What is open contracting and its benefits?

What is open contracting?

At its core, open contracting consists of: 1) the affirmative disclosure of information; and 2) participation, monitoring, and oversight. According to the Open Contracting Partnership (OCP), “open contracting is about publishing and using open, accessible, and timely information on government contracting to engage citizens and businesses in identifying and fixing problems.” Importantly, open contracting consists of disclosure and engagement throughout the entire chain of procurement, including planning, tendering, awarding, and implementation. It can also cover non-procurement issues such as licensing and extractives contracts.

What are the benefits?

Open contracting can improve value for money, efficiency, competition, quality of services, and public integrity. Open contracting data can enable effective oversight of government services by revealing who is getting paid how much to deliver what, as well as how they were selected, and whether they delivered on time and with quality. This can expose anomalies that alert the public and government officials to procurement processes that are inefficient or uncompetitive, delivered the wrong results, delivered them late, or are too expensive. This, in turn, can help identify kickbacks or collusion during the procurement process.

In addition, the transparency of the announcement and awarding of tenders can encourage new, often smaller, companies to participate in public procurement, and clarify demographic differences in who is applying. This, in turn, can promote sustainable development and higher-quality goods and services. The publication and use of open contracting data for monitoring and oversight therefore helps to achieve a number of mutually reinforcing goals:

  • Deliver better value for money and efficiency for governments;
  • Create fairer competition and a level playing field for business, especially smaller firms;
  • Drive higher-quality goods, works, and services for citizens;
  • Prevent fraud and corruption; and  
  • Promote smarter analysis and better solutions for public problems.

There is empirical evidence for the advantages of open contracting. A 2017 World Bank study covering 34,000 firms in 88 countries found that greater transparency in the contracting process (as well as effective complaint mechanisms and external auditing systems) leads to greater competition–particularly from smaller firms–and fewer kickbacks to officials. Many countries have now reaped the benefits of open contracting.

Practical Examples:

  • In Ukraine, the ProZorro procurement platform more than doubled the number of private procurement marketplaces. Where three or more companies bid, the Ukrainian government saved on average 30%. In addition, the number of suppliers per procuring entity rose dramatically by 45%13.
  • In Paraguay, the lower cost of office supplies, achieved by improving the country’s online procurement platform, has saved taxpayers at least PYG 400 billion (about US $68 million)

Open Contracting in Puntland

Bareedo Platform, which one of its core mandates is “Promotion of open Government” has been leading a campaign aimed to encourage open government in Somalia to promote democracy, accountable government and challenge corruption. In particular, Bareedo Platform started its campaign in Puntland, the biggest state with functional institutions and successfully accomplished several milestones.

As part of open data initiatives, Bareedo Platform commences opening up of Puntland public procurement system and will work with government in adoption of the open contracting platform through OCDS format and train civil society organizations, the private sector, and the media on the use of the new platform as a way of improving citizen engagement in the procurement process.

Bareedo Platform will commemorate World Open Data Day on March 7, 2020 in Garowe, Puntland Somalia where there will be open discussion on scaling up open contracting in Somalia. You can join us by registering here: https://bit.ly/2IlUrII

Source of Information: OPG