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Indonesia

Government Procurement Transparency (ID0103)

Overview

At-a-Glance

Action Plan: Indonesia Action Plan 2018-2020

Action Plan Cycle: 2018

Status: Active

Institutions

Lead Institution: 1. National Public Procurement Agency (NPPA) 2. Central Information Commission

Support Institution(s): Corruption Eradication Commission, 1. Indonesia Corruption Watch (ICW); 2. Transparency International Indonesia (TII)

Policy Areas

Anti-Corruption, Capacity Building, E-Government, Legislation & Regulation, Open Contracting and Public Procurement, Public Participation, Public Procurement

IRM Review

IRM Report: Indonesia Design Report 2018-2020

Starred: Pending IRM Review

Early Results: Pending IRM Review

Design i

Verifiable: Yes

Relevant to OGP Values: Access to Information , Civic Participation , Technology

Potential Impact:

Implementation i

Completion: Pending IRM Review

Description

January 2019 - December 2020
Commitment Description
Lead implementing
agency/actor
1. National Public Procurement Agency (NPPA)
2. Central Information Commission
Public procurement process in Indonesia takes 30% of
the total state budget. Such goods and services
provided by the government through the procurement
process have been very convenient in establishing
infrastructures and facilities to support people, such as
schools, hospitals, etc. However, according to NPPA’s
record, the country is still in a deficit at $15 billion per
year or almost 200 trillion rupiahs due to a poor
procurement process.
One of the solutions to prevent and overcome
problems encountered within the procurement process
is to enhance transparency and accountability of the
procurement documents.
Even though currently the government is publishing
the procurement information offline and online, but,
based on Scoping Study Open Contracting in
Indonesia (2016), six stages of procurement
documents starting from planning to final stage are not
yet to be published. All this time, information available
on the website is only limited to the information about
the selection process, the rest of the process is not yet
available. Therefore, the open contracting initiative is
expected to assist public procurement transparency
followed with standardized data and content.
What is the public problem that
the commitment will address?
The government recently issued a Presidential
Regulation Number 16/2018 on Public Procurement
which focuses on accelerating the easiness of the
procurement process. The regulation mandate
procurement system integration which consists of
planning program process, budgeting, up to monitoring
and evaluation. The system is called the Electronic
Procurement System (EPS).
However, based on the regulation, there was no
procurement document available to be published.
Therefore, Open Government National Action Plan
2019-2020 will set a target for NPPA and KIP to release
policy (regulation and decree) related to document list
which can be accessed by the public.
Furthermore, to strengthen the monitoring system
mandated by the regulation, NPPA should add
monitoring component to the procurement of goods
and services by involving civil society How will the commitment
contribute to solve the public
problem?
This commitment is relevant to the OGP values, such
as information disclosure, public participation,
transparency, and technology innovation. By using the
integrated SPSE, procurement process of government
goods and services will be more accountable. This
commitment also encourages transparency and public
participation.
Why is this commitment relevant
to OGP values?
● Open contracting becomes one of the indicators to
determine the achievement of SDGs goals,
particularly related to Agenda 10.
● Open contracting commitment is an initiative that
initially brought by Bojonegoro Regency and local
civil society organizations through the OGP
Subnational Pilot Program. Moreover, open
contracting has been supported by the Steering
Committee of OGP through OGP Regional Summit
2017 and OGP Global Summit 2016.
● Some of the civil society organizations, e.g.
Bojonegoro Institute (BI), Indonesia Corruption
Watch (ICW), Transparency International
Indonesia (TII) have been supporting this
commitment by coordinating with local government
since last year. Center of Information and Regional
Studies (PATTIRO) from Semarang and The
Alliance of Independent Journalists (AJI) will be
supporting this commitment as well.
Additional information
Milestone Activity with a verifiable
deliverable
Start Date: End Date:
1. The availability Head of
Institution Decree on information
disclosure about government
procurement which can be
accessed by the public.
January 2019 September 2019
National Public Procurement Agency (NPPA)
2. The utilization of Electronic
Procurement System in all
government procurement (Planning,
Procurement Preparation, Election
Preparation, Election, Contract
Implementation, Commencement) in
government institutions.
January 2019 December 2020 3. Workshop on Public
Procurement Monitoring for civil
society organizations in the
national or regional level.
January 2019 December 2020
1.Public consultation to acquire
people’s response to public
information disclosure referring to
public information disclosure
January 2020 September 2020
Central Information Commission
2. The availability of Information
Commission Regulations on
information disclosure about
government procurement referring
to the regulation issued by NPPA.
September 2020 December 2020
Contact information
Other Actors
Involved
State actors
involved
Corruption Eradication Commission
CSOs, private
sector, multilaterals,
working groups
1. Indonesia Corruption Watch (ICW);
2. Transparency International Indonesia (TII)

