standardized and structured way, using a unique ID for each contracting process. Once the data is structured, it can be presented in visual formats, like charts, tables, and graphs, that explain what’s going on in procurement systems.
The AGEOPS platform’s easy-to-use interface allows users to search for detailed information about tenders and contracts awarded by government institutions dating back to 2010. According to an analysis conducted by the Open Contracting Helpdesk in January 2020, the database contains data and documents in OCDS format on 6,952 contracting processes involving 71 procuring entities and 1,392 suppliers (figures visible on the AGEOPS site may vary slightly because of differences in how the results are calculated) .
Users can also analyze key performance indicators through simple visualizations on the site’s business intelligence dashboards, such as contract value and number by province, award status, procurement type, amendments and challenges in contract implementation.
The creation of this open contracting portal is a huge achievement in itself, and a notable development when compared to Afghanistan’s old procurement system. This progress is a testament to the NPA’s dedication, despite facing some pushback from ministries reluctant to publish or move from a manual to digital system. The NPA’s staff has worked continuously on improving the system and engaged proactively with support providers from the Open Contracting Partnership (OCP) and OCDS Helpdesk.
AGEOPS is also noteworthy for publishing a lot of information on contract implementation, which the NPA’s new director general, Alham Omar Hotaki, sees as “a first step required to tackle corruption and enhance service quality.” Mr Hotaki notes that implementation is the longest and most vulnerable stage of the contracting process.
Tracking contract implementation is particularly relevant in Afghanistan because the widespread use of informal subcontracting often contributes to the poor quality of projects. Afzali from Integrity Watch describes how their community monitoring projects revealed that companies who had relationships with the government or international forces were getting projects and selling them on to others, with this practice continuing for several layers. The firm that eventually implemented the project would see about 30% of the total payment, which they had to make up by cutting corners.
Afghanistan’s procurement law permits up to 20% of non-essential works to be subcontracted. But in practice, companies are subcontracting almost all of the projects, says Mohammad Naser Timory, Integrity Watch’s advocacy manager. This means small companies are forced to make informal agreements with the main contractors and have no legal recourse if there are contractual disputes. Better information on contract implementation and vendors could help the government detect issues early on and make adjustments, as well as helping to set better regulations for subcontracting at the policy level.
After successfully piloting the AGEOPS platform, the NPA plans to make further upgrades to the system, in particular adding more information on the planning stage of contracts to determine whether contracts are delivered according to plan and track spending against estimated costs. An e-tendering function is being developed, which will allow procurement deals to be carried out in real-time and reduce the risk of manual data entry errors or missing information thanks to automatic capture of the details in the database.
There are some rare exceptions when data isn’t published – when there are legitimate security, privacy or commercial confidentiality concerns – but transparency is the rule, says the NPA’s director general Hotaki.
“There is no such thing as ‘absolute confidentiality’ in procurement. We respect the privacy of businesses and personal data, but open the rest for the wellbeing of the society.”
Contract monitoring works so monitor contracts
The procurement agency hopes information from the portal will help communities understand public projects in their neighborhoods and alert central authorities when things aren’t going to plan. There’s an effective precedent for community monitoring in Afghanistan: a rigorous academic study of road works projects found that in neighborhoods where the community monitored the implementation of the project, new roads were of significantly higher quality and more durable. The randomized controlled trial, a robust evaluation methodology, showed that oversight by citizens had a positive effect on the whole road, not only the section near the monitors’ village. The paper attributed the effectiveness of the monitoring project to two complementary mechanisms. The first was information: the community could learn the quality of service provision because monitors were trained on technical features of construction quality and had access to documents with the original contract specifications. The second was enforcement: the community was given recourse to hold providers accountable because the program established regular meetings between the Afghan government, international donors, and the news media where it updated parties on its monitors’ reports and contractors’ performance.
Involving citizens in monitoring the reconstruction projects in their communities has a number of benefits. The central government lacks the capacity to effectively monitor all contractors and, like international donors, they often can’t send monitoring teams to many communities due to security concerns. Community monitoring relies on the power of strength in numbers, putting pressure on vested interests that they can’t ignore.
Integrity Watch’s community monitors currently rely on local contractors to share all the documentation about the contracts with them. Afzali hopes the AGEOPS portal will help them to cross-check the documents they gather locally against the central government’s records. Making the data available would also help Integrity Watch to analyze bigger contracts, like national-level projects approved by the NPA, and track their progress.
Integrity Watch has seen a significant change in how easy it is for community monitors to obtain documents from local contractors in recent years. They now have access to more than 90% of project documents at the site level, compared to around 20% when they started ten years ago. Afzali attributes this to the access to information law, which Integrity Watch helped draft. They referred to the Open Contracting Data Standard in the law, and added language to ensure every ministry is obliged to proactively publish information on as many important details about public contracts (before, during, and after) as possible. There is still a gap between the law and practice – but, local contractors provide them with the information most of the time, and if they don’t cooperate, the monitors can ask for information at the central level. “There is a culture of transparency in the making,” says Afzali.
Other groups that monitor major public projects have begun using the AGEOPS contracting data, such as CoST – the Infrastructure Transparency Initiative, which analyzes the data along with datasets from other government sources. Research by CoST shows that Afghanistan proactively publishes more infrastructure data since introducing the OCDS-based procurement system. Disclosure increased from 27% in 2018 to 36% in 2019, according to the organization’s most recent assurance report, a yearly review of the accuracy and completeness of data available on a sample of infrastructure projects with recommendations for improvement.
In addition to the NPA’s outreach with suppliers, the agency is collaborating with academic researchers and plans to use the findings, for example on contract implementation and vendor registration, to inform its own internal processes.
The government also committed to opening up data on beneficial ownership to understand who profits from public contracts and where there is a conflict of interest. But progress on this reform has been slow.
“Beneficial ownership is important anyway, but in our circumstances, it is particularly important,” says Integrity Watch’s Afzali. “There is a very blurred line between politics, crime, and business in Afghanistan. You would find some criminals have close relationships with politicians, [and] some politicians who are criminals at the same time but no one can touch them because they are too powerful. There are cases where contractors cannot implement a contract without being backed by a powerful person, like a militia or illegal arms group as they call them here. Mostly these are backed by MPs, for example.”
Integrity Watch’s biggest lesson from their engagement in public procurement in recent years is the importance of independent institutions. With the National Procurement Council composed of high-level politicians, there’s a risk of technical processes being politicized and resources being misused, says Afzali. And it leaves the government vulnerable to accusations of partiality, whether it’s the case in reality or not.
That said, the threat to anyone who dares to challenge unscrupulous power brokers is real – be that person a civilian, journalist, election candidate or civil servant. While Minister Yari was leading reforms at the public works ministry, insurgents attacked the premises, killing more than 40 staff and injuring 32 more. But it keeps him going knowing that he can make a difference to ordinary Afghan lives.
As President Ghani said, “lasting stability for Afghanistan is not the absence of bullets, it’s the fair application of the rule of law and the protection of citizens’ rights and freedoms”.
In the crocodile pit, progress is slow and hard-won, but thanks to the continued persistence of dedicated teams, both inside and outside government, reformers are edging closer to gaining the upper hand.