- Challenge: Indonesia’s government contracting has long been vulnerable to corruption, with around two in every five graft cases involving public procurement. The government’s public procurement agency, LKPP, recognized that poor contracting practices, decentralization, and a lack of transparency made it difficult for authorities to manage procurement effectively or sanction bad behavior, nor could citizens monitor how their tax dollars were being spent.
- Open contracting approach: LKPP introduced reforms to improve access to contracting information and fostered partnerships with other actors who had an interest in curbing corruption in the sector. The agency adopted an e-procurement system to improve how information about contracting procedures was documented, and introduced regulations to ensure enforcement nationwide. Dedicated procurement units, which were established in all 657 national and subnational government entities, helped to professionalize the procurement function. Under-resourced and faced with the challenge of overseeing such a vast and complex procurement system, LKPP has found a valuable partner in the civil society organization Indonesia Corruption Watch (ICW). This watchdog group provides input on procurement policies and recommendations for reform in line with international best practices. Together LKPP and ICW have introduced a framework for monitoring contracting that relies on timely data aggregated from various government sources and collective intelligence. They created an online risk-monitoring tool, Opentender.net, and trained more than a thousand transparency advocates, researchers, journalists and auditors to use it to detect suspicious contracting processes over the last seven years.
- Results: Public complaints that used evidence gathered from the platform have led to prosecutions and convictions in at least five high-profile corruption cases, covering at least US$18 million. Over twelve years and several leadership changes, LKPP has maintained a consistent collaboration with ICW that allows civil society actors to access public contracting information through a user-friendly website and to report on corruption risks and other irregularities. Anyone can visit Opentender.net and analyze data on more than 1.8 million tenders from all Indonesia’s government entities dating back to 2008. The anti-corruption agency KPK, which often relies on public tip-offs, has also handled a growing number of procurement corruption cases in recent years, with an increase from 9 cases in 2013 to 15 in 2014 and as many as 47 cases in 2021. Recent upgrades to the Opentender.net platform have expanded the scope and speed of the monitoring process. Since 2021, state auditors are being trained to use the Opentender.net tool, with initial results suggesting the platform could improve the efficiency and coverage of audits by as much as 200% (from 10 to 30 issues audited per quarter) and reduce the duration of audits from 2 days down to 30 minutes. Although the results of civic monitoring weren’t tracked systematically in the past, during a month-long monitoring marathon in 2021, NGOs and citizens scrutinized almost 600 tenders and found violations in as many as 30%. ICW and LKPP are now working on connecting Opentender.net to the government’s formal complaints mechanisms and building an ecosystem of civic actors who can systematically report suspicious contracts directly to authorities through the user-friendly platform.
How do you govern a country like Indonesia? The archipelago nation consists of 17,000 islands. It is home to 270 million people, about half of whom live on Java, a densely populated island with bustling urban centers like the capital Jakarta. A large share of the rest live in low-income rural settlements, scattered amid dense jungle and accessible only by boat or air.
With a decentralized government of more than 600 national and subnational agencies, managing and overseeing Indonesia’s public procurement is a huge challenge. The sector is highly vulnerable to corruption, with an estimated 40% of the graft cases handled by law enforcement involving government contracts. A lack of transparency in the tendering process has contributed to poor award decisions. Corruption in the judiciary also means bad behavior discovered after the fact is seldom sanctioned.
The national public procurement agency (LKPP) saw an opportunity to improve award decisions by professionalizing procurement and increasing transparency in the tendering process. But with no permanent presence at the local government level and no mandate to take corrective action against violations, the LKPP needed all the support it could get to effectively detect and deter corruption.
Open contracting approach
Over the last twelve years, LKPP introduced reforms to dramatically improve access to information about contracts and fostered partnerships with other actors who have an interest in curbing corruption in procurement, such as the civil society group Indonesia Corruption Watch (ICW), and the government’s Corruption Eradication Commission (KPK).
How Open Contracting Partnership is supporting Indonesia
OCP began supporting ICW to strengthen Indonesia’s procurement reforms in 2021. We provide technical support in implementing the Open Contracting Data Standard to produce publicly available tender data, and support implementing red flags methodologies and use cases for procurement data.
