Taking the Pain Out of Public Procurement
Metro Cash & Carry is one of the world’s leading self-service wholesale companies – selling food and non-food products to businesses and governments. In the past, MC&C’s Ukrainian branch would turn down potential business contracts with the Ukrainian government to avoid well-known and widespread corruption in its public procurement system.
Bribery and other illicit activity in the awarding of public contracts is not new – but the disastrous impacts of it are increasingly understood. When unqualified companies can bribe their way into contracts, lives are endangered, whether from collapsing school buildings or the use of counterfeit medicines. Some governments understand this, and are taking proactive steps to know and trust the companies they award contracts to in order to root out those seeking to swindle taxpayer dollars.
Take Ukraine, where MC&C is now selling food to the defence ministry, kindergartens, hospitals and nursing homes is the fastest growing part of their business. What changed?
Quite a bit, in fact. Ukraine implemented ProZorro – an open source, open data, e-procurement system which made public procurement in Ukraine much more transparent, accountable and efficient. Since then, Ukraine has seen an influx of companies bidding for contracts and the government has saved more than 300 million Euros – roughly 14% of public spending.
The Ukrainian case highlights how open contracting to prevent corruption and improve the competitiveness and effectiveness of public procurement can transform government’s ability to deliver critical services to citizens, including infrastructure, health and education.. Open contracting levels the playing field in public procurement. It makes public data accessible throughout the full cycle of the contracting process – including planning, tendering, performance tracking, and contract closure. These increasingly efficient contracting systems also foster clearer communication channels between business, governments and civil society.
It’s a massive problem – and opportunity – for business. The global market for government contracts is massive – approximately US $9.5 trillion annually, comprising a massive revenue source for many industries.. This is spurring business and the public to scrutinise how contracts are awarded, through the transparency provided by open contracting.
Open contracting reduces corruption, enables fair competition and increases market access for business. It helps large companies better understand opportunities and enter new markets, and enables small and medium-sized enterprises to better decide whether or not to compete for contracts.
The good news is that global momentum for open contracting is building. More than 25 countries already have committed to incorporate open contracting into their public procurement process. Success stories from Ukraine, Mexico, and UK provide inspiration to others. But more is needed. Governments, businesses, and civil society must work together to open up the process to create a more efficient, transparent, and fair public procurement process.
The B Team is taking on this important issue by holding its first open contracting roundtable in Morocco, as part of the 10th Annual Mo Ibrahim Governance Weekend. This roundtable is the first in a series of events that The B Team will hold around the world, engaging businesses and helping them to understand and contribute to the growing field of open contracting. In the lead up to the roundtable we have published “Opening Up Public Procurement” a new brief which sets out the case for open contracting, which you can read here.
Business can contribute to making public procurement more fair, competitive and effective by shaping the implementation of open contracting. We invite business leaders from the construction, telecom, healthcare, tech and extractive industries – or any company that participates in public procurement – to get involved and lend your voice and experience to this important conversation. Register your interest here to attend an upcoming webinar or a in person roundtable in UK, India, Brazil, China, EU and the USA.