News

Pledge to make public contracting ‘open by default’ major step in fighting corruption

12 May 2016

14 countries including UK commit to better, open deals for their government dollars

Today’s Anti-Corruption Summit in the UK saw a groundbreaking commitment by 40 governments to “ensure public contracts are awarded and managed openly, accountably and fairly, consistent with applicable law – making public procurement open by default – so that citizens and businesses can have a clear public record of how public money is spent”.

This is the first time that governments have laid out a concrete vision of accessible, useable data across the entire chain of public contracting, while connecting information across bureaucratic silos.

Public contracting touches us all. It is behind the roads, schools and hospitals that we all depend on. Contracting too often gets corrupted by a combination of money, discretion and secrecy. Today, we saw a commitment to change that and to make public contracting open by default.

Information on public contracts was once buried in yellowing stacks of papers, deep in the basement of a government ministry. Now, we are poised to make a great leap forward to shareable open data, action and analysis,” said Gavin Hayman, Executive Director of the Open Contracting Partnership.

Each year, governments spend vast sums of money – some US$9.5 trillion or 15% of global GDP – on deals and contracts with companies to deliver goods and services to citizens. The scale of the money spent, the relative secrecy under which it gets disbursed, and the huge amounts of government discretion involved make public contracting government’s number one corruption risk.

The Anti-Corruption Summit commitment to openness now need to be put into practice. We are delighted that Afghanistan, Argentina, Bulgaria, Colombia, France, Georgia, Ghana, Italy, Malta, Mexico, Nigeria, Romania, the UK and the USA have all announced that they are committing to implementing the Open Contracting Data Standard, a global open data standard for publishing public procurement information.

Colombia, France, Mexico, Ukraine and the UK also announced plans to form an innovation and learning partnership, the so-called the Contracting 5, to take that open data and build tools and analytics to drive better responsiveness, engagement and results from their public deal-making.

“Open contracting innovators from Argentina to Mexico to UK and the USA have made a clear commitment to better, open deals for their government dollars. With good leadership, open contracting can save them a fortune in time and money, create a level playing field for companies, and deliver better results to citizens”, Hayman said.

Countries also committed to prioritize open contracting for high-risk, high-profile investments, such as the UK will do for the country’s billion dollar high-speed rail infrastructure project HS2. This process follows similar commitments from Mexico on its new airport. Nigeria also pledged to prioritize open contracting in its investments in oil refineries, roads and the power sector.

Argentina, Nigeria and others also committed to trialing open contracting in the health sector where it will be vital to ensure that high-quality medicines and equipment reach those in need.

A growing body of evidence shows that transparent and participatory public procurement and contracting save public money, reduce fraud and corruption, provide more opportunities for businesses, and empower citizens to hold governments accountable.

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The Open Contracting Partnership connects governments, civil society and business to open up and monitor public contracting. We support the global open contracting community and work with partners across sectors and along the whole process of government contracting. We run a global helpdesk at data@open-contracting.org to support the implementation of the Open Contracting Data Standard, a global standard to open government contracting. More information at www.open-contracting.org

Press contact(s):

London, UK

Gavin Hayman, Executive Director, Open Contracting Partnership

E: ghayman@open-contracting.org

T: +1-202-560-3675

 

Washington, USA

Georg Neumann, Senior Communications Manager, Open Contracting Partnership

E: gneumann@open-contracting.org

T: +1-202-714-4460

 

Useful facts and figures:

  • An estimated US$9.5 trillion, around 15% of global GDP, is spent annually on public procurement.
  • Most foreign bribery cases (57%) prosecuted under the OECD Anti-Bribery Convention involved bribes to win government contracts, according to an OECD report on the cost of foreign bribery.
  • Corporate vehicles (including companies located in tax havens, and companies whose beneficial owners were bribed officials) acted as intermediaries in 35% of foreign bribery cases, the same OECD study found.
  • Opaque corporate structures are used in more than 70% of cases of grand corruption, equivalent to around US$56.4 billion, according to a study by the Stolen Assets Recovery (StAR) Initiative of the World Bank.
  • Corruption and fraud may amount to 20-25% of procurement budgets, according to the UN Office of Drugs and Crime.
  • In Ukraine, a fully open contracting portal (Prozorro) saved the government 14% on planned spending in its first year. The number of companies bidding for contracts increased by 50%.
  • South Korea’s transparent e-procurement system KONEPS saved the public sector US$1.4 billion in costs. It also saved businesses US$6.6 billion. Time taken to process bids dropped from 30 hours to just two.
  • When Slovakia made it mandatory to publish contracts online, competition among bidders almost doubled. Over 8% of citizens checked a public contract in the last year.