Detecting Corruption Risk through Open Contracting

December 1, 2016
Andrew Mandelbaum
News/Events, Procurement

At this month’s Open Government Partnership (OGP) Global Summit in Paris, many government and civil society participants will be talking about open contracting. Dozens of countries — from Nigeria and Paraguay, to France, our hosts — are committing to implement the principles of open contracting as a core element of their strategies to reduce corruption and improve the allocation of public resources. By adopting the Open Contracting Data Standard (OCDS), some of these countries hope that disclosing procurement data in an open and useable format will help improve spending efficiency and generate public trust.

But there remain several hurdles to achieving the riches promised by open contracting in spite of the political will that these countries have expressed. Technical staff within governments do not always possess the resources and knowhow to implement open contracting. Even if openness is achieved, questions remain about the potential of disclosure alone to achieve the intended results. For governments and citizens to reap the benefits of open contracting, the appropriate question is not “how to be open?”. Rather, we must ask how we can use procurement data to identify and disrupt malfeasance, to gain value for money, and to improve efficiency and the quality of service delivery.

<p>DG's Corruption Risk Dashboard</p>

Assessing Procurement Efficiency & Competition
At Development Gateway (DG), our approach to gaining value from procurement data has been to focus on distinct use cases. To garner insight into questions of the efficiency and competitiveness of procurement, we have been developing a dashboard in collaboration with the Vietnam Public Procurement Authority (PPA). The tool, which converts government data to OCDS, helps the PPA to address a variety of priority questions about the performance of procurement entities, the suppliers bidding for government contracts, and the methods and processes in use.

Red Flagging & Corruption Monitoring
To help identify corruption risk and support the efforts of investigators to target specific contracts, DG is developing a red flag tool with the collaboration and support of the Open Contracting Partnership. The Corruption Risk Dashboard can sift millions of public tenders and contracts using high-powered data analytics to identify patterns and discrepancies associated with specific corruption types. The aim of this tool is not to reveal corruption, but to aid key stakeholders — from government, the media, and civil society — to focus their resources on investigating the contracts most prone to corruption risk. The Corruption Risk Dashboard integrates with DG’s procurement efficiency and competition dashboard, and benefits from its OCDS conversion tool.

Our Corruption Risk Methodology
In lieu of a physical investigation, it can be difficult to attribute certainty to any data-based approach to corruption identification. Consequently, our approach, outlined in a freshly published report co-authored with OCP, aims to identify the risk of corruption by triangulating indicators that point to the possibility of specific corruption types:

  • Fraud: when a bidder falsifies information submitted to the procuring entity;
  • Collusion: when bidders work among themselves to try to obtain particular outcomes;
  • Process rigging: when government officials distort the procurement process, whether in collusion with suppliers or in demand of a kickback, to seek a certain outcome.

This approach, and the more than 60 indicators we’ve developed, builds off the work of the likes of the International Anti-Corruption Resource Center, DigiWhist, and the Government Transparency Institute (Budapest). It also benefits from our experience building procurement analytics tools in Vietnam and Nepal, and conducting open contracting scoping studies in five West African nations and countries throughout Asia.

Promising Results

<p>risk indicators</p>

Thus far, our indicators have shown promise in identifying a subset of contracts at risk for the three forms of corruption that we’ve targeted. If you’d like to learn more, we will be discussing our methodology and results in two sessions at OGP, so please join us at the following events:

December 9, 10:45 am: Leveraging Big Data to Combat Corruption in Government Procurement

December 9, 2:00 pm: Tools & Strategies to Transform Public Contracting

For our internet audience, we’ll summarize our findings upon our return.

Image: Asian Development Bank CC BY-NC-ND 2.0

Share This Post

Related from our library

DG’s Open Contracting Portal Designated as a Digital Public Good

Digital Public Goods Alliance designated DG’s Open Contracting Portal as a digital public good in September 2022. The Portal provides procurement analytics that can be used to improve procurement efficiency and, in turn, reduce corruption and increase impact.

December 6, 2022 Open Contracting and Procurement Analytics, Process & Tools
Photo by Adrian Infernus via Unsplash
DG at the African Green Revolution Forum (AGRF)

Representatives from Development Gateway: an IREX Venture (DG) will be attending the African Green Revolution Forum (AGRF) from September 5-9 in Kigali, Rwanda to highlight two projects: the Visualizing Insights on African Agriculture (VIFAA) project and the Farmer-Centric Data Governance Models project.

September 1, 2022 Agriculture
“Data…for What?!:” Expanding into Education, Media/Disinformation & Youth

In Episode 2 of "Data…for What?!," a podcast series from Development Gateway: an IREX Venture (DG) which explores our new strategic plan, Josh Powell met with experts from DG and IREX to discuss DG’s expansion into the education, media and disinformation, and youth sectors. The conversations explore the most pressing challenges and greatest opportunities for data and technology to positively impact these sectors and discuss how these trends are likely to play out in the years ahead. Based on these trends, the experts explain the unique fit for DG’s skills and specific opportunities for collaboration that align with the vision of DG’s partnership with IREX, which has a long and successful history working in each sector.

August 16, 2022 Team