Why good procurement data does more than fight corruption

Why good procurement data does more than fight corruption

By National Renewable Energy Laboratory, U.S. Department of Energy - https://sam.nrel.gov/files/content/documents/pdf/DOE%20Forrestal%20Building%20Rooftop%20PV.pdf ; page 1, Public Domain, https://commons.wikimedia.org/w/index.php?curid=20001886

Much of the focus of the Open Contracting Data Standard (OCDS) has rightly been on the capacity for open data to act as a mechanism for countering fraud, but effective use of the data standard has the capacity to improve operational procurement both within government and externally with its suppliers. Adhering to the standard greatly improves the ability to move, compare and analyse procurement data, it makes record keeping more effective and  strengthens the quality of data held on contracts. Better data on contracts are urgently needed by Governments, not just to act as a counter-fraud or a transparency measure, but also as the basis for improving the operational procedures and software used by Government.

We outline ten key benefits from having good procurement data in Government. If you think your Government needs to improve the way that you record procurement data, please get in touch, we can help you build a procurement service for the future:

1. Good procurement data uses buyer identifiers

Currently, when buyers are entering data into tender sites they use their own understanding of their organisation’s name. Fair enough, but because this isn’t entered with any reference to a register of buyers, the data subsequently includes subtle variations of a buyer’s name. Here are four names entered into the UK’s data by the Department for Energy and Climate Change:

DEPARTMENT OF ENERGY & CLIMATE CHANGE
DEPARTMENT OF ENERGY AN CLIMATE CHANGE
DEPARTMENT OF ENERGY AND CLIMATE CHANGE
DEPARTMENT OF ENERGY AND CLIMATE CHANGE (DECC).

This variation makes it impossible to know which contracts DECC has let without first joining up these records. By using a unique identifier system, OCDS ensures that the activities of a single entity are always recorded properly. This is known as referential integrity,
something that OCDS requires buyers to do before they can publish their data successfully. We’re working on some referential integrity projects for openopps.com, so watch this space.

There’s actually a much wider benefit to solving this problem. OCDS encourages Governments to create meaningful, authoritative registers of all of the public entities that make up the Government. At the moment, it is not unusual for individual Departments to operating using multiple different lists of the bodies that fall within their field of responsibility. This lack of authoritative data creates confusion and wastes effort. Having a proper, well-maintained, open register of public entities would allow the efficient movement of data across government, making it much easier to report on a wide-range of government activities as well as making Government more accountable to citizens.


2. Good procurement data uses supplier identifiers

In the same vein, a proper register of suppliers that have won awards allows a much greater understanding of who is benefitting from Government contracting. As with the buyer records, the details of contract winners are entered manually, with all of the same associated weaknesses and variations. So, again there is no referential integrity in the data, which means we can’t know how many contracts any given business won across Government. Supplier identifiers are particularly important, as they can give us lots more information about who is winning tenders, such as whether or not they are based offshore, or whether they have a history of legal citations against them. We can also find out about their accounts, whether or not they’re a small company and whether they’re part of a larger company.

Properly linked data means that we can also compare the activities of suppliers, determining where they’re charging too much, and perhaps whether they’re being inconsistent with the charges they’re making. Different categories can be analysed to see how competitive tenders are and where small suppliers are being used. All of this might seem a little prosaic, but at the current time, very few Governments retain comprehensive contracting records, let alone records with clear identifiers, so it is almost impossible to compare how different companies are performing across the whole of government.


3. Good procurement data is a canonical record of contracts

When buyers use OCDS they are required to list changes to contracts, so that there is a single record of all the changes made to a contract during its lifetime. It is not unusual in large Departments to see different parts of the organisation negotiating different changes to a single contract, and subsequently different versions of the same contract being held by the Department. This makes it hard to audit performance and to enforce the contract in any legal dispute. The data protocols enforced by OCDS require buyers to maintain a record of changes and amendments to contracts so that a single record of the active contract is always maintained.

In Slovakia, every contract is required to be made public for it to be a valid contract. Under this sort of regime amendments to contracts must be made public if they are to be active, which has the advantage of ensuring that the only contract in place is the publicly available version. The principle of a canonical record is embedded in good data practice, so it can also be applied to sensitive contracts that cannot be made public.


4. OCDS is platform agnostic

Once you adopt a data standard that is independent of a software company, it becomes easier to change your software providers as the data is can readily be ported from one system to another, meaning that buyers can move to a more “plug and play” approach to using different software. Products like Contracts Finder can be amended, upgraded and replaced without having to write new integration tools and data can be moved from adjacent systems like financial registers easily.

Many of the IT failures seen in Government come from a policy of buying software and believing that functionality is more important than the data that underlies the software. To prevent these failures, Governments need to move to a ‘data first’ approach where the data is seen as the  cornerstone of a public service and the software is merely a mechanism that facilitates delivery. In this new approach to service delivery, often called 'Government as a Platform’, standards are critical, as they allow for data from different systems and different publishers to be conjoined, shared and modelled as universal whole. Tim O’Reilly has written about Government as a Platform here:
http://chimera.labs.oreilly.com/books/1234000000774/ch02.html. The Government Digital Service has also written about it here: https://gds.blog.gov.uk/2015/03/29/government-as-a-platform-the-next-phase-of-digital-transformation/


5.Good procurement data makes it easy to show bad performance

There is a tendency in Government procurement to look closely at a procurement only after something has gone wrong. Whether it’s the failure of West Coast rail franchise tender, the delays in Universal Credit or the failure of guarding services at the London Olympics, Government follows the same pattern: Wait for catastrophic failure. A Minister promises to get to the bottom of the failings, so that “lessons can be learnt”. A report appears some months later inevitably citing “poor procurement” as a contributory factor.

