Open contracting: Accountability through enhanced disclosure and participation* What is open contracting and why is it important? Because of their vital role in the financial health of a country and the lives of its citizens, there is a crucial interest in ensuring that public contracts are fairly awarded, are well performed and get good value-for-money. However, in both wealthy and developing countries around the world, public contracting has been identified as the government activity most vulnerable to wastefulness, mismanagement, inefficiency and corruption.1 Frequently, there is limited information in the public record about: a) how public contracts are formed (e.g. whether by negotiation or through a competitive tender process); b) the content of the agreements; c) the progress of their performance; and d) the relevant government oversight mechanisms. This lack of information can make it difficult for civil society – and sometimes even for auditors and parliaments – to assess whether the government is getting good value for money or whether the parties to the contract are fully complying with their obligations. At the same time, there is typically limited opportunity for civil society organisations (CSOs) and communities to participate in or monitor public contracts. ‘Open contracting’ refers to principles and practices of increased disclosure and participation in public contracting. Disclosure and participation are mutually reinforcing drivers of accountability. In non-transparent environments with low disclosure of contracting information, civil society and the media cannot adequately monitor the use of public resources. If given sufficient information, however, they can meaningfully participate in public contracting processes and work collaboratively with the government, donors and the private sector. This participation can achieve better deals for governments, a level playing field for the private sector and a high quality of goods, works and services for citizens around the world. Open contracting is beneficial to public financial management as it is relevant for both revenue-generating and expenditure-making agreements. It can be implemented for all types of public contracts at all levels of government and in all sectors, from basic contracts for the procurement of goods to much more complex arrangements, such as public-private partnerships, licenses, concessions and production sharing agreements. Who is currently practising open contracting? In recent years, many governments around the world have begun taking action to enhance disclosure and participation in public contracting. These efforts are taking place at all stages of public contracting (from planning through to completion of contractual obligations) and are being implemented at the national, subnational, sector and agency levels. Such open contracting efforts include: • Developing a framework for public contracting that ensures a transparent and equitable process • Recognising the right of the public to access public contracting information Commonwealth Governance Handbook 2013/14 77 Lindsey Marchessault Results • In Ecuador, the introduction of an e-reverse auction in which vendors transparently bid their lowest prices for the sale of medicines significantly reduced the overall cost of obtaining information on contracts and simplified the bidding process. In total, this process achieved an expenditure reduction of US$327 million • Georgia introduced an e-procurement and e-auction platform, enabling any interested party to follow the bidding process. This resulted in savings of public money (14 per cent of the procurement budget) • Korea’s public procurement agency publishes information of all of the contracts it administers on its online public portal, KONEPS (estimated to be worth $75 billion dollars in 2010) * This article has been adapted from the report, ‘Open contracting: a new frontier for transparency and accountability’ (forthcoming 2013). For more information, contact the Open Contracting Partnership, www.open-contracting.org or at partnership@opencontracting. com.
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