DIGIWHIST Recommendations for the Implementation of Open Public Procurement Data. An Implementer‘s Guide.

April 27th, 2017 Posted by No Comment yet

Based on our current DIGIWHIST research, Mara Mendes (Open Knowledge Foundation Germany) and Mihály Fazekas (University of Cambridge) have created a catalogue of nine recommendations for governments on how to best publish procurement data. Providing comprehensive public procurement information free of charge in an easy-to-use format to all interested parties is expected to increase market transparency, decrease transaction costs, and facilitate government accountability.

A well-functioning central public procurement platform should contribute to achieving value for money in public procurement as well as increase integrity throughout the public sector. The DIGIWHIST portal opentender.eu featuring all of the above functionalities will be launched in 2017, filling the gap where source data quality allows.

Measuring Corrupt Rent Extraction by Tracking the Misuse of Corporate Vehicles

December 12th, 2016 Posted by No Comment yet

In recent years, the abuse of diverse corporate networks for extracting corrupt rents and channelling them to opaque destinations have come to the forefront of international anticorruption efforts. This was marked by the UK anti-corruption summit’s focus on beneficial ownership which built on initiatives against opaque companies by OECD or FATF to name a few. However, results remain to be seen. This is partially due to the difficulty of measuring success on the ground rather than in law books.
In order to adequately measure the corrupt misuse of corporate vehicles we have to focus on the exchanges they conduct with public bodies rather than simply looking at legal loopholes or the mere existence of suspicious companies. Corrupt exchanges involving companies typically require the participation of public and business elites who can manage high value public decisions, and can move large sums among business entities. Public decisions can concern, among others, public contracts, concessions (e.g. mining rights), specific regulations (e.g. protection from competition), or the sale of public property. Such high-level corruption requires the violation of the underlying universalistic or impartial principles of public resource allocation in order to benefit a select few to the detriment of others.

This paper was submitted by our DIGIWHIST researchers Mihály Fazekas and Bence Tóth for the Proxy Challenge II “Finding new ways to assess anti-corruption efforts” organised by U4 Anti-Corruption Resource Center at the 17th IACC in Panama (2016).  It was nominated bext proxy indicator submission and won the competition.

Corrupt Contracting: Partisan Favouritism in Public Procurement. Hungary and the United Kingdom compared

November 18th, 2016 Posted by No Comment yet

For politicians seeking to use a clientelist approach to achieve political and private gain, i.e., to prolong their hold on power and maximize personal profit, control of government contracting is a key tool. We theorise that politicians wishing to exploit government contracting for such ends will seek to increase their influence over three stages of public procurement – policy formation, implementation and monitoring – but that their efforts can be constrained by institutional controls and checks. We examine these influence strategies and institutional constraints by comparing one young democracy and one mature democracy, Hungary and the United Kingdom. Developing new procedural and outcome indicators of corruption risk in contracting, we use a change of government as a natural experiment to analyse partisan favouritism in procurement. We find that, in Hungary, where political influence is systematic and far-reaching, 50-60% of the market is dominated by favoured companies, compared to only 10% of the UK market.

Corruption in EU Funds? Europe-wide evidence on the corruption effect of EU funded public contracting

November 18th, 2016 Posted by No Comment yet

It is theoretically ambiguous and empirically contested whether EU Funds contribute to lower corruption and better governance or the opposite. Many recipient countries benefit to a substantial degree with allocations amounting to 2-4% of their annual GDP. A range of positive and negative cases has been uncovered by the European Commission, national governments and the media, however, there has been no Europe-wide quantitative evaluation looking at the micro-level, arguably where corruption takes place. This chapter offers just that by utilizing a large-scale public procurement database of more than 2.8 million awarded contracts in 2009-2014 from the EU’s Tenders Electronic Daily (TED) database. It systematically matches and compares EU Funded public procurement contracts with nationally funded ones in order to get an approximation of the causal impact of EU funding on corruption. Results point out that overall EU Funds increase corruption risks across Europe by 3-20% depending on the corruption risk indicator used. Findings are robust to multiple matching algorithms. However, this effect shows a remarkable variability across countries and regions underlining the importance of recipient institutional framework for example in terms of broader corruption levels.

An Objective Corruption Risk Index Using Public Procurement Data

November 18th, 2016 Posted by No Comment yet

In order to address the lack of reliable indicators of corruption, this article develops a composite indicator of high-level institutionalised corruption through a novel ‘Big Data’ approach. Using publicly available electronic public procurement records in Hungary, we identify “red flags” in the public procurement process and link them to restricted competition and recurrent contract award to the same company. We use this method to create a corruption indicator at contract level that can be aggregated to the level of individual organisations, sectors, regions and countries. Because electronic public procurement data is available in virtually all developed countries from about the mid-2000s, this method can generate a corruption index based on objective data that is consistent over time and across countries. We demonstrate the validity of the corruption risk index by showing that firms with higher corruption risk score had relatively higher profitability, higher ratio of contract value to initial estimated price, greater likelihood of politicians managing or owning them and greater likelihood of registration in tax havens, than firms with lower scores on the index. In the conclusion we discuss the uses of this data for academic research, investigative journalists, civil society groups and small and medium business.

