Christopher H. Bovis’s says in his book EU Public Procurement Law‡
’One of the most important principles of the Public Procurement
Directives is the principle of transparency…it services two main
objectives:
- Introducing a system of openness into public purchasing in the
member states, so a greater degree of accountability should be
established and potential direct discrimination on grounds of
nationality should be eliminated.
- Ensuring that transparency in public procurement represents a
substantial basis for a system of best practice for both parts of the
equation, but is of particular relevance to the supply side, to the
extent that the latter has a more proactive role in determining the
needs of the demand side.’
Quite, but I would add a third ensuring that transparency extends to
an obligation/social contract on buyers fully disclosing in the public
domain how our money is spent.
Somewhat belatedly following up on the last blog (remember?) I picked up
on the zeitgeist of transparency and disclosure currently abroad
throughout the EU and wider world. One of the reasons for the delay was a
wish to extend the examination to the whole of 2013 (with the archives
only becoming available in January) and to all member states.
Previously I said I’d examine in more detail the issue of publication
of the Referenced Document number or to give it its more prosaic
description, ‘Part IV.3.2 of the award: Previous publication(s)
concerning the same contract’. These should appear in each OJEU
disclosed Contract Award. I realise this all sounds highly esoteric and
the procurement geek’s equivalent to angels dancing on pinheads, but is
in fact, along with the disclosure of the contract award itself, a
bellwether on not only openness in who won a publicly funded contract
and at what price but also how it can be linked back to the original
offer through a simple audit trail. When framed within the context of
all OJEU transactions equating to roughly 22% of 20% of the EU’s
economic output/GDP equivalent to something like €570bn* of European
taxpayers’ money, there’s nothing esoteric about it at all.
In initial investigations for the first part of the blog, I was prompted
by a PwC/Ecorys report commissioned by OLAF (the EU’s Anti-Fraud
Office) examining losses incurred on public budgets in eight member
states with €1.4-2.2bn/£1.2-1.9bn being lost based on TED data for 2010.
In these initial investigations, whilst it was encouraging to see that
overall, disclosure rates had considerably improved since the mid 1990s,
it became apparent that the newer member states appeared to be the most
compliant. Great you might think and given that with a neophytes’
enthusiasm comes a wish to make a positive impression, there’s nothing
necessarily out of context. However, it has to be seen against the wider
backdrop of transparency and corruption and this is where something of a
paradox is created. The greater the level of perceived corruption in a
member state, the greater the levels of contract award disclosure. Are
you keeping up at the back there?
Claudius’s Conundrum
To explain this conundrum let’s start with how all the EU member
states have performed, including the EU institutions, e.g. the
Commission, Parliament Courts of Justice, European Investment Bank etc.
in disclosing the number of contract awards to the number of contract
notices. A rolling average has been calculated over the previous three
year period 2011-2013, examining over 930K records. This generated
unusual results on two levels.
- With the exception of the Netherlands, Spain and the EU
Institutions, all the other countries with award disclosure rates above
the EU average are those only joining within the previous 10 years and
in the case of Bulgaria & Romania, seven. Moreover, it wasn’t much
more than a decade before that, that any emerged, blinking from
centrally planned totalitarianism with scant regard for the rule of law
or the disclosure of anything bar propaganda. In contrast, all those
languishing below the European average, with the exception of Slovakia
are all 20th century western market economies, never under the COMECON†
yoke.
- With one marginal exception Slovenia, they all manage to report
higher levels of awards than tenders i.e. +100% over a three year
average. That equates within that group of countries in the period
examined, an additional 15K contract awards, equivalent to 16% of all
the tenders published for which there appear to be no original
invitations to tender. So why is this? The initial suppositions aren’t
very encouraging. Are awards published for Tenders that were never
advertised or is there a culture of publishing multiple awards against
one contract notice? There is no practical way of proving either without
either the tireless examination of each contract or a statistically
significant sample. For the latter, there’s a legal vehicle for this
where results are published without the contracting entity ever needing
to advertise the original tender and that’s the Voluntary ex Ante
Transparency Notice (see Part 1), but these aren’t being accounted for
in this study, since there’s nothing to trace it back to so that’s a red
herring.
