“Sunlight is said to be the best of disinfectants.” Louis Brandeis
October 24, 2012 saw the launch of a major multi-year global initiative that Reos Partners has been designing and developing with the World Bank, German Society for International Cooperation (GIZ), and other partners. The “Open Contracting” initiative is based on the idea that citizens should be able to scrutinize and debate both the contracts that their governments enter into with the private sector and the ways these agreements are awarded and implemented (www.open-contracting.org). Why is this issue important? Each year, governments (and ultimately citizens) pay an estimated $9.5 trillion for services provided by the private sector. In many countries, much of this investment is currently lost through corruption, inefficiencies, and mismanagement; some estimate that, in the most corrupt countries, this loss can be as much as 30% of spending on private sector initiatives. Given that the Organisation for Economic Cooperation and Development spent $133 billion in 2011 on global development, just a 2% reduction of corruption or inefficiencies would surpass the agency’s entire annual spending on such assistance.
Why Focus on Contracting?
When we try to understand how to reduce corruption and mismanagement in the context of a globalised world, the problem can seem overwhelming – and it is. However, if we take a lead from the systems thinking approach and begin to see the broader web of national and international relationships as part of a complex system, one thing becomes clear – we need to look for points of leverage within that system. Leverage points are those places where we can exert a modest degree of force to deliver a significant impact.
This is the genius of focusing on contracts: on how they are awarded and how well the services are delivered. A contract is the “eye of the needle” through which all the ideas and assumptions of both parties have to pass. If some “sunlight” can be shone at this specific point in the process, many things both upstream and downstream become easier to scrutinize, and it becomes simpler to hold those involved accountable.
How Did We Get Here?
The embryonic idea for this global movement was developed during a multi-stakeholder meeting that took place in June 2010 during an event focused on improving the governance of the extractive industries in Africa called “Getting a Good Deal for Africa”. This was the first time Reos Partners had worked with the World Bank Institute to bring our core methodology to their portfolio of issues. On the final day of the meeting, when considering how they could address some of the key challenges, a group came up with the concept of “contract monitoring”. From that seed idea, the Open Contracting initiative began to develop. The core group of stakeholders evolved into a steering group that co-hosted the launch of Open Contracting in South Africa – GIZ, CoST, Integrity Action, Oxfam America, the Philippines government, Transparency International, and the World Bank Institute (WBI).
There are three main streams of activity that have evolved from the meeting in South Africa, all of which are core to developing Open Contracting as a new practice.
A working group made up of representatives from civil society, government, multilateral agencies, and the private sector is developing a series of global principles for Open Contracting. The objective of the principles is to build on existing norms to create a transparent, accountable, and participatory framework for contract formation, disclosure, and monitoring. The principles are intended to be applicable to all types of contracts between public and private entities across all economic sectors, and to maximize the use of technology in making relevant data accessible and usable to all, particularly in developing countries. To accompany the principles, World Bank Institute staff members are developing a scoping paper that articulates the relevance of each principle, examples of good practices from around the world, and ideas for implementation.
Open Contracting aims to improve transparency and accountability in public contracting in an increasingly data-focused world. In order to enhance accountability and to assist those monitoring contract execution (within both government and civil society), a working group made up of WBI staff and representatives from civil society, government, and other international organisations is developing a set of technical standards to be used for the disclosure of key contractual terms. The goal is to make such documents available in a simple, machine-readable format, based on the categorization of standardised meta-data, the ability to link to other existing sets of data. This working group recognises that organisations vary in their capacity to implement such technical standards and that different contexts require different disclosure standards. Group members are currently working on specifications for disclosure of terms found in the contracts themselves as well as in any annexes, amendments, or reference documents. In the next phase, they expect to expand the specifications to include data extracted from procurement documents and the legal framework.
To facilitate the implementation of Open Contracting, a working group has been formed to develop strategies to enhance both the disclosure of contracts and the effective monitoring of them. Based on an understanding of the initiatives and tools currently being used to support Open Contracting around the world, the group seeks to facilitate learning exchanges on Open Contracting issues, fund innovative approaches and tools for Open Contracting, document ongoing Open Contracting efforts, and otherwise enhance the knowledge and skills of interested stakeholders on Open Contracting issues.
As the work on global principles, disclosure standards, and capacity building continues, the steering group currently guiding the process is focused on building a nimble governance structure that will enable the movement to evolve. The next gathering of this group will take place in 2013 at a location to be determined.