Why Open Contracting

Why government contracting matters

Every year, governments spend huge sums of money through contracts, on everything from pencils and paper to building major infrastructure projects such as airports.

Open contracting is  the bricks and mortar of public benefit, where taxpayers’ money gets converted into schools, roads and hospitals, into things that ordinary people really care about.  

This global spending amounts to over US$9.5 trillion each year, a massive 15% of global GDP. That is a pile of one dollar notes stretching from the earth to the moon – and back.

No wonder; contracting is government’s number one corruption risk.

57% of foreign bribery cases prosecuted under the OECD Anti-Bribery Convention involved bribes to obtain public contracts. According to a 2013 Eurobarometer survey, more than 30% of companies participating in EU public procurement say corruption prevented them from winning a contract.

Corruption has significant costs. A World Bank survey of 34,000 companies in 88 countries shows that competition was higher and kickbacks were fewer and smaller in places where transparent procurement, independent complaints and external auditing are in place.

What is open contracting

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.

Open contracting delivers better deals for governments, provides a level playing field for the private sector, and high-quality goods and services for citizens.

Our Global Principles provide the framework to guide public procurement reflecting norms and best practices worldwide.

Open contracting involves the full chain of government deal-making, from concessions of natural resources to procurement of goods, works, and services for citizens. It starts at the planning stage, and covers tenders, awarding, and implementation of all public contracts.

At the heart of our work is a global, non-proprietary data standard, the Open Contracting Data Standard. It is not a pass-or-fail standard but a schema to provide shareable, reusable, machine-readable open data on public contracting across the entire cycle of public procurement. The data standard is the basis for building and sharing tools that use and analyse this information.

But publishing government contracts through the data standard is only the first step in open contracting. Using this data to analyze and monitor public procurement is equally important. Citizens have long been monitoring projects in vital services areas such as education and health or infrastructure works including roads. Better data on the underlying contracts will unlock new opportunities for scrutiny and feedback and new opportunities to fix problems.  

The benefit of open contracting

Publishing and using structured and standardized information about public contracting can help stakeholders to:

  • deliver better value for money 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,
  • promote smarter analysis and better solutions for public problems.

This public access to open contracting data builds trust and ensures that the trillions of dollars spent by governments results in better services, goods, and infrastructure projects.

Implementation of open contracting

Open contracting is at the cutting edge of open government across the globe. Governments in countries such as in Canada, Ukraine or Paraguay or cities such as Mexico City and Montreal are already implementing the data standard.

Our guide to implementing open contracting provides a detailed step-by-step process to get your country to be part of these revolution from shifting public contracting from closed to open.

Read more about the experiences by our Showcase and Learning Projects as well as projects by partners and related local initiatives that use open contracting to make sure government money is well spent.

The evidence so far

The evidence accumulating from countries starting to implement open contracting is promising.

In Ukraine, government, business, and civil society have already built a world class, transparent procurement system called Prozorro to rebuild trust with both citizens and local businesses. Prozorro has now run over 26,000 tenders for $240 million in goods. Apart from doing this fully openly and fairly, it has helped save an average of 13% on budgeted spending too. New business participate in the procurement process and win contracts. This early impact has led to principles of open contracting including open data and citizen monitoring being enshrined in a new procurement law. ProZorro, despite the ongoing governance challenges in the Ukraine, is now being scaled up across government.

In Slovakia, full publication of government contracts helped expose wasteful spending, fraud and also led to a significant increase in competition for other contracts subsequently, encouraging small businesses and public innovation.

Openness pays huge returns on investment. 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.

Global norms and guidelines referring to open contracting

Open contracting is being recognised by global bodies such as the G20 Public Procurement Guidelines and its Principles of Open Data for Anti-Corruption. Global open government and open data initiatives such as the Open Government Partnership and the Open Data Charter recognise open contracting as a priority dataset to be shared with businesses and the public.