The data behind the deals - investigating how public money is spent through procurement

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@herahussain @opencontracting

engage@open-contracting.org

bit.ly/ocpjourno-covid

US$

9,500,000,000,000

https://www.occrp.org/en/coronavirus/opaque-coronavirus-procurement-deal-hands-millions-to-slovenian-gambling-mogul

https://english.elpais.com/society/2020-03-27/unreliability-of-new-tests-delays-effort-to-slow-coronavirus-spread-in-spain.html

https://www.nytimes.com/2020/03/26/us/politics/coronavirus-ventilators-trump.html

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What Open Contracting is doing to open up the data behind government contracts

Open Contracting connects

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to open up & monitor public contracting

What we do

• Advocacy that challenges vested interests and changes the global norm in public contracting from closed to open.�
• Support for a network of partners who implement open contracting projects and the adoption of the Open Contracting Data Standard. Where necessary, we’ll be leading specific demonstration projects ourselves.�
• Learning how and why open contracting works and gathering compelling evidence of what open contracting can achieve.

AFGHANISTAN ALBANIA ARGENTINA AUSTRALIA, CANADA CHILE COLOMBIA COSTA RICA DOMINICAN REPUBLIC FRANCE GEORGIA GHANA GUATEMALA IRELAND ITALY KENYA MACEDONIA MEXICO MOLDOVA MONGOLIA NIGERIA PARAGUAY ROMANIA, SIERRA LEONE UGANDA UK UKRAINE UNITED STATES URUGUAY VIETNAM ZAMBIA BUENOS AIRES (ARGENTINA) BOJONEGORO (INDONESIA) ELGEYO MARAKWET (KENYA) JALISCO (MEXICO) MEXICO CITY (MEXICO) MONTREAL (CANADA) SCOTLAND (UK)

Open Contracting Data Standard (OCDS)

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Unified, structured data & records

(with unique IDs etc)

Open contracting reforms save Ukraine more than $1 billion

Busting price-fixing scandal in Colombia

But what...

about the commercial confidentiality of contracts?

mythbusting.open-contracting.org

REPORT

We've talked to over 70 experts from more than

20 countries and found surprisingly little evidence that supports keeping contracting information secret.

https://www.open-contracting.org/resources/idiotsguide/

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Common red flags & how to find them

bit.ly/ocpjourno

RESOURCE

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Red flags for integrity: Giving the green light to open data solutions

• introductory guide to how countries can reference their procurement data against a set of over 150 suspicious behavior indicators, or “red flags.”
• flags occur at all points along the entire chain of public procurement-from planning to tender to award to the contract, itself, to implementation-and not just during the award phase, which tends to be the main focus in many procurement processes.

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Read more: https://www.open-contracting.org/wp-content/uploads/2016/11/OCP2016-Red-flags-for-integrityshared.pdf

Corruption can happen at different stages of the procurement cycle

Title Text

Winning supplier provides a substantially lower bid price than competitors.

INFORMATION ABOUT SUPPLIER BIDS

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Winning bid is too close to price estimate.

COMPARE BUDGET WITH FINAL CONTRACT

Company has no history in providing service or product:

PRIOR CONTRACTS & DESCRIPTION OF COMPANY PURPOSE E.G. ON WEBSITE

FRAUD

COLLUSION / CARTELS

The difference between bid prices is an exact percentage (a whole number).

INFORMATION ABOUT SUPPLIER BIDS

Companies registered vs companies actually providing vs control of market

ANALYSIS OF CONTRACT AWARDS

& DATA ON COMPANIES IN SECTOR

BID

RIGGING

Single bidder only

(limited, competitive, direct)

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Use of direct awards/exceptions

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Multiple contract winner

WHO ARE THE TOP SUPPLIERS?

LOOK BY SECTORS, e.g. HEALTH

• The eligibility criteria for deciding which companies can bid for a contract can be set too narrowly, including by favouring a preferred company. For example, the UK High Court found that the Nuclear Decommissioning Authority fudged an evaluation of tender requirements to prevent the disqualification of one of the bidders for a £7 billion contact.

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• Issue the tender at an inconvenient time. The week before Christmas can be good. Half of the contracts that Slovenia announced then only received one bid.

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FIXING THE PLANS

• Inside information can be shared with a preferred company such as one company receiving the terms of reference before others do.

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• The tender can be not very well advertised. Doing this has the effect – whether intentional or not – of discouraging bids from unfavoured companies. In an extreme example of this, the only place that a €120 million tender in Slovakia was advertised was on a bulletin board in a corridor inside a closed-off ministry building.

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• Competing companies can conspire to drive up prices: Such cartels are a big problem – the European Commission imposed €1.9 billion in fines on cartels in 2017.

FIXING TENDERS

• Contracts can be awarded to companies with a clear conflict of interest. For example, the ex-head of Chicago Public Schools funnelled contracts to an ex-employer who she was still secretly working for. Nigeria’s ex-oil minister, Dan Etete, handed out a contract for an offshore oil block to a company that turned out to be his.

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• Contracts can be given out without any bids at all. For example, more than $23 million of contracts for schools in Chicago were given out without any other bids being received, in return for kickbacks and bribes to the head of city’s public schools.