IRM Midterm Status Summary

12. The Enhancement of Transparency and Participation on Government Procurement

Language of the commitment as it appears in the action plan:

The government recently issued a Presidential Regulation Number 16/2018 on Public Procurement which focuses on accelerating the easiness of the procurement process. The regulation mandate procurement system integration which consists of planning program process, budgeting, up to monitoring and evaluation. The system is called the Electronic Procurement System (EPS).

However, based on the regulation, there was no procurement document available to be published. Therefore, Open Government National Action Plan 2019–2020 will set a target for NPPA and KIP to release policy (regulation and decree) related to document list which can be accessed by the public.

Furthermore, to strengthen the monitoring system mandated by the regulation, NPPA should add monitoring component to the procurement of goods and services by involving civil society.

Milestones:

National Public Procurement Agency (NPPA)

  1. The availability of Head of Institution Decree on information disclosure about government procurement which can be accessed by the public.
  2. The utilization of Electronic Procurement System in all government procurement (Planning, Procurement Preparation, Election Preparation, Election, Contract Implementation, Commencement) in government institutions.
  3. Workshop on Public Procurement Monitoring for civil society organizations in the national or regional level.

Central Information Commission

  1. Public consultation to acquire people’s response to public information disclosure referring to public information disclosure.
  2. The availability of Information Commission Regulations on information disclosure about government procurement referring to the regulation issued by NPPA.

Start Date: January 2019                                                               End Date: December 2020

Context and Objectives

According to the Minister of Finance, Sri Mulyani, procurement of goods and services accounted for around 524 trillion rupiah (36.8 billion USD) or 36% of Indonesia’s 2018 national budget. [126] The National Public Procurement Agency (LKPP) reported that the government suffers an average 15 billion USD [127] deficit every year due to a weak procurement process, including a lack of transparency.

In 2016, Web Foundation’s Open Data Lab Jakarta released a report that looked into Indonesia’s procurement transparency with support from Hivos. Findings in the report suggested that the procurement process lacked transparency across all six stages: planning, announcement, selection, awarding, performance, and termination. [128] While the government has taken steps to increase transparency in the procurement process, the report found that most procurement documents are not available online, [129] particularly in the critical stages of performance and termination.

The government has not been oblivious to this situation. Most recently, the government issued a new Presidential Regulation on Government Procurement of Goods and Services [130] in March 2018. This new regulation mandates the integration of the complex layers of procurement system that is available on the government’s electronic procurement system (SPSE) lpse.lkpp.go.id. The system was established in 2008 and has been adopted by public institutions across Indonesia, though the extent of its utilization varies throughout the stages of procurement process: planning, preparation, open call for proposals, proposal selection, contracting, and implementation.

According to Arif Adi Kuswardono, one of the Information Commissioners at the Central Information Commission (KIP), the problem is that the LKPP does not have a standardized information disclosure policy. [131] This leads to inconsistent practices and confusion among citizens as to what procurement information is publicly available. To address this, the KIP believes that the LKPP should refer to the KIP’s Public Information Service Standards Regulation rather than creating a new regulation. [132] However, the LKPP would also need to develop an updated Public Information List (DIP) on the procurement process. This would clarify which procurement information is classified as open by default and which is privileged and therefore requires a formal public information request to be disclosed.

