Slides from Hera Hussain's presentation at Data Journalism UK 2019, Salford UK May 2019

1. The data behind the deals -
investigating how public
money is spent through
procurement
@herahussain @open-contracting
hhussain@open-contracting.org

2. This slide-deck is a primer
for investigative journalists.
Learn how to spot red flags and use
public procurement data to tell
stories about public spending.

3. How to make the most of this
slide deck.
1) Use the hyperlinks for more
information.
2) Read the speaker notes!
3) Like it? Download it. Share it. It’s in
the public domain!

4. 1 Why it’s
important

5. US$
9,500,000,000,000

6. US$
9,500,000,000,000
read the
speaker notes

7. #1 GOVERNMENT
CORRUPTION RISK
57%
FOREIGN BRIBERY
CASES
FOR PUBLIC CONTRACTS
40%SPENDING, SIGN OFF &
APPROVAL UNDEFINED
(OECD 2012)

8. Public procurement represents around one
third of public spending in developed
countries (OECD, 2013).
20 per cent of EU GDP annually spent by
government, public sector and utility service
providers for goods, services and public
works.

9. The European Parliament
found that corruption and
fraud in contracting in EU
countries may cost taxpayers
€5 billion
every year.

10. Public procurement
scandals in the news

11. Former head of Chicago Public
Schools cheated to help her
former employer get contracts,
most prominently a $20 million
sole-source training contract in
exchange for kickbacks. The
Economist concluded that
“stealing from Chicago’s poorest
children (the vast majority of
children at the city’s public
schools are black or Hispanic and
from poor families) is a new low,
even by Chicago standards.”
Byrd-Bennett will probably get
about seven years in prison.

13. When
bogus
army
contracts
hindered
the fight
against
terrorism in
Nigeria

14. 2
What Open
Contracting is doing
to open up the data
behind government
contracts

15. The Open Contracting Partnership is a
silo-busting collaboration across government,
business, civil society and technologists
working to transform public contracting
worldwide using open data and improved
oversight from multi-stakeholder cooperation
and feedback.

16. Open Contracting connects
to open up & monitor public contracting
Government Business Civil society

17. What we do
■ Advocacy that challenges vested interests and changes the
global norm in public contracting from closed to open.
■ Support for a network of partners who implement open
contracting projects and the adoption of the Open
Contracting Data Standard. Where necessary, we’ll be
leading specific demonstration projects ourselves.
■ Learning how and why open contracting works and
gathering compelling evidence of what open contracting
can achieve.

18. AFGHANISTAN ALBANIA ARGENTINA AUSTRALIA,
CANADA CHILE COLOMBIA COSTA RICA DOMINICAN
REPUBLIC FRANCE GEORGIA GHANA GUATEMALA
IRELAND ITALY KENYA MACEDONIA MEXICO
MOLDOVA MONGOLIA NIGERIA PARAGUAY
ROMANIA, SIERRA LEONE UGANDA UK UKRAINE
UNITED STATES URUGUAY VIETNAM ZAMBIA
BUENOS AIRES (ARGENTINA) BOJONEGORO
(INDONESIA) ELGEYO MARAKWET (KENYA) JALISCO
(MEXICO) MEXICO CITY (MEXICO) MONTREAL
(CANADA) SCOTLAND (UK)

19. ● Replicating freedom of information laws. Open contracting is a proactive
approach to disclosure that levels the playing field, ensuring that
information is available to everyone, not reactively and privately exchanged
between individuals making FOI requests.
● An e-procurement system (i.e. an electronic system for publishing and
marketing tenders online). Open contracting can improve e-procurement
by structuring, linking and publishing documents and data related to the
planning, procurement and implementation of public contracting.
● The end of legitimate commercial sensitivity. There will always be a
balance between the need to redact commercially sensitive or private
information and the open-by-default approach.
Open Contracting is not...

20. Open Contracting Data Standard (OCDS)
Planning Tender Award ImplementationContract

21. Unified, structured data & records
(with unique IDs etc)

22. O
C
D
S
Procurement
Regulation
Procurement
System/
database
Paper-based
procurement
e-procurement
Procurement
Portal
International
commitments
& MDB projects
Budget Payments
Contract
management
OTHER
SYSTEMS
OCDS
National
State
City OTHER
TRACKING FIELDS
Policy
Media
INTERNAL
ASSESSMENT
Academia
...

