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May 14, 2020

Efficient Public Contracting for Emergency Responses

Covid
Posted by Lindsey Marchessault[1]

COVID-19 has ground the global economy to a halt. To address the crisis and help the recovery, governments must make the most out of limited public resources to effectively fight the virus, protect their populations, and rebuild their economies. With huge public spending being committed to fight the disease, it is more important than ever that public contracting delivers value for money.

Unfortunately, low levels of transparency, digitization, and coordination are creating a ‘hunger games’ scenario as hospitals, public health agencies, subnational and national governments compete to purchase essential equipment, medicine and services.

The crisis is exacerbating long-standing weaknesses in procurement systems. Even in normal circumstances, it is estimated that corruption inflates the costs of public contracts by an average of 10-25 percent. Unfortunately, there are people taking advantage of the chaos to enrich themselves at the expense of medical staff and patients.

The Policy Response

Public procurement can be notoriously slow and characterized by complex procedures. In the current crisis, delays in obtaining life-saving equipment can be the difference between life and death. To speed things up, governments are passing emergency measures to circumvent established rules and procedures. Greater speed, however, increases the risk of mismanagement. As IMF Managing Director Kristina Georgieva recently said, “Spend what you can but keep the receipts, we don’t want accountability and transparency to take a back seat.”

The best examples of these emergency procurement measures are the ones that achieve agility without sacrificing accountability.

For example, on March 20th, Ukraine adopted a resolution[2] that permitted direct, non-competitive purchasing of the goods and services deemed essential to fight COVID-19. To maintain accountability, the resolution requires that a structured report of the purchase be recorded within one day. In addition to this report, the buyer must upload the contract itself, including all annexes and amendments. Once the contract is finalized, the buyer must disclose the final value paid. All data is structured according to the Open Contracting Data Standard and immediately becomes available to the general public through an open API.

In Colombia, the national procurement agency wanted to improve the coordination of demand and supply for urgently needed goods and services. To do this, they published a notice asking suppliers available to provide the needed products and services to come forward. They then consolidated these data into a transparent catalog of products and services. The various buying institutions can review and purchase directly from those suppliers via a virtual marketplace. This response has two benefits. First, it reduces the burden on the companies from having to separately research and submit proposals to many different public institutions. Second, it reduces competition among the buyers thus driving up prices and providing support to the businesses concerned.[3] All information about the COVID-19 this scheme is also published using the Open Contracting Data Standard.

Standardized Open Data

Standardized open data helps with coordination, market research, due diligence, and supply chain management. For example, Paraguay uses the Open Contracting Data Standard to structure and publish information about its public procurement. To facilitate tracking of COVID-19 related procurement, the procurement agency did two things. First, they identified specific budget lines for all emergency procurement. Second, they added “COVID-19” as an identifier in the “procurementMethodRationale” field of the IT system. As a result, it is easy to identify the awarded suppliers, the amounts, the contract document, the budget lines used to finance the contract, any payments made, and contract milestones achieved for all Covid-19 procurement.[4] The system also links the procurement information to budgets and public investment projects which will facilitate tracking and analyzing recovery efforts.

Accountability through Public Monitoring

While it is important to structure and publish contract information, it is equally important to follow the money to ensure it delivers its intended impact. Civil society in Ukraine is actively monitoring the procurement of critical items including masks and test kits across the country. Data-driven monitoring is also powering civil society advocacy in Chile. And at least one case of corruption has already been identified using open contracting data in Paraguay.

Finally, with the fiscal and economic challenges that are coming around the corner, improving efficiency and value for money in public contracting will be critical. When facing severe budget shortfalls and an economic recession, savings need to be found somewhere and public investment needs to lead to economic improvement.

The Covid-19 crisis is unprecedented in our lifetime. While desperate times call for desperate measures, now is not the time to buy blindly without keeping the receipts.

To help ensure transparency and accountability, the Open Contracting Partnership has developed two important resources: a guide to the essential data collection and publication and a guide to emergency procurement monitoring. These resources and more can be found at www.open-contracting.org/Covid19.

This article is part of a series related to the Coronavirus Crisis. All of our articles covering the topic can be found on our PFM Blog Coronavirus Articles page.

 

[1] Director of Data and Engagement, Open Contracting Partnership.

[2] Cabinet of Ministers of Ukraine Resolution March 20, 2020 № 225 https://zakon.rada.gov.ua/laws/show/225-2020-п; Law of Ukraine Amending Legislative Acts of Ukraine to Prevent the Occurrence and Spread of Coronavirus Disease (COVID-19) https://zakon.rada.gov.ua/laws/show/530-20/ed20200402

[3] Colombia Compra Eficiente Open Data https://www.colombiacompra.gov.co/tienda-virtual-del-estado-colombiano/salud/instrumento-de-agregacion-de-demanda-emergencia-covid-19

[4] See https://www.contrataciones.gov.py/buscador/licitaciones.html?marcas%5B%5D=covid_19

Note: The posts on the IMF PFM Blog should not be reported as representing the views of the IMF. The views expressed are those of the authors and do not necessarily represent those of the IMF or IMF policy.

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