Fig. 1 Average Disclosure Rates of Contract Awards 2011-2013
The second puzzle examines the disclosure of the link back to the
original contract, i.e. a nice clear transparent audit trail. Over the
examined period 2011-2013, 31% of contract awards failed to disclose
details of the original contract notice, accounting for a staggering
141K contracts. Any guesses what the value of all this would be? The EU
average is dragged down by France publishing 26% of all awards in this
period with its poor disclosure rate of only 62%. Again, with the
exception of the EU Institutions, 8 of the 18 states with above average
Previous Publication disclosure rates are the former COMECON countries.
The UK surprisingly languishes third from bottom but then seen within
the prism of the rest of this study perhaps not so.
All this could be put down to buyers’ collective administrative
laziness without easy access to the original tender or simply a failure
to record or know what the OJEU reference was. This sounds more likely
than any malign hidden agenda concealing and obfuscating possible
potential attempts to link the award with the original contract. It may
also be that despite the perceived corruption in many of the countries
reporting high levels of disclosure that they also display
correspondingly higher levels of enthusiasm for being in the EU,
manifesting itself in more positive engagement in its byzantine
administrative complexities although this doesn’t hold true for
Slovenia, the Czech Republic or Cyprus.
Fig. 2 Average Disclosure rates of Previous Publications concerning the same contract 2011-2013
Despite the Commission’s recent self-damning report on the endemic
levels of corruption permeating at various degrees through all levels of
EU public life, seen from the perceptions of each member states’
citizens EU Anti-Corruption Report
they couldn’t quite bring themselves to rank each member state,
conveniently avoiding any discomfiting political issues and upsetting
anyone.
Each member state has therefore been ranked according to their
average corruption perception index score over the same period 2011-13,
based on Transparency International’s figures, since they’re beholden to
no one. This is an index in which they have ‘ranked 177 countries and
territories around the world on their perceived levels of public sector
corruption’. The scores rank from 0 Highly Corrupt through to 100 Very
Clean. For details on this visit their excellent site cpi.transparency.org
Figure 3 transposes the average 2011-13 CPI rankings for each member
state against the disclosure rates in Figures 1 & 2. The
Scandinavians are ranked in the top 10 in what Transparency
International calls ‘Very Clean’. In contrast the ‘less clean’ Balkan
member states are ranked at the bottom. Any countries in the bottom 10
(thankfully not represented in the EU) are referred to as ‘Highly
Corrupt’. Set against the back drop of this ranking the other graphs
reveal something unusual, in that the lower a countries’ perceived
corruption index, the higher generally the award disclosure rate. There
is also a slight upward trend in the disclosure of a previous
publication, i.e. the original tender. This is counterintuitive since
the trend should show them all going roughly in the same direction.
Fig. 3 Comparison of 2011-2013
Average Corruption Index Rankings of EU states against Average RN &
Award disclosure rates 2011-2013
Known Unknowns or No Honestly?
In an attempt to try to present this more simply and effectively,
Fig. 4 aggregates the figures for each member state according to their
CPI grouping by Transparency International. There is now clearly a
discernible downward trend in the disclosure rates of countries’
contract award data against their decreasing levels of perceived
corruption. There is also a marginal upward trend in the disclosure rate
of countries’ previous documents as the levels of transparency increase
as perhaps one might expect.
Fig. 4 Average Disclosure Rates against Corruption Perception Groupings for 2013
The below table aggregates the CPI averages for the period 2011-2013
collected from Transparency International with an attempted emulation of
the same shading used by TI in their excellent infographic cpi.transparency.org/cpi2013/infographic/
for ease of visual representation. Apologies to TI if it isn’t exactly right.
To put some perspective on this, two further rungs down the league
table and you hit rock bottom with the lowest Score group 0-9 or ‘Highly
Corrupt’ occupied by Afghanistan, North Korea & Somalia.
So having dragged you through this minefield you might expect me to
cut to the chase revealing some insightful conclusion. Is it a sort of
zero sum game whereby the trade-off for less corruption is less
transparency or are the figures skewed by the simple fact that the
overly high (+100%) disclosure rates from the more corrupt countries (as
perceived by Transparency International) in themselves reveal something
not quite right?
Or, should we be guided by Prof. Nick Black who recently dismissed
the most established method of measuring NHS hospital mortality as
having no value and simply ignore these figures?