We also supported peer-learning and connection with other open contracting champions implementing data-driven civic monitoring strategies and provided advocacy and policy reform advice.
Currently, we are providing support to advocate for strategic data-use by citizens, expanding the use of Opentender.net to internal auditors, and advocating for the adoption of good practices in international fora particularly during Indonesia’s G20 Presidency.
1. Professionalizing public procurement
When LKPP adopted a nationwide e-procurement system in 2010, contracting information wasn’t recorded or published in a systematic way. In fact, procurement wasn’t even a formal government function. State entities purchased goods, works and services through informal tender committees, convened on an ad-hoc basis. There was no standard process for announcing upcoming tenders or managing contracts.
In 2011, LKPP set rules mandating all government entities to create procurement plans before initiating a tender process. These plans included item codes identifying whether the purchase was related to goods, construction, consultancy, or other types of services. Publishing this information would allow vendors to better identify upcoming opportunities and authorities and civil society to monitor how public funds were being allocated.
But uptake was low. To encourage more governments to publish their procurement plans, LKPP rolled out a technical system nationwide that only allowed a tender process to proceed once the government officer had entered a procurement plan code.
LKPP also decided that implementing such reforms would be more effective if each government entity had a dedicated and professional procurement unit (ULP). A pilot unit was established in Jakarta Province in 2014, at the suggestion of the governor, and served as a template for every other government office in the country.
2. Building partnerships
As more contracting information became available, more non-government actors showed an interest in using it. Among them was Indonesia Corruption Watch (ICW), a non-profit group that was already conducting procurement investigations based on tip-offs from the public and other available sources, but the information was sporadic, piece-meal and took months to verify.
ICW had been working with journalists, civil society organizations, whistleblowers and citizens who are the beneficiaries of public goods works and services, and they knew such groups could be an asset for identifying corruption in Indonesia’s vast and complex procurement system. But these actors lacked access to important details to track contracting processes from start to finish. Whistleblowers were also deterred from filing official complaints for fear of retaliation and because KPK legislation set a high bar for the evidence required to open a formal investigation.
In 2012, ICW showed LKPP how they had analyzed fraud risks in contracting procedures using Excel spreadsheets and data scraped manually from the LKPP’s text-based website.
ICW suggested that, if LKPP could share information on the different stages of the procurement process in a timely and machine-readable format, ICW had the research skills and technical know-how to build a tool that could go beyond reporting and compliance and reveal trends and patterns in the procurement system.
This led LKPP to team up with ICW in 2013 to develop an online monitoring site called Opentender.net. The centralized platform includes easy-to-use analytics tools that allow anyone to look at fraud risks and other indicators associated with public procurement performance, such as competition, efficiency, and value for money. Data is aggregated from all Indonesia’s national and local government agencies related to competitive tenders, which account for 40% of all procurement spending. A search engine function allows users to drill down to individual procurement packages, while other tools enable monitoring of fraud risks, blacklisted suppliers (added in 2021), and collusion risks. There are also sector-specific analytics for tenders related to major spending categories: COVID-19, infrastructure and national entities. And the site includes articles about subsequent investigations uncovered by the data.
Opentender.net was upgraded in 2021 to publish open data structured according to the Open Contracting Data Standard, a format which makes the data easier to share and reuse. The upgrade also widened and refined the range of risk indicators analyzed, based on the Open Contracting Partnership’s Red Flags methodology. As of 2022, the platform features OCDS data on more than 1.8 million contracting procedures from 629 procuring entities dating back to 2008. It took about four months and a budget of US$33,000 for the platform to publish OCDS data.
Since 2015, ICW and LKPP have trained over a thousand journalists, students, researchers, civil society representatives, and state auditors from across the country on how to use Opentender.net to identify irregularities, report them to authorities, and provide recommendations for policy reform. Civil society has also contributed to drafting new regulations and other official guidance for improving the procurement system.
Over time ICW and LKPP have become more strategic about these training activities, setting a goal in 2021 to develop a public monitoring framework that would empower an ecosystem of civic monitors to detect problems in tenders and institutionalize a process for escalating their findings to the appropriate decision makers or enforcement agencies.