In doing so, the KIP will conduct public consultations to identify the areas where public access to procurement information is most needed. Public input from these consultations will help the KIP and also the LKPP in classifying procurement information as either open by default or privileged. This would in turn provide the KIP with a clear legal basis in adjudicating public information requests. According to one of the KIP Commissioners, [133] unclear procurement information disclosure policy has resulted in contradictory public information request verdicts between the KIP and the state administrative court (PTUN).

Meanwhile, the KPK also pointed out that while transparency is an important aspect of the procurement process, the government must also focus on safeguarding the integrity of the procurement system from human and technical errors. [134] In a 2015 report highlighting corruption in government procurement, [135] the KPK expressed concerns over the electronic procurement portal’s frequent system maintenance which often limited potential bidders from participating in a fair bidding process. The report showed that 138 out of the 454 corruption cases prosecuted by the KPK between 2004 and 2015 were related to procurement fraud, second only to bribery cases. [136] This figure indicated that in spite of the government’s efforts to improve the integrity of the procurement process, it remains one of the most vulnerable areas to corruption in government practice. Given these findings, it is also important to note that despite its crucial role in tackling corruption in public procurement, the KPK was not involved in any capacity during the development of this commitment. [137]

Collaboration between the KIP and the LKPP in this commitment carries moderate potential impact to improve transparency in government procurement. By opening up public access to procurement information, the government is adding an extra layer of scrutiny to monitor the procurement process. However, as the KPK pointed out, improving transparency alone will not reform government procurement without improvements in safeguarding the integrity of the electronic procurement system.

Next Steps

Considering the magnitude of the problem, commitments improving the procurement process should be prioritized for inclusion in future action plans. Within the scope of this commitment, the government should focus on the following:

  • Involve the KPK and relevant CSOs such as Transparency International (TI) Indonesia and the Indonesia Corruption Watch (ICW) in developing the new procurement information disclosure regulations;
  • Conduct awareness-raising initiatives to educate citizens of their important role in monitoring the government procurement process; and
  • Establish a clear mechanism for intragovernmental coordination between the LKPP as the procurement authority, the KIP as the information disclosure authority, and the KPK as the relevant law enforcement authority in combating fraudulent procurement practices.

[126] Hendra Kusuma, "Sri Mulyani Cerita Pentingnya Pengadaan Barang dan Jasa bagi APBN" (Detik Finance, 2018), https://finance.detik.com/berita-ekonomi-bisnis/d-4087734/sri-mulyani-cerita-pentingnya-pengadaan-barang-dan-jasa-bagi-apbn.

[127] Open Government Indonesia National Secretariat, “Indonesia OGP National Action Plan 2018–2020” (2018), 41, https://www.opengovpartnership.org/wp-content/uploads/2019/01/Indonesia_Action-Plan_2018-2020.pdf.

[128] Web Foundation's Open Data Lab Jakarta, “How Can Indonesia Achieve a More Transparent Procurement Regime? Open Contracting and the Future of Indonesia's Procurement System" (2016), 5–6, http://labs.webfoundation.org/wp-content/uploads/2016/04/OCDS-Indonesia-Research-Note.pdf.

[129] Ibid., 7.

[130] Government of Indonesia, “Peraturan Presiden No. 16/2018 tentang Pengadaan Barang/Jasa Pemerintah” (2018), https://jdih.lkpp.go.id/regulation/1001/peraturan-presiden-nomor-16-tahun-2018.

[131] Arif Adi Kuswardono (Central Information Commission), interview by IRM researcher, 11 Mar. 2019.

[132] Aditya Nuriya (Central Information Commission), interview by IRM researcher, 11 Mar. 2019.

[133] Kuswardono, interview.

[134] Putri Rahayu (Corruption Eradication Commission), interview by IRM researcher, 11 Mar. 2019.

[135] Corruption Eradication Commission, “Kajian Pencegahan Korupsi pada Pengadaan Barang dan Jasa Pemerintah” (2015), https://acch.kpk.go.id/id/berkas/litbang/kajian-pencegahan-korupsi-pada-pengadaan-barang-dan-jasa-pemerintah.

[136] Ibid., 8–9.

[137] Rahayu, interview.


Commitments

Open Government Partnership