Why was $130bn spent on Covid contracts with no visibility?

2 September 2020

Global public procurement spend stands at $13tn each year but governments are failing to post information on $12.6tn worth of contracts, according to a report.

The report from the Open Contracting Partnership and Spend Network estimated that public contracts that are published openly only account for $362bn.

It said less than 2% – the equivalent of $244bn – of public contracts were published using the globally recognised Open Contracting Data Standard, which allows for the data to be analysed and interrogated.

Over $10tn – 77% of total public procurement spend – is spent by 16 countries, with China standing as the largest procurer at $4.2tn and the United States spending $1.8tn. The UK spends $359bn each year.

The report said the lack of transparency “severely hinders efforts to increase competition”, which especially impacts SMEs and minority-owned businesses.

“Including the valuation of contracts over time would provide data users with a better understanding of when pertinent contracts are due to expire. It also impedes effective oversight to reduce fraud and corruption. What can’t be measured can’t be improved," it said.

Meanwhile, the coronavirus pandemic has highlighted how “ineffective, opaque procurement systems” have led to taxpayers getting a bad deal for public services.

The report said governments awarded contracts worth more than $100bn – the Guardian put the figure at $130bn – to manage the impact of Covid-19 between January and July 2020, “but the lack of timely and open information about basic contracting details makes these deals highly vulnerable to waste, fraud and other misuses”.

Meanwhile, the UK has spent £2.5bn on services and equipment such as personal protective equipment (PPE) and medical supplies.

However, governments often struggled to respond quickly and efficiently due to archaic and ineffective systems. 

“Buyers and suppliers failed to connect, and in many cases, governments weren’t able to respond to a scarce market with skyrocketing costs and inexperienced suppliers. Coordination was limited, with different parts of government competing with each other,” the report said. 

Gavin Hayman, executive director of the Open Contracting Partnership, said: “Covid-19 has put public procurement in the spotlight like never before. Governments spent eye-watering sums of money without proper checks and balances, leading to unnecessary waste and unforgivable loss of life. 

“PPE and medical supplies are just the tip of the iceberg. With governments relying on public procurement systems to boost their economic recovery efforts, we need transparency to ensure public money is well spent, whether on school meals, medicine, or vital infrastructure.”

Governments must urgently reform to improve transparency and publish “open real-time and quality public procurement data”, including contract start and end dates, currency and contract values, the report added.

“This would not only give more businesses the information they need to bid for contracts, increasing competition and value for money, but also hold governments and suppliers to account and ensure decisions are made in taxpayers’ interest.”

Ian Makgill, founder of Spend Network, added: “Publishing full details of public contracts makes the enormous public procurement market more efficient and competitive. Governments can gain real benefits by opening up the whole procurement process, from the planning and bidding stage, through to the decision on preferred supplier, and the fulfilment of the contract. 

“With the right information, governments can get better prices, drive economic growth and protect citizens from unscrupulous actors who are determined to rip off the public finances.”

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