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• Modifying the contract after it’s been awarded so that it’s even more favourable to ‘chosen’ company. Contracts can often end up costing much more than the original award.

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• Turning a blind eye to shoddy implementation. In China, schools that should have been earthquake-proof have collapsed on children. And in Romania, hospital patients have died because the disinfectant was watered-down.

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FIXING

AWARDS

FIXING

IMPLEMENTATION

A RED FLAG DOES NOT MEAN

THAT THERE IS CORRUPTION

A red flag is something anomalous that deserves further investigation.

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It is not proof that anything is wrong or that a transaction is corrupt, collusive, fraudulent, or otherwise illicit. A flag cannot, and is not intended to, prove corruption in the procurement process.

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Flags can, however, offer insight into the risk of corrupt or illicit behavior in individual contracts and signal troubling patterns across the procurement system worthy of further investigation. The use of analytics for red flagging may also showcase more general opportunities to increase integrity and value for money across the procurement process.

EMERGENCIES CAN INCREASE CORRUPTION RISK

• Urgent need for items
• Problems in coordination
• Hospitals, agencies, local & national governments bidding against each other for limited supply.
• Newer players in the market stepping into increasing supply.
• Coordinating and centralizing demand can help to manage supply chains.
• Relaxing of due diligence
• Direct awards
• Less transparency into where money came from and where it is going

• Explore the big picture of how much is being is spent, where and with whom
• Tracking the purchase of certain items such as respirators and PPE
• Scrutinise direct awards
• Network analysis of top suppliers and competitors
• Identifying possible risks in the supply chain
• Price differences for similar items. For instance, you can try to look at the average price the government paid for specific items (hospital masks, disinfectant, etc) before the crisis and compare it to the current price.
• Analyze if items are delivered on time or track regional patterns of service and goods delivery.

Ideas for stories

COVID19 CONTRACT MONITORING

Covid

monitoring

for OCDS countries

• Paraguay: Paraguay has a dedicated budgetary identifier for contracts funded for Covid-19 response (as a failsafe to ensure all contracts related to Covid19 are documented as such in the data set).
• Ukraine: Ukrainian government’s business intelligence tool that has a specific module to show all the COVID-19 related emergency procurement
• Colombia: Colombia’s National Health Institute is awarding contracts directly but it is asking for quotes and delivery times for its COVID-19 test and lab supplies procurement. The institute discloses not only tender data and information but all the technical comments received from potential suppliers.
• Chile: Chilean government published a list in xls of the urgent items they needed to buy, which can help you narrow down the search.
• Portugal: IMPIC created an open dataset on the national open data portal, which is updated weekly, to publish all the public contract awards using the emergency legal framework.

The COVID-19 pandemic has companies all over #Ukraine suddenly trading in medical supplies, especially masks, even if they used to specialize in footwear or car parts before, while prices are sometimes fifty (!) times as high as in December 2019.

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According to our calculations, public entities bought almost 2.5 million surgical masks for the total amount of UAH 25 million between January 1 and March 28, 2020 (± USD 1 million with an average exchange rate of 1 USD = 25 UAH). The month with the largest volume of purchases was March at 1.8 million masks. In February, they bought 547,000 masks, and in January 108,000.

https://www.open-contracting.org/2020/04/07/covid-19-data-driven-monitoring-in-ukraine-how-much-do-masks-cost/

https://ojo-publico.com/1731/los-grupos-biotecnologicos-detras-de-los-kits-para-covid-19

“Los contratos del desastre” (Contracts from the disaster) project by Poder in México and El Intercambio in Guatemala analyzed public procurement in the wake of natural disasters.

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Here they explain how they mapped unstructured procurement data to the OCDS.

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No open data?

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Data sources

& tools

The reality of doing this work systematically...

• Web scraping e.g. Chrome extension Scraper
• Python and panda libraries to better analyse large data sets (use Jupyter notebooks to document what you’ve done)
• Use the Open Contracting Data Standard as a tool to link and identify information and structure your datasets
• Tools to visualise and search OCDS data

GOOD OLD FASHIONED FOIA

• National portals
• Debarred companies: World Bank, AfDB, ADB, AIIB
• International Finance Institutions: contract awards World Bank, UN Global Marketplace, UN Procurement & Annual Statistical Report, UN Development Business, AfDB, ADB, AIIB
• Extractives Industries: 40+ countries disclosing contract information here including the UK (see here)
• Others: Panama Papers or Offshore leaks database by ICIJ
• Company information

(via OpenCorporates.com)

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• Beneficial ownership

(via OpenOwnership.org)

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• Spending

(via OpenOpps.com)�

• EU tenders

(via opentenders.eu) �

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WHERE TO FIND DATA

OCDS

datasets

What next

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1.

Make contracts your new favourite data set to monitor

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2. Build a list of where & what information you have access to

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3. Set up a database to import data

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�4. Make better FOIA requests for the specific info that is missing

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5. Got a story? Talk to us. Let us know if you've written a cool story! Our helpdesk can also help with technical questions if you’re working on a public interest investigation. Email info@open-contracting.org.

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Stay in touch

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Our newsletter for investigative journalists:

opencontracting.substack.com

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@opencontracting

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www.open-contracting.org