3. Formal and strategic alliances
ICW advocates for formalizing its cooperation with different actors through memoranda of understanding (MoUs). The civil society organization has had an ongoing agreement with LKPP since 2013, and is now working on finalizing MoUs with three local governments and local CSOs. This approach has helped to overcome a general resistance among government agencies to working with external actors and created a formal process for following up on the findings of civil society and citizen monitors.
ICW’s collaboration with international experts and organizations has put them in a position where they can advise on and recognize efforts by the government to adopt international best practices in procurement. Indonesia’s Open Government commitments in particular, helped to raise the country’s international profile in procurement reform.
4. The importance of regulations
But a monitoring tool is only as good as its source data, and civil society still struggles to access information not currently published on the government systems. This includes details about signed contract documents, which contain technical specifications, item prices and contracting parties; invoices and the physical implementation of projects; as well as data related to certain procurement methods.
From the start of their reforms, LKPP and civil society monitors have advocated for regulatory changes as a way to improve the disclosure of contracting data. Government officials tend to err heavily on the side of caution when responding to information requests because there is a lack of clarity on what they are and aren’t allowed to disclose, and uncertainty over the implications of releasing “sensitive” commercial information. According to ICW’s Wana Alamsyah, the use of regulations that “clearly and firmly” state the government’s obligations have been critical to overcoming this hesitancy, and have been hard-won in Indonesia’s volatile political environment. The first regulations in 2011 focused on the planning phase of contracting processes. In 2018, ICW encouraged LKPP to set clear guidelines on contract disclosure as part of Indonesia’s Open Government Action Plan. In 2019, LKPP established internal guidelines that informed a national regulation to disclose contract documents. Most recently, the government passed a regulation in 2021 to explicitly state that information in contract documents is public information, overcoming a common excuse for non-disclosure by public bodies. LKPP is now working to create nationwide technical guidelines to ensure compliance with this regulation.
Having a wealth of accessible contracting information and open collaboration between government and civil society actors has improved the planning, management and oversight of the public procurement system.
Anyone can visit Opentender.net and search 1.8 million contracting procedures from all Indonesia’s national and subnational entities dating back to 2008. The publication of data improved dramatically after Indonesia created professional procurement units and regulated publication, and civil society showed an interest in using the data. For example, in 2013, no government entity published data on which procurement plan their tenders were linked to. Since 2018, almost all (over 99%) of tenders are linked to procurement plans. Similarly, all tenders now include item codes identifying whether the procurement is related to goods, construction, consultancy, and other types of services. This detail wasn’t included in the data at all before 2017.
The number of criminal corruption investigations related to public contracts has increased from nine to around 15 annually between 2014 and 2019, and up to 47 cases in 2021. Whether this rise is the result of more civic monitoring can’t be proved definitively, but tip-offs from the public are a common trigger for the Corruption Eradication Commission to initiate a formal investigation.
Improved oversight by civic actors did lead to prosecutions and convictions in at least five high-profile corruption cases, in which the estimated losses to corruption totalled at least US$18 million:
- In Manado, North Sulawesi, the civil society group Yayasan Suara Nurani Minaesa (YSNM) used opentender data to report corruption, which led to arrest, prosecution and incarceration of a city planning official (see ICW report, p.134)
- ICW used opentender data to monitor, validate evidence and report to KPK on:
- National ID card procurement in 2013 (Speaker of the House convicted in 2018)
- Jakarta UPS system procurement in 2014 (CEO of vendor convicted in 2017)
- Health equipment procurement in 2012 (Banten Governor convicted in 2017))
- Hajj Catering in Ministry of Religious Affairs procurement 2012 (Minister convicted in 2016)
Researchers can access procurement information online in minutes instead of gathering evidence through freedom of information requests and field visits over several months.
Their analysis is more sophisticated too, according to Wana Alamsyah from ICW.
“With open data, ICW could start mapping potential fraud systematically and not only on a case-by-case basis. We could dig deeper into the information and present our investigations to the relevant inspectorates (enforcement bodies) for them to take action. We also started collaborating with oversight agencies (auditors/inspectorates) to conduct monitoring together.”
