July 7, 2020
COVID-19 has created conditions in which corruption in health procurement can flourish. Open contracting would bring this notoriously opaque process into the light.
This article originally appeared on Devex.
By Tom Wright and Sean Darby
Substandard ventilators, grossly overpriced equipment, lucrative contracts awarded to companies with little or no expertise — these are just a few of the disturbingly commonplace things we have seen during the COVID-19 pandemic in countries ranging from the U.K. and U.S. to Brazil and
Normally, an estimated 10% to 25% of a public contract’s value is lost to corruption every year.
But these are not normal times. So it is a good bet that we will eventually discover this figure was much higher during the coronavirus pandemic, as the perfect storm of urgent need, supply shortages, and overwhelmed health systems and governments provides a wealth of opportunities for corruption.
How has this happened?
Governments around the world have responded to the emergency by loosening their procurement checks and balances. Many have invoked emergency legislation, scrapping the need to open tenders to competitive bidding — instead choosing one supplier in what is known as a “direct award.”
For instance, in the United Kingdom, procuring entities can bypass the normal requirement to publicise a tender openly and directly negotiate with suppliers when purchasing coronavirus-related equipment. The risk? The choice is ultimately made by a small group of people, eliminating robust scrutiny and cost, quantity, and capability comparisons.
Unmet demand in the market has also seen governments award contracts to suppliers they have never dealt with before or companies that have no track record of supplying professional grade medical products. Suppliers of COVID-19 response devices around the world have been appearing with no experience or quality thresholds in place.
Price rigging and gouging of essential items has become commonplace, too. This has been reported in the United States, Germany, and Brazil, among others. In Uganda, our team at Transparency International has seen firsthand the artificial inflation of prices for emergency food products, allegedly by officials in the Office of the Prime Minister and potentially for private gain.
Other governments have loosened responsibilities around freedom of information requests. The Italian government suspended certain types of these requests, while the Romanian government has delayed responses until 30 days after the epidemic ends. FOI requests have long been known to be an effective anti-corruption tool, providing often the only official mechanism for transparency in otherwise opaque areas — like health procurement.
Was it inevitable that a global health crisis like COVID-19 would result in checks and balances around procurement being removed or suspended, and opportunities for corruption to flourish? We believe the answer is no.
Increasing transparency in health procurement
A key reason why health procurement, like all public contracting, is vulnerable to corruption and mismanagement is that it is often hidden from regular scrutiny.
We believe there is a way of tightening the screws on corruption in health procurement. It is called open contracting.
It relies on transparency to enable civil society and business to work together to hold government agencies to account at each stage of the procurement process. As a result, monetary flows can be monitored, and there is accountability in the handing out and funding of contracts delivering health care.
The process enables price comparisons, curbs price gouging, price manipulation, and overpayments. Importantly, data can reveal patterns and any idiosyncrasies which may suggest that there are overpayments, collusion or kickbacks taking place.
Transparency International’s Open Contracting for Health project, OC4H, backed by the U.K. Department for International Development, works in Uganda, Zambia, Nepal, Kenya, and South Africa.
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It has led to the publication of high-quality data by government bodies overseeing health procurement along with the introduction of electronic systems to make data easily available. Simultaneously it has enabled civil society to monitor those contracts while the private sector advocates for even more transparency.
Open contracting during a global health crisis
Since the outbreak of the pandemic, OC4H, like almost everything else, has had to change how it operates. Part of this shift involves looking at how the project can continue to achieve its existing aims. While civil society, government, and the private sector cannot come together physically at the moment, Transparency International’s partner chapters are devising innovative ways to continue open conversations remotely, such as bringing groups together onto a single social media platform, and conducting online training on key topics.
OC4H’s focus had been on ensuring that goods are procured using the countries’ legal requirements and advocating for these requirements to be improved. Now, the focus is on the emergency procurement mechanisms being used.
We are seeing the results of efforts to increase the transparency of emergency procurement and combat corruption. Transparency International chapters, including Kenya and Papua New Guinea, are tracking financial commitments to the COVID-19 response to ensure that promises are kept, and money is actually used to tackle the pandemic.
This increases the transparency of where money is going and allows citizens to see if the money is being spent effectively. Transparency International Uganda has been calling for increased transparency and accountability in the procurement of essential commodities during the COVID-19 response. Shortly after, government officials were arrested for artificially inflating the price of food goods being used as part of the emergency response.
How to root out opportunities for corruption during the pandemic
OCH4 has revealed clear steps that civil society can take to ensure that emergencies do not become a free-for-all for those that would exploit the ensuing disruption and distraction for personal gain. These should include:
- Building capacity in COVID-19 monitoring, project design, and advocacy.
- Advocating on the national and global level to raise awareness of how to manage the risks of emergency spending. This will help make the case for governments to adopt best practices for emergency procurement with appropriate safeguards and public disclosure.
- Collecting data on emergency procurements and creating replicable tools to monitor purchasing in COVID-19.
- Using information and analysis gathered to build dialogue between government and civil society, and thereby help the move toward data- and evidence-driven policy.
Obviously, these steps cannot be implemented overnight. But once these processes are in place and are made adaptable for emergency situations, we believe there will be far less opportunity for many of the corrupt practices we have seen.
Most importantly, countries will be able to respond more effectively to crises like the current pandemic and ensure people around the world stand a better chance of getting the life or death support they need.