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    Corruption in Health Procurement

    Every year, governments spend huge sums of money through contracts, on everything from pencils and paper to building major infrastructure projects such as airports or hospitals. Open contracting is the bricks and mortar of public benefit, where taxpayers’ money gets converted into schools, roads and hospitals, into things that ordinary people really care about.

    This global spending amounts to over US$9.5 trillion each year, a massive 15% of global GDP. That is a pile of one dollar notes stretching from the earth to the moon – and back.1

    However estimates suggest that 10 to 25 per cent of global spending on public medicine procurement is lost to corruption while procurement related issues have led the World Health Organization to conclude that 20-40% of health financing does “little to improve the health of everyday people”.2

  • The Impact of Health Sector Corruption on Society

  • Open Contracting and it's Benefits

    Open contracting is the practice of publishing and using accessible information throughout the procurement cycle to ensure that the vast sums of public money are spent honestly, fairly, and effectively.

    The Open Contracting approach uses government transparency to foster participation between public bodies, business and civil society with the collaborative aim to boost the integrity, fairness and efficiency of public contracting.

    • Governments can use open contracting to obtain relevant information on contract performance; the use of open contracting can also encourage value-based procurement decisions, and mitigates the risk of awards being reversed, or projects being terminated, due to faulty processes. 
    • For businesses, open contracting data  can unlock a better understanding of opportunities in markets, which in turn may support small and medium enterprises in deciding whether or not to compete for public contracts.
    • For civil society, open contracting can support more targeted, informed engagement and tracking of project delivery. 

    In short, open contracting can deliver better value for money and offers a range of benefits to different stakeholders.

    • The Five Main Impacts of Open Contracting

      1. Improved Service Delivery

      Open contracting generates a greater understanding of what is working and what is not working in the health sector, allowing government departments to visibly progress, publicise their successes and ultimately save lives. Open contracting can:

      • Verify whether results are being delivered on the ground
      • Enable CSOs to collect data in areas where government does not have the resources to do so
      • Uncover patterns of ineffective procurement processes
      • Map trends and therefore develop strategies for long term and systematic improvements
      • Facilitate the monitoring of contracts, meaning a reduced chance of unfufilled promises

      In Uganda, it is estimated that over two-thirds of drugs meant for free distribution in the public sector are lost due to theft or are unaccounted for, and that 68-77% of formal charges are pocketed by workers.1

      2. More value for money

      Stakeholders will see increased value for money on their investments as a result of open contracting. Overall, products, works and services will be better quality for less cost, leading to less budgetary restraints in the public health system.

      Open contracting can:

      The UK National Health Service standardised manufacturer and price data for generic products, which were being purchased at different rates by individual trusts. The data was analysed and the opportunities to aggregate demand and leverage collective purchasing were identified, leading to savings of between 15% and 50%.2

      3. Better Business

      Open contracting has a positive effect on private sector growth and competition. This is due to a diversifying of economies and the creation of a more transparent, level playing field for businesses bidding on government contracts. It also encourages small business innovation and participation through facilitating a greater understanding of the market. 

      Open contracting can:

      As a result of ProZorro implementation in Ukraine, they received a 50% increase in companies bidding for contracts - helping build business and citizen trust in the government process.3 

      4. Gender Equity

      The utility of open contracting can have a direct impact on the quality and types of health products and services provided to women and girls. 

      Open Contracting can:

      In 2013, the Indonesian government commissioned research that showed male-owned businesses participated in government contracting at a much higher rate than women-owned businesses. Unlike male-owned businesses, the women-owned businesses said limited access to information was a significant barrier.4

      5. Reduction in Inefficient Spending and Corruption

      There is a wealth of evidence showing that companies and governments have consistently used opaque procurement systems as a vehicle for corrupt deeds. In 2015, Global Witness published an investigation uncovering the powerful actors were using a web of anonymous companies to hide their gains at the expense of the rest of the population.

      All stakeholders (civil society, the private sector, government and donors) have an interest in identifying and combating corruption in public contracting. 

      Open contracting can:5

      In Paraguay, open data has led to a reduction in the number of cancelled tenders as well as revealing over-spending and inflated contracts for basic goods at some ministries. Policies on value for money for frequently purchased goods were adopted across the government. 6   

      • Value for money & Value for many: Video on open contracting

        Take a few minutes to watch this video



        Discussion Hub: What are your first impressions of Open Contracting?