Journalists report feeling more confident to cover public contracting issues. They use the Opentender.net platform to find leads for stories, while in the past they only covered a corruption case once authorities had launched an official investigation.
In some cases, researchers and journalists have teamed up to strengthen their investigations and amplify their findings to a larger audience, as in Yogyakarta province.
User data from Opentender.net, shows that the platform has seen a 40% increase in visitors since 2013, and users are staying on the site longer.
Opentender.net user data in 2013 and 2020
|159% increased hits
|1642% increased pages
|40% increased visits
ICW continues to improve the features and functionality of Opentender.net and analyze user data to better understand what data is most valuable for different user groups.
“We interviewed several user groups and found the Top 10 Red Flags page was the most useful feature for journalists, civil society organizations and government auditors, whereas academics were more interested in features related to methodology, such as the disclaimer page and glossary,” said Siti Juliantari, Deputy Coordinator of ICW.
When ICW looked at the user data for Opentender.net, they realized an overlooked user group was government auditors. The latter reported finding the platform useful because it allows them to track suppliers’ histories, which they can’t do directly through government portals. For example, one local government auditor interviewed for an ICW report, said the Opentender.net platform gave him a “more comprehensive picture” than the existing auditing system because he could browse contracts from different local governments. This helped him to detect a suspicious case in which a small company won two large tenders with two local governments a month apart. It was unlikely that the firm would have the capacity to work on two large contracts simultaneously with a combined contract value of IDR 49 billion (US$3.4 million). The auditor’s quarterly review was more efficient using the platform, allowing him to identify 30 administrative issues compared to 10 previously (a 200% increase), and the time taken to identify and review the same information during an audit dropped from 2 days to 30 minutes. LKPP and ICW are now training state auditors on how to use the platform. Some 111 local government auditors from 12 provinces were trained in using Opentender.net in 2021. Training for internal auditors will be expanded this year, and ICW aims to ensure audit findings and recommendations are acted upon.
A community of monitors
LKPP and ICW are working on connecting Opentender.net to the official LKPP complaints mechanism “e-pengaduan”, hoping that the public’s trust in an independent civil society platform will encourage more complainants to come forward. At the same time, the reformers are building an ecosystem of civic actors who have the skills and will to systematically identify and report suspicious contracts. They are drawing inspiration from tactics used by the Ukrainian civic procurement monitoring community DoZorro, including gamification and datathons to motivate engagement. For example, in 2021, ICW worked with OCP to train five civil society organizations and 59 citizen monitors to file complaints via e-pengaduan based on evidence of irregularities gathered through opentender.net. Monitoring over one month led to 92 complaints filed.
The reformers have a long-term aspiration to centralize access to the various official complaints mechanisms (such as Ombudsman complaints mechanism, whistleblower channels) so these channels are easier for procurement monitors to find and use, and the fix rate of complaints can be tracked efficiently.
The demand for monitoring training is so high that ICW is looking for more sustainable models to teach these skills. For example, they are developing an online training course on corruption and public procurement which will be added to ICW’s existing Anti-Corruption Academy. With 12,000 users, the Academy is part of the training curriculum of 12 tertiary education institutes as well as government offices and the private sector.
LKPP is also developing a dedicated system for emergency procurement. This data has never been collected, managed, and analyzed before.
Finally, ICW and LKPP will continue to strengthen coordination with national stakeholders, such as the Ministry of Home Affairs, Ministry of Development and Planning, and the Central Information Commission to ensure the new regulation on contract disclosure is being implemented by government agencies.
Faced with the challenge of curbing corruption in a sprawling, decentralized network, Indonesia’s procurement agency has found a remarkably effective approach for opening up the procurement system: by creating clear rules on what information procuring entities must publish, adopting technology that ensures these rules are followed and the information can be used freely by anyone, and joining forces with like-minded transparency advocates who have the skills, tools, and public trust to turn civil servants and public actors alike into effective tender monitors. These reformers now have their sights set on empowering an ecosystem of monitors who can support authorities to quickly detect suspicious deals and promote better procurement practices to ensure taxpayers’ money is well-spent.