Open Data on Public Procurements (MK0150)

Which public problem is addressed by the commitment? Worldwide, public procurements are the typical place where corruption is found. There are many ways in which public procurements are used as instrument for various transactions that are contrary to the public interest and for the purpose of personal proceeds or trading influences. The National Strategy for Prevention of Corruption and Conflict of Interests identifies public procurements as significant risk factor, present in most areas of operation by public institutions. In its last round of monitoring efforts, the Center for Civil Communications notes that, in the first half of 2021, only 1% of public procurements were subject to administrative controls resulting in irregularities identified in every fifth procurement procedure controlled. CCC’s monitoring reports on public procurements regularly feature remarks on low competition in public procurements. Low competition in public procurements organized in economy sectors marked by solid competition is an important indicator of corruption risks. Republic of North Macedonia has electronic system of public procurements that is public and allows citizens to view data on procurement notices and contracts signed. However, monitoring public procurements by external persons, primarily by the media and civil society organizations, is made difficult due to manual data collection. This means that external monitoring is burdened with engagement of resources and time that could be otherwise devoted to data analysis instead of data collection.

Main objective of the commitment The commitment aims to improve accountability in public procurements through better opportunities for external monitoring by the media and civil society organizations. The commitment anticipates publication of public procurements in machinereadable format as open data on the government’s portal designated for that purpose.

How will the commitment contribute to addressing the public problem? Data transparency has significant impact on reducing corruption risks. Disclosing information to the interested public allows in-depth analyses and detection of corruption alerts. In essence, this means that institutions, by the effect of their transparency, enable better quality of involvement on the part of external actors, e.g. civil society, in effective monitoring, through partnership relations between the two sides. Analyses based on the share, scope, networking of contracting authorities and economic operators account for modern-day anticorruption tools and allow timely alerts that could be further processed by other public institutions, e.g. SCPC, in order to improve relevant policy and legal framework. Database on public procurements in open format provides conditions for development of such tools and improves the fight against corruption.

How is the commitment relevant to OGP values? COMMITMENT IS IMPORTANT FOR TRANSPARENCY because it allows new method of access to existing information that facilitates fast analyses of large data volumes. COMMITMENT IS IMPORTANT FOR CIVIL PARTICIPATION because it facilitates work of civil society organizations and the media profiled in the field of public 37 procurements and allows increased number of stakeholders to use public procurement analyses to inform citizens. COMMITMENT IS IMPORTANT FOR PUBLIC ACCOUNTABILITY because comprehensiveness of analyses based on databases in open format enables development of new tool for early alarms on risk factors in particular public procurements and early alarms improve control and integrity of public procurements and saves funds collected from taxpayers.

Additional information Implementation of this commitment does not require additional budget funds. Link to UN Sustainable Development Goals Link to SDG16: Peace, Justice and Strong Institutions SDG target 16.5: Substantially reduce corruption and bribery in all their forms Measures defined under this commitment contribute to prevention and fight against corruption and protection of the public interest by increasing accountability and responsibility of elected and appointed officials before citizens.

No. Milestone Indicators Activity holder Start date End date 2.1. 1 Develop plan on data publishing that provides the structure of datasets and select information to be published for all public procurements Plan on data publishing is developed (yes/no) BPP January 2022 February 2022 2.1. 2 Publish database on the open data portal Number of posts on public procurements that meet the criteria contained defined in the plan for data publishing on the portal BPP March 2022 continuous

Action Plan Review

Commitment 2.1: Public procurements as open data

● Verifiable: Yes

● Does it have an open government lens? Yes

● This commitment has been clustered as: Public procurement transparency (Commitments 1.1, 1.3, and 2.1 of the action plan)

● Potential for results: Modest

Commitment cluster 1: Public procurement transparency

(Public Procurement Bureau, Central Register of the Republic of North Macedonia, General Secretariat at the Government of the Republic of North Macedonia, Center for Civil Communications, Institute for Democracy “Societas Civilis” - Skopje, Metamorphosis Foundation for Internet and Society)

For a complete description of the commitments included in this cluster, see Commitments 1.1, 1.3, and 2.1 in the action plan here.

