On March 29, Data Journalism Agency (Texty.org.ua) published a research "What Government Procurement Tenders Hide" of old corruption schemes in public procurement that are working today. The study is based on information on public procurement, that was published in print in the "Journal of Public Procurement" before ProZorro and other open data portals appeared. The analysis of hundreds of thousands of "Protocols of opening quotations" in the Journal made it possible to calculate classic corruption schemes that applied to 2015 and has found that old methods are still working today.
On March 29, Data Journalism Agency (Texty.org.ua) published a research “What Government Procurement Tenders Hide” of old corruption schemes in public procurement that are working today. The study is based on information on public procurement, that was published in print in the “Journal of Public Procurement” before ProZorro and other open data portals appeared. The analysis of hundreds of thousands of “Protocols of opening quotations” in the Journal made it possible to calculate classic corruption schemes that applied to 2015 and has found that old methods are still working today.
The International Renaissance Foundation has been supporting the projects aimed at open government, fighting corruption and better access to the Ukrainian government services for many years. The Texty’s study is one of such projects, which reveals the corruption schemes, helps to ensure public procurement to be honest, the interaction between citizens and government more open, and the quality of public services higher.
“By 2015, open access to public procurement information contained tender winners only. With the vast array of multi-format data, we were able to recover 30,000 protocols (15% of the tenders available in the procurement database) and make them readable. Full information about previously passed competitions enables to understand most common schemes used at the time. This data archaeology is also like “markers” for those who investigative and analyze suspicious tenders on ProZorro today,” said Anatoliy Bondarenko, the head of infographics and data journalism on Texty.
Texty’s analysts identified three classic tender corruption schemes:
Scheme “Companies Which Always Lose”. This scheme is simple and expects that only two members are involved in the tender, one of which is a guaranteed winner while the other traditionally loses. The study found that the same business can participate in 40-60 auctions under this scheme.
Scheme “Everyone Wins with Their Customer”. It foresees that each participant always wins with “their” customer and loses with the customer their competitor wins with. Particularly well this scheme is seen in the so-called “utility” tenders. For example, if you need to carry out pruning trees in Dnipro, it is likely the Dnipro company wins the tender, but not a company from any other city. Geographical or interregional factors of participant exchange is just a special case.
Scheme “Closed for Proposals” is based on a small number of competitors that take part in the tender. Especially it is easy to identify when the state buys fast-moving consumer goods (such as stationery) and a small number of participants is involved in a tender. When railway cars are purchased, a small number of participants in the tender is not suspicious because there are not many railway car suppliers.
The authors affirm that all these schemes are still working and can be followed in new tenders for ProZorro. At the same time, open data has this application effect when public procurement system is transparent, easy to analyze and enables quick identification of abuse, it can be changed.
“Eighteen months of ProZorro is not quite enough to give accurate information about the conspiracy. The presented research is just a background. This methodology can be integrated into ProZorro database analytics to improve significantly the indicators to identify corruption schemes,” says Victor Nestulya, director of innovative projects for Transparency International.
The project is implemented under the think tanks development initiative of the International Renaissance Foundation in partnership with the Think Tanks Fund (TTF) and funded by the Embassy of Sweden in Ukraine.