Whilst the use of a data standard will not do away with this chain of events, good procurement data has the chance to make a dent in procurement failures. By comparing the work of different buyers, it is possible to predict failure points before they happen such as tenders where specifications are changing, tenders that are insufficiently competitive, buyers that routinely fail to achieve value for money and suppliers that do the same.

Making it easier to subject buyers to scrutiny isn’t always welcome, but if we start to see outlier behaviour before a catastrophic event (e.g. tenders taking much, much longer than average) it is possible to act early to prevent failures rather than waiting for them to occur before acting. Despite the discomfort that this will inevitably create, it will contribute significantly to the effective running of government.


6. Good procurement data shows pipelines of upcoming contracts

Properly implemented, OCDS creates a clear list of contract end dates. These can be compiled and compared so that it is easy to know when contracts come to an end. This allows buyers to co-ordinate purchasing between collaborating authorities, making sure that buyers’ spend can be corralled into fewer contracts to improve buying power. At the same time, buyers can prepare new contracts that meet the needs of more parties by knowing who is able to join a contract before tenders are awarded. Suppliers can also benefit, planning their efforts to work only with buyers that have contract renewals due.

Information asymmetry
abounds in tendering, and creates an economic imbalance, where incumbents enjoy significant advantages because they know what it takes to deliver (and profit) from a service. Greater awareness of when contracts will terminate creates a much sounder platform for competitive tenders. It is easier to know what was bought previously, which suppliers delivered the service and how cost effective it was. Rival suppliers can then use this data to compete more forcefully and to ensure that they are ready to submit more competitive solutions than incumbents.


7. Good procurement data helps smaller businesses

Part of being more competitive means being able to structure your procurements to social ends. At the moment, most governments don’t know where to direct their efforts in order to bring more small businesses into their supply chain. With the right data it is possible to identify the tenders that are most suitable for small businesses as well as the small businesses that are most successful in delivering services to Government. Really good data allows buyers to spot where tenders are unfairly excluding small businesses before they are let.

Implementing OCDS across Government hands control to those with a mandate to improve social procurement, by bringing small businesses into the supply chain, reducing the carbon impact of purchasing or encouraging more community organisations to bid for business. The data created by OCDS provides a sound basis for detailed analysis of the public supply chain, giving buyers the data they need to deliver much more effective social spending programmes.


8. Good procurement data can be used to track sub-contracting

OCDS contracts can be cross-referenced, which means that private subcontractors could also provide details of the partners they are using to deliver services to Government. This matters because Government doesn’t want to see criminals and tax evaders benefitting from their contracts, even at one remove, but also because a well managed supply-chain can prevent downstream supply problems, improve productivity and deliver more local business, e.g. insisting on onshoring over offshoring.

Again, the application of the standard creates new opportunities for examining the practices of suppliers that benefit from billions of Government contracting. This might not necessarily be about exposing all of the data publicly, many suppliers would reject the idea of listing their partners openly, but by making the data available in a common standard it becomes possible for buyers to better understand their supply chains and the risks and opportunities embedded in those supply chains.


9. Good procurement data brings clarity to framework deals

Many contracts let by governments use a structure where a short-list of suppliers is agreed in a master contract and then a number of contracts are let underneath these master contracts. The contracts can be accessed by different buyers and can have broad remits. In the UK they’re called framework contracts and, whilst they can be a useful tool to prevent unnecessary tendering, they can be problematic, as it can be hard to know who is using them and whether they’re being used correctly. That means it is hard to track savings or know if the suppliers are performing properly. Poorly structured frameworks can also be exploited by supplier cartels.

Again, correct implementation of OCDS would see clear notifications of all contract award notices, including the awards relating to the smaller contracts let under frameworks, ensuring that all of the data is collated in the correct manner. This gives buyers and framework managers a good understanding of whether contracts are being used and whether they’re delivering savings and value for money.


10. Good procurement data saves money

If implementing OCDS increases competition, prevents fraud, prevents procurement failures, secures better performance and highlights bad performance, it is fair to say that it will deliver significant savings for the public purse. Governments around the world spend around $10tn a year with their suppliers and recent pressures on budgets has driven these costs up, rather than down, as Governments have used outsourcing as a way to generating savings. At the same time, Governments’ internal contract management resources are dwindling. Ensuring that data is available to monitor our contracts is critical if the public sector is going to deliver the savings it needs.

A better understanding procurement across the bodies that make up Government will be the most cost-effective way to promote budgetary efficiency and to deliver the “more for less” mantra that is beloved of politicians.

There is a risk that we’re portraying OCDS as a panacea, but if one thinks about the complexity and waste involved in public procurement, and the potential impact of having more comprehensive, accurate, transferable procurement data, it is not hard to conclude that good data will have a significant positive impact.

If your Government would like help to improve their procurement data, or to conduct a business case for investment, we can help you build new insights and gain more control over your spending through better data.




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