Context and objectives:

The commitments in this cluster aim to enhance the transparency of North Macedonia’s public procurement system. Under Commitment 1.1, the Public Procurement Bureau (PPB) will publish information on the beneficial owners of companies that are awarded state tenders to the government’s Electronic Public Procurement System (EPPS). ^[49] Although the Central Register of the Republic of North Macedonia (CRRNM) created North Macedonia’s beneficial ownership register in January 2021, the information is accessible only upon request and payment of a fee. Commitment 1.1 will make part of this information publicly available and free of charge on the EPPS, specifically the beneficial owners of legal entities that are awarded public procurement contracts over 1,000 EUR (the legal threshold). A working group of the CRRNM, the PPB and the Center for Civil Communications will be responsible for preparing the criteria for the data that the PPB will publish. Users will be able to download the information as open data using keyword searches. ^[50]

Commitment 1.3 continues the implementation of the Law on Public Procurement. Contracting authorities will create separate tabs on their websites to publish all information and documents related to their public procurement, including links to procurement notices on the EPPS. Finally, for Commitment 2.1, the PPB will provide data on public procurement in open format, specifically as comma separated value export (CSV). According to the Institute for Democracy ‘Societas Civilis’ (IDSC), the procurement data will be modelled after the open finance portal from the previous action plan (2018–2020). [51]

Commitments 1.1. and 2.1 were proposed by civil society, though the PPB was involved in their design from the start. ^[52] Commitment 1.3 was proposed by civil society, and it mostly continues from a commitment in the previous action. ^[53] There were no significant objections during the co-creation of these commitments. While there was a discussion between the PPB and CSOs for Commitment 2.1 over what would be considered as open data format, stakeholders reached an agreement on adopting the CSV format. ^[54] The idea for public procurement as open data was discussed during previous action plans, but was finally included in this fifth action plan as it fit the current work of the PPB. This cluster's commitments support the OGP value of transparency and have activities that are verifiable.

Potential for results: Modest

North Macedonia faces challenges with corruption in public procurement, which can negatively affect foreign investment. ^[55] These commitments could strengthen public scrutiny of government spending so that corruption can be detected more easily. Though each is a positive step forward, their potential is modest due to design limitations and, in the case of Commitment 2.1, pending decisions about the scope of data to be provided in open format.

Presently, it is unclear who the real owners are of companies that are awarded public procurement contracts. As the beneficial ownership register is currently available for a fee, Commitment 1.1 will make some of its information more accessible. By having access to the beneficial owners of companies that win public procurement contracts, users can better detect conflicts of interest in the allocation of state funds. A civil society stakeholder also noted that being able to access data in machine-readable format will be a major shift in accessibility. ^[56] At present, the concluded contracts are largely available as screenshots in PDF files and there is no possibility to search for information within the files. This means that users must identify information from the documents manually and then transpose it into a machine-readable document, such as an Excel file, if they wish to analyse more than one contract at a time. The change will reduce the time that users need to download, code, and sort the data they need when conducting advanced analysis and evaluating integrity of public procurements.

However, this commitment is likely to only have modest results toward “prevent[ing] illusionary competition in tender procedures among companies with same beneficial ownership”. ^[57] Only the beneficial owners of companies that have won public contracts will be disclosed, but not those of companies that unsuccessfully bid. Without information on all bidders, users may find it difficult to detect collusion between companies who make previous arrangements to control who wins a contract. [58] In North Macedonia, public procurement contracts are evaluated based on the most economically advantageous offer and the best quality offer (Law on Public Procurement), so it is important to have an overview of all offers made and how the economic and quality criteria were concurrently considered for awarding contracts.

Regarding Commitment 1.3, public institutions have a legal obligation (under the Law on Public Procurement) to provide all information and documents on their procurement in one place. The information that public institutions will publish on their procurement tabs is already available on the EPPS. There are no sanctions for institutions that do not publish their procurement information on their webpages, nor is there a deadline by which institutions must create their procurement tabs. ^[59] In practice, larger institutions already publish procurement information on their websites, but there are over 1,300 institutions involved in public procurement in North Macedonia and some do not have their own webpages. ^[60] Also, the milestones have a target for only 50% of public institutions to have procurement tabs. Thus, this commitment on its own is unlikely to see major changes to transparency. However, in combination with the other two commitments, it can further enhance the searchability of procurement information, as users will be able to find procurement information directly on the websites of institutions, rather than having to cross check with the EPPS.

Public procurement data on the EPPS is currently not available in open format, limiting its usability for stakeholders. Under Commitment 2.1, the PPB will publish its procurement data in CSV format, in line with the Open Contracting Partnership’s Open Contracting Data Standard (OCDS). ^[61] Users will be able to browse and export data from the past three years and the PPB will create an archive going back ten years. If a user searches for all public procurements for the year 2020, for example, they will be able to download the data in CSV format, which can then be used for more advanced analysis. This commitment will also reduce the time that users need to sort through the data they need. Civil society stakeholders plan to use the data to establish an early warning system to flag suspicious trends in public procurement. Currently, this data is usually analysed in biannual intervals, but similar analysis can now be done more frequently as the data will be more easily available. ^[62] Civil society noted that it would have been better for the data to be updated automatically, as opposed to having to be updated manually. Nonetheless, the change from previously not having any information in open data is significant.