I don’t know, but it is something the Commission should commission
(no pun intended) someone to look at more closely. Step forward
Transparency International?
I’ll leave the last words to the peerless and existential Donald Rumsfeld, ex. US Secretary of State for Defense [sic]
“there are known knowns, there are things that we know that we know,
there are known unknowns, that is to say there are things that we now
know we don’t know but there are also unknown unknowns…”
Indeed Don, indeed.
Claudius
‡Edward Elgar Publishing ISBN 978-1-84720-947-4
*Based on 22% of 20% of the aggregated averages for the EU for 2011-2013 from Statista: www.statista.com/statistics/279447/gross-domestic-product-gdp-in-the-european-union-eu/.
According to a 2011 OECD report ‘On average, 22% of the total value of
public procurement in OECD countries that are also members of the EU are
published in the OJEU’
†COMECON or Council for Mutual Economic
Assistance was the Soviet Union’s response to the OECD and consisted of
the former communist Central and Eastern European states.
Carry on Disclosing – Concluding an investigation into EU OJEU Contract Award Transparency against Perceived Corruption
Christopher H. Bovis’s says in his book EU Public Procurement Law‡ ’One of the most important principles of the Public Procurement Directives is the principle of transparency…it services two main objectives:
Quite, but I would add a third ensuring that transparency extends to an obligation/social contract on buyers fully disclosing in the public domain how our money is spent.
Somewhat belatedly following up on the last blog (remember?) I picked up on the zeitgeist of transparency and disclosure currently abroad throughout the EU and wider world. One of the reasons for the delay was a wish to extend the examination to the whole of 2013 (with the archives only becoming available in January) and to all member states.
Previously I said I’d examine in more detail the issue of publication of the Referenced Document number or to give it its more prosaic description, ‘Part IV.3.2 of the award: Previous publication(s) concerning the same contract’. These should appear in each OJEU disclosed Contract Award. I realise this all sounds highly esoteric and the procurement geek’s equivalent to angels dancing on pinheads, but is in fact, along with the disclosure of the contract award itself, a bellwether on not only openness in who won a publicly funded contract and at what price but also how it can be linked back to the original offer through a simple audit trail. When framed within the context of all OJEU transactions equating to roughly 22% of 20% of the EU’s economic output/GDP equivalent to something like €570bn* of European taxpayers’ money, there’s nothing esoteric about it at all.
In initial investigations for the first part of the blog, I was prompted by a PwC/Ecorys report commissioned by OLAF (the EU’s Anti-Fraud Office) examining losses incurred on public budgets in eight member states with €1.4-2.2bn/£1.2-1.9bn being lost based on TED data for 2010. In these initial investigations, whilst it was encouraging to see that overall, disclosure rates had considerably improved since the mid 1990s, it became apparent that the newer member states appeared to be the most compliant. Great you might think and given that with a neophytes’ enthusiasm comes a wish to make a positive impression, there’s nothing necessarily out of context. However, it has to be seen against the wider backdrop of transparency and corruption and this is where something of a paradox is created. The greater the level of perceived corruption in a member state, the greater the levels of contract award disclosure. Are you keeping up at the back there?
Claudius’s Conundrum
To explain this conundrum let’s start with how all the EU member states have performed, including the EU institutions, e.g. the Commission, Parliament Courts of Justice, European Investment Bank etc. in disclosing the number of contract awards to the number of contract notices. A rolling average has been calculated over the previous three year period 2011-2013, examining over 930K records. This generated unusual results on two levels.
Fig. 1 Average Disclosure Rates of Contract Awards 2011-2013
The second puzzle examines the disclosure of the link back to the original contract, i.e. a nice clear transparent audit trail. Over the examined period 2011-2013, 31% of contract awards failed to disclose details of the original contract notice, accounting for a staggering 141K contracts. Any guesses what the value of all this would be? The EU average is dragged down by France publishing 26% of all awards in this period with its poor disclosure rate of only 62%. Again, with the exception of the EU Institutions, 8 of the 18 states with above average Previous Publication disclosure rates are the former COMECON countries. The UK surprisingly languishes third from bottom but then seen within the prism of the rest of this study perhaps not so.
All this could be put down to buyers’ collective administrative laziness without easy access to the original tender or simply a failure to record or know what the OJEU reference was. This sounds more likely than any malign hidden agenda concealing and obfuscating possible potential attempts to link the award with the original contract. It may also be that despite the perceived corruption in many of the countries reporting high levels of disclosure that they also display correspondingly higher levels of enthusiasm for being in the EU, manifesting itself in more positive engagement in its byzantine administrative complexities although this doesn’t hold true for Slovenia, the Czech Republic or Cyprus.
Fig. 2 Average Disclosure rates of Previous Publications concerning the same contract 2011-2013
Despite the Commission’s recent self-damning report on the endemic levels of corruption permeating at various degrees through all levels of EU public life, seen from the perceptions of each member states’ citizens EU Anti-Corruption Report they couldn’t quite bring themselves to rank each member state, conveniently avoiding any discomfiting political issues and upsetting anyone.
Each member state has therefore been ranked according to their average corruption perception index score over the same period 2011-13, based on Transparency International’s figures, since they’re beholden to no one. This is an index in which they have ‘ranked 177 countries and territories around the world on their perceived levels of public sector corruption’. The scores rank from 0 Highly Corrupt through to 100 Very Clean. For details on this visit their excellent site cpi.transparency.org
Figure 3 transposes the average 2011-13 CPI rankings for each member state against the disclosure rates in Figures 1 & 2. The Scandinavians are ranked in the top 10 in what Transparency International calls ‘Very Clean’. In contrast the ‘less clean’ Balkan member states are ranked at the bottom. Any countries in the bottom 10 (thankfully not represented in the EU) are referred to as ‘Highly Corrupt’. Set against the back drop of this ranking the other graphs reveal something unusual, in that the lower a countries’ perceived corruption index, the higher generally the award disclosure rate. There is also a slight upward trend in the disclosure of a previous publication, i.e. the original tender. This is counterintuitive since the trend should show them all going roughly in the same direction.
Fig. 3 Comparison of 2011-2013 Average Corruption Index Rankings of EU states against Average RN & Award disclosure rates 2011-2013
Known Unknowns or No Honestly?
In an attempt to try to present this more simply and effectively, Fig. 4 aggregates the figures for each member state according to their CPI grouping by Transparency International. There is now clearly a discernible downward trend in the disclosure rates of countries’ contract award data against their decreasing levels of perceived corruption. There is also a marginal upward trend in the disclosure rate of countries’ previous documents as the levels of transparency increase as perhaps one might expect.
Fig. 4 Average Disclosure Rates against Corruption Perception Groupings for 2013
The below table aggregates the CPI averages for the period 2011-2013 collected from Transparency International with an attempted emulation of the same shading used by TI in their excellent infographic cpi.transparency.org/cpi2013/infographic/ for ease of visual representation. Apologies to TI if it isn’t exactly right.
To put some perspective on this, two further rungs down the league table and you hit rock bottom with the lowest Score group 0-9 or ‘Highly Corrupt’ occupied by Afghanistan, North Korea & Somalia.
So having dragged you through this minefield you might expect me to cut to the chase revealing some insightful conclusion. Is it a sort of zero sum game whereby the trade-off for less corruption is less transparency or are the figures skewed by the simple fact that the overly high (+100%) disclosure rates from the more corrupt countries (as perceived by Transparency International) in themselves reveal something not quite right?
Or, should we be guided by Prof. Nick Black who recently dismissed the most established method of measuring NHS hospital mortality as having no value and simply ignore these figures?
I don’t know, but it is something the Commission should commission (no pun intended) someone to look at more closely. Step forward Transparency International?
I’ll leave the last words to the peerless and existential Donald Rumsfeld, ex. US Secretary of State for Defense [sic]
Claudius
‡Edward Elgar Publishing ISBN 978-1-84720-947-4
*Based on 22% of 20% of the aggregated averages for the EU for 2011-2013 from Statista: www.statista.com/statistics/279447/gross-domestic-product-gdp-in-the-european-union-eu/. According to a 2011 OECD report ‘On average, 22% of the total value of public procurement in OECD countries that are also members of the EU are published in the OJEU’
†COMECON or Council for Mutual Economic Assistance was the Soviet Union’s response to the OECD and consisted of the former communist Central and Eastern European states.