Investigating Public Procurement using OpenTender, A Technology-Based Instrument to Improve Public Control

It is generally agreed that to eradicate corruption, a state needs to adopt information technology (IT) in managing and providing public service to the citizens. Nowadays, IT-based approaches to improve the quality of governance are widely used in various states. The speedy growth of the IT industry has contributed to the development of the application of IT in the public sector.

Indonesia Corruption Watch (ICW), as an important element of the anti-corruption movement in Indonesia, has realised the potential of