Discussions continue between CSOs (the IDSC and the Center for Civil Communications (CCC)) and the PPB about which procurement data will be published in open format. Currently available data covers only the procurement body, who won the contract, and the type of procedure. The IDSC and the CCC have additional parameters they want the PPB to include as open data and there is still a possibility for the PPB to export all its data in open format for this commitment. This would include around 20 variables that will be highly useful for analysing procurement trends, such as contract dates, information on other bidders, additional information on the procedure, and how it was implemented. If this commitment leads to all variables being published in open format, it will facilitate more serious and more in-depth analysis.

Opportunities, challenges, and recommendations during implementation

The PPB currently does not anticipate any technical difficulties for implementing Commitments 1.1 and 2.1, but a potential risk is coordinating all involved parties. ^[63] For Commitment 1.3, the largest obstacle is that not all institutions have webpages where they can publish their procurement information. Nonetheless as stated, the information is already available on the EPPS. For Commitment 2.1, as explained, the greatest limitation is the uncertainty over which data will be published in open format. However, the PPB will reportedly soon provide the IDSC and CCC with more clarity on this issue.

The IRM offers the following recommendations regarding beneficial ownership transparency:

● Expand disclosure to include all bidding companies’ beneficial owners. Commitment 1.1 is limited to the beneficial owners of companies that win public procurement bids, which obscures the full scope of public procurement calls. In future action plans, the PPB could expand disclosure to cover all companies who bid on procurement calls, and not only those awarded public contracts. Such disclosure may be useful for tackling money laundering and collusive practices.

● Publish more information from the beneficial ownership register on the EPPS beyond the names of beneficial owners. Milestone 1.1.2 calls for publishing the names of beneficial ownership in legal entities that are awarded public procurement contracts. While this is a good starting point, the PPB could publish more information, including beneficial owner’s birth month and year, their country of residence and nationality, and the nature and extent of their beneficial interest. Where publishing the more beneficial ownership data on the EPPS not possible due to privacy concerns, the PPB could link the EPPS directly to the beneficial ownership register so that users can find out more about the beneficial owner. Open Ownership has guidance on balancing privacy concerns with transparency. [64] The PPB could also engage end users of the data to establish which critical data points would be useful to publish in the EPPS.

● Strengthen existing verification process by introducing mechanisms for reporting inaccurate data on the beneficial ownership register. The Law for Preventing Money Laundering and Terrorist Financing obligates the CRNMM to verify the accuracy of the information that companies submit to the register. The CRRNM could further support the existing verification process by introducing new mechanisms for users (civil society and journalists) to report potential anomalies in the data in the register. This could allow for additional external oversight from the public and civil society without changing the existing verification process. The CRRNM could also work with the State Commission for the Prevention of Corruption and other relevant bodies when verifying beneficial ownership information.

The IRM offers the following recommendations regarding public procurement transparency:

● Ensure all data on current contracts is published in open format and available in a timely manner. To ensure maximum transparency, the PPB should open all its data in open format on current procurement contracts, with a focus on contracts for which parties can be still held responsible. It is important to ensure that the information is published in a timely manner and updated in real time (as opposed to every six months). The PPB could consider developing automatic systems for updating the data.

● Work directly with the Open Contracting Partnership (OCP) to align the EPPS with the Open Contracting Data Standard (OCDS). To ensure that the EPPS is aligned with international best practices, the PPB could explore working directly with OCP to fully adopt the OCDS [65] and implement procurement process oversight. For example, in Lithuania’s 2021–2023 action plan, their Public Procurement Office is working directly with OCP to open all its historical procurement data in OCDS. [66] The PPB could also consult OCP’s resources on adopting the OCDS. OCP has a list of indicators aligned to the end use for contracting data [67] and guidance on how to link indicators to data in OCDS format. [68] OCP also has a quick-start guide for open contracting [69] and strategic recommendations for regulating open contracting. [70]

● Train stakeholders on how to use procurement data for impact. The success of Commitment 2.1 largely depends on stakeholders’ usage of the newly opened data. Public usage of the data is critical, as the PPB may not have the capacity to monitor all procurement and ensure that public funds are spent efficiently and fairly. The PPB could train stakeholders on using procurement data. For example, in its 2016–2018 action plan, the Republic of Moldova trained small and medium enterprises, civil society, and software developers on using their new e-procurement system, MTender. [71]

● Include citizen feedback in the EPPS. The PPB could establish a feedback mechanism and opportunities for the public to act on the procurement data, such as filing complaints, reporting irregularities, or suggesting improvements. It is also important for the PPB to respond to and act on the feedback received. As an example, Ukraine launched DoZorro during its 2016–2018 action plan, which enables citizens to submit feedback, including alerts of irregularities and violations, on the ProZorro e-procurement system. [72] The PPB could publish the questions and replies on the same webpage so users can reference previously published answers.