Careers, Connections, and Corruption Risks: Investigating the Impact of Bureaucratic Meritocracy on Public Procurement Processes

November 2nd, 2016 Posted by No Comment yet

Why do officials in some countries favor entrenched contractors, while others assign public contracts more impartially? This article emphasizes the important interplay between politics and bureaucracy. It suggests that corruption risks are lower when bureaucrats’ careers do not depend on political connections but on their peers. We test this hypothesis with a novel measure of career incentives in the public sector—using a survey of more than 18,000 public sector employees in 212 European regions—and a new objective corruption risk measure including over 1.4 million procurement contracts. Both show a remarkable subnational variation across Europe. The study finds that corruption risks are indeed significantly lower where bureaucrats’ career incentives exclusively follow professional criteria. In substantial terms, moving EU regions so that bureaucrats’ merit and effort would matter as much as in, for example, Baden-Wüttemberg (90th percentile) could lead to a 13–20 billion Euro savings per year.

D3.3 A comprehensive review of objective corruption proxies in public procurement: risky actors, transactions, and vehicles of rent extraction

August 26th, 2016 Posted by No Comment yet

Corruption is ostensibly difficult to measure, especially when it is unclear which form of corruption is captured, which part of the corrupt deal is visible in the data, and how different proxies relate to each other. Due to the emergence of innovations in measuring corruption in public procurement, this paper can provide a comprehensive review of quantitative corruption proxies, conceptualise how different indicators capture different aspects of corruption, and identify gaps in the measurement landscape. Institutionalised, wellestablished corruption in government contracting aims to bypass fair and open competition in order to allocate contracts to companies belonging to the corrupt group. This requires at least

  1. corrupt transactions allowing for rent generation,
  2. particularistic relations underpinning collective action of corrupt groups;
  3. organisations enabling rent allocation (public organisations); and
  4. organisations extracting corrupt rents (private companies)

These four requirements of corrupt contracting serve as a framework for the review. We find that there is a surprisingly wide array of indicators validated in particular contexts, leaving generalisability unclear. It is also suggested that the academic literature has largely been preoccupied with one or the other type of corruption proxies such as personal connections without recognising their complementarities. Given the clandestine and often complex character of corrupt deals, a comprehensive measurement approach is advocated where each indicator sheds light on different aspects of the same corrupt phenomena.

Breaking the cycle? How (not) to use political finance regulations to counter public procurement corruption

June 21st, 2016 Posted by No Comment yet

There are widespread perceptions and countless documented cases of tight-knit networks of politicians and businessmen colluding for allocating public procurement contracts in return for political party donations. In the absence of systematic evidence, neither the magnitude of the problem nor the effectiveness of policies curbing such corruption is well-understood. In order to advance our understanding of these phenomena, this paper tests whether political financing regulations can contribute to controlling corruption in public procurement. We utilize aggregated official micro-level data on almost 3 million contracts awarded across 29 European countries in 2009-2014 to measure the risk of high-level institutionalised corruption using novel proxy indicators. Legislation regulating political finances are directly measured by coding national laws in 2009-2014.

D2.4 Raw data

June 7th, 2016 Posted by No Comment yet

This is a DIGIWHIST project deliverable with the main goal of obtaining unstructured and semi-structured data from a pool of 100+ potentially relevant datasources where further data processing is assessed to be plausible. In order to determine the right strategy for data scraping, this also requires analysis of the architecture and structure of online data portals reporting data on public procurement tenders, private and public entities such as companies, public sector organisations’ budgets, asset declarations, and political office holders.

The main outputs in this document are therefore the technical evaluation of the quality of individual datasources and the collection of raw data from those chosen for further processing. This task required the prioritisation of the better-structured and more policy-relevant sources. The selected sources and thus also raw data outputs represent a solid basis for achieving the DIGIWHIST project’s research goals.

Web data knowledge extraction

May 2nd, 2016 Posted by No Comment yet

A constantly growing amount of information is available through the web. Unfortunately, extracting useful content from this massive amount of data still remains an open issue. The lack of standard data models and structures forces developers to create adhoc solutions from the scratch. The figure of the expert is still needed in many situations where developers do not have the correct background knowledge. This forces developers to spend time acquiring the needed background from the expert. In other directions, there are promising solutions employing machine learning techniques. However, increasing accuracy requires an increase in system complexity that cannot be endured in many projects.
In this work, we approach the web knowledge extraction problem using an expertcentric methodology. This methodology defines a set of configurable, extendible and independent components that permit the reuse of large pieces of code among projects. Our methodology differs from similar solutions in its expert-driven design. This design makes it possible for the subject-matter expert to drive the knowledge extraction for a given set of documents. Additionally, we propose the utilization of machine assisted solutions that guide the expert during this process. To demonstrate the capabilities of our methodology, we present a real use case scenario in which public procurement data is extracted from the web-based repositories of several public institutions across Europe. We provide insightful details about the challenges we had to deal with in this use case and additional discussions about how to apply our methodology.