23. The Open
Contracting Data
Standard (OCDS)
has been endorsed
by the Cabinet Office
and GDS. The
guidance
documentation for
implementation can
be found here.

24. What Open Contracting Data Standard is not
a software
a licensed standard
unable to work without
an overhaul of all
systems

25. Open Contracting and
ProZorro has saved the
government £1.2 billion,
or 1.4 per cent of GDP.
According to a 2017
survey, 29 per cent of
businesses believe the
system is corrupt. In 2016,
59 per cent did.

27. Open contracting reforms save Ukraine more than $1 billion

28. Busting
price-fixing
scandal in
Colombia

29. • Exposed price-fixing
scheme that increased
costs by 45%
• Increased 14 suppliers
to 46
• 700,000 meals served
per day

30. But what...
about the commercial
confidentiality of contracts?

31. mythbusting.open-
contracting.org
REPORT
We've talked to
over 70 experts
from more than
20 countries and
found surprisingly
little evidence that
supports keeping
contracting
information secret.

32. Intelligently and intentionally making public contracting
information ‘open by design’ will lead to significantly
improved outcomes. Any concern that this would lead to what
we call the three Cs of breaking commercial confidentiality,
harming competition and enabling collusion doesn't hold up.
The evidence now shows what these arguments really are -
myths. We have to avoid a lazy default where routine
information is classified as confidential to prevent public
scrutiny. Governments should not be stifled by the tentacles of
private interests and better understand what they are buying,
from whom and if they're getting their money's worth.

33. Not all contracting information will be
published all the time but we have to avoid a
lazy default where routine information is
classified as confidential to prevent scrutiny.
Only 2.7% of defense contracts in Australia
were flagged as confidential and this is from
the most secretive part of government.
Government contracts shouldn’t contain
patented information or commercial secrets.

45. 1. Full contract publication should be the norm – redaction should be the
exception, supported by a public interest justification.
2. Government contracting processes should be designed for
transparency.
3. There should be an enforcement system for ensuring that contracts and
contract information is in fact disclosed in practice and in a usable form.
4. Where there is not up-front requirement for full publication of the
contract, any redaction for commercial sensitivity should be based on a
robust application of the public interest test.
5. The ‘public interest test’ should take into account the economic benefits
of the sharing of commercial information, such as more competitive
public contracting, as well as the broader case for the public’s right to
know.

46. 6. It is particularly important that the pieces of information needed to judge value
for money are disclosed.
7. Governments should issue clear guidance to public entities, agencies and
firms on the issue of when contract information may be exempted from
publication on the basis of commercial sensitivity to set clear expectations and
reduce uncertainty.
8. When a case by case redaction approach is used, only the contracting party
that claims potential direct financial harm from a specific release of information
should be able to request redaction of information.
9. When a case by case redaction approach is used there should be a clear
process and time limits for determining what is redacted in individual contracts,
why, for how long, and with what appeals process.
10. Redaction on the grounds of commercial confidentiality should be grounds for
increased scrutiny through other oversight mechanisms.

47. 3
Common red
flags & how to
find them

48. RESOURCE
Red flags for
integrity: Giving
the green light to
open data
solutions
● introductory guide to how countries can
reference their procurement data against a
set of over 150 suspicious behavior
indicators, or “red flags.”
● flags occur at all points along the entire
chain of public procurement-from planning
to tender to award to the contract, itself, to
implementation-and not just during the
award phase, which tends to be the main
focus in many procurement processes.
Read more:
https://www.open-contracting.org/wp-content/uploads/2016/11/OCP2016-R
ed-flags-for-integrityshared.pdf

49. Corruption can happen at different
stages of the procurement cycle
Planning Tender Award ImplementationContract

50.
Key planning
documents not
provided
Non-public bid
opening
High number of
contract awards to
one bidder
Large difference
between contract
award and final
contract amount
Change orders
issued after
contract award on
line item
requirements
Short notice to
bidders
Supplier address
- P.O.Box
- Similarities btw
suppliers
Supplier receives
multiple single
source contracts
Change orders to
increase prize
substantially (or
multiple by a
smaller amount)
Vague description
of supply terms
Bidder that has
never bid
previously wins
tender
Final prize is
higher than
industry average
Payment without
delivery of service

51. Winning supplier provides a substantially lower bid price than
competitors.
INFORMATION ABOUT SUPPLIER BIDS
Winning bid is too close to price estimate.
COMPARE BUDGET WITH FINAL CONTRACT
Company has no history in providing service or product:
PRIOR CONTRACTS & DESCRIPTION OF COMPANY PURPOSE E.G.
ON WEBSITE
FRAUD

52. COLLUSION / CARTELS
The difference between bid prices is an exact percentage (a whole
number).
INFORMATION ABOUT SUPPLIER BIDS
Companies registered vs companies actually providing vs
control of market
ANALYSIS OF CONTRACT AWARDS
& DATA ON COMPANIES IN SECTOR

53. BID
RIGGING
Single bidder only
(limited, competitive, direct)
Use of direct awards/exceptions
Multiple contract winner
WHO ARE THE TOP SUPPLIERS?
LOOK BY SECTORS, e.g. HEALTH

54. ● The eligibility criteria for deciding which companies can bid
for a contract can be set too narrowly, including by favouring a
preferred company. For example, the UK High Court found that
the Nuclear Decommissioning Authority fudged an evaluation of
tender requirements to prevent the disqualification of one of the
bidders for a £7 billion contact.
● Issue the tender at an inconvenient time. The week before
Christmas can be good. Half of the contracts that Slovenia
announced then only received one bid.
FIXING THE PLANS

55. ● Inside information can be shared with a preferred company
such as one company receiving the terms of reference before
others do.
● The tender can be not very well advertised. Doing this has the
effect – whether intentional or not – of discouraging bids from
unfavoured companies. In an extreme example of this, the only
place that a €120 million tender in Slovakia was advertised was on
a bulletin board in a corridor inside a closed-off ministry building.
● Competing companies can conspire to drive up prices: Such
cartels are a big problem – the European Commission imposed
€1.9 billion in fines on cartels in 2017.
FIXING TENDERS

56. FIXING
AWARDS
● Contracts can be awarded to companies
with a clear conflict of interest. For example,
the ex-head of Chicago Public Schools
funnelled contracts to an ex-employer who
she was still secretly working for. Nigeria’s
ex-oil minister, Dan Etete, handed out a
contract for an offshore oil block to a company
that turned out to be his.
● Contracts can be given out without any bids
at all. For example, more than $23 million of
contracts for schools in Chicago were given
out without any other bids being received, in
return for kickbacks and bribes to the head of
city’s public schools.
FIXING
IMPLEMENTATION
● Modifying the contract after it’s
been awarded so that it’s even
more favourable to ‘chosen’
company. Contracts can often
end up costing much more than
the original award.
● Turning a blind eye to shoddy
implementation. In China,
schools that should have been
earthquake-proof have collapsed
on children. And in Romania,
hospital patients have died
because the disinfectant was
watered-down.

57. A RED FLAG DOES NOT MEAN
THAT THERE IS CORRUPTION

58. A red flag is something anomalous that deserves
further investigation.
It is not proof that anything is wrong or that a transaction is corrupt,
collusive, fraudulent, or otherwise illicit. A flag cannot, and is not intended
to, prove corruption in the procurement process.
Flags can, however, offer insight into the risk of corrupt or illicit behavior in
individual contracts and signal troubling patterns across the procurement
system worthy of further investigation. The use of analytics for red flagging
may also showcase more general opportunities to increase integrity and
value for money across the procurement process.

59. 4 In Focus
United Kingdom

60. We’re going to look at the
public procurement
landscape in the UK.
What data is available, what’s
missing & how to

61. The value of public sector
procurement within the UK
exceeded
£301 billion
in 2016.

62. G7
The UK is the first G7
country to commit to
the Open
Contracting Data
Standard (OCDS) for
contracts
administered by a
central purchasing
authority, the Crown
Commercial Service
(CCS).
UK Anti-Corruption
strategy
The cross-government anti-corruption
strategy provides a framework to guide
UK government action to tackle
corruption for the period to 2022.
“Reduce corruption in public
procurement and grants” (priority 4) is
identified as one of the 6 priority areas.
The strategy discusses the UK’s
commitment to open contracting
principles and data standard. It also
promises a review of local procurement
practises.

63. OPEN GOVERNMENT PARTNERSHIP
In 2013, the UK endorsed the Open
Contracting global principles in its
second Open Government
Partnership National Action Plan. In
2016, in its third Open Government
National Action Plan, the UK
committed:
“To implement the Open
Contracting Data Standard in the
Crown Commercial Service’s
operations by October 2016; we will
also begin applying this approach
to major infrastructure projects,
starting with High Speed Two and
rolling out the data standard across
government thereafter.”
The 2016 NAP was announced at the
International Anti Corruption Summit, hosted
by the UK government on 12th
May 2016. In the
Anti Corruption Summit Communique, 40
governments agreed to: “ensure public
contracts are awarded and managed openly,
accountably and fairly, consistent with
applicable law – making public procurement
open by default – so that citizens and
businesses can have a clear public record of
how public money is spent.”
It is worth noting that under Open
Government Partnership Sub-National
program, Scotland committed to implement
Open Contracting Data Standard and
released a strategy in late 2017.

64. OPEN DATA
CHARTER
The Open Data Charter is a
collaboration between
governments and experts
working to open up data. It was
founded in 2015 around six
principles for how governments
should be publishing
information. The aspiration was
that data should be open by
default, timely and
interoperable. More than 70
governments and organisations
have joined the movement.
CONTRACTING 5
The governments of Colombia, France, Mexico,
United Kingdom, Ukraine and Argentina, have
agreed to come together to found the Contracting 5,
a group of governments working to foster openness,
innovation, integrity and better business and civic
engagement in government contracting and
procurement through the Open Contracting global
principles and data standard.
MAYOR OF LONDON
The Mayor’s office has committed to ‘research
the viability of the Open Contracting Data
Standard and explore new routes to market’ as
part of its new “Smarter London Together”
strategy (pg.39,45).

65. Who must publish what...
Requirement:
Publish advertised and awarded
opportunities (tenders, awards)
Central government
Over £10 000 on Contracts Finder
and EU’s Tenders Electronic Daily
(TED).
Councils
Over £25 000 on Contracts Finder
and EU’s Tenders Electronic Daily
(TED).
PROCUREMENT SPENDING
Requirement:
Central and local government bodies
(including NHS) are required to publish the
details of their expenditure transactions
every month. This document provides links to
the official guidance and details of how to
add it to data.gov.uk.
https://guidance.data.gov.uk/25k-spend-dat
a.html
Central government
Once a month
Councils
Quarterly though monthly is recommended

66. http://spendmatters.com/uk/exclusive-contracts-finder-analysis-suggest-government-tender-opportunities-arent-theree/
Just 27% of
tenders
published by
Government
bodies makes
it onto
CONTRACTS
FINDER
[2017]

67. http://www.wired.co.uk/article/revealed-carillions-billion-pound-government-clients

68. Single bids in tenders
over 2012 - 2017
have increased by
476%

70. This analysis would not have been
possible without structured open
data.

71. 5 Data sources
& tools

72. The reality of doing this work systematically...
• Web scraping e.g. Chrome extension Scraper
• Python and panda libraries to better analyse large data sets
(use Jupyter notebooks to document what you’ve done)
• Use the Open Contracting Data Standard as a tool to link
and identify information and structure your datasets
• Tools to visualise and search OCDS data
GOOD OLD FASHIONED FOIA

73. • National portals
• Debarred companies: World Bank, AfDB, ADB, AIIB
• International Finance Institutions: contract awards World Bank,
UN Global Marketplace, UN Procurement & Annual Statistical
Report, UN Development Business, AfDB, ADB, AIIB
• Extractives Industries: 40+ countries disclosing contract
information here including the UK (see here)
• Others: Panama Papers or Offshore leaks database by ICIJ
WHERE TO FIND DATA

74. DATA SOURCES
IN THE UK

75. Linking
contract
information
with other
datasets in
the UK
● Company information
(via OpenCorporates.com)
● Beneficial ownership
(via OpenOwnership.org)
● Spending
(via OpenOpps.com)
● Grants
(via 360Giving.org)
● Land registry
● EU tenders
(via opentenders.eu)

76. What next
1.
Make
contracts
your new
favourite
data set to
monitor 2. Build a list of where
& what information
you have access to
3. Set up a database to
import data
4. Make better FOIA
requests for the specific
info that is missing
5. Got a story? Talk to us. Let
us know if you've written a cool story!
Our helpdesk can also help with
technical questions if you’re working
on a public interest investigation.
Email info@open-contracting.org.

77. Join the
community!
● Sign up for our newsletter!
We’ll send our alerts for
new tools and resources.
Send an email to
info@open-contracting.or
g to sign up for the alerts
with the headline
“Journalism newsletter”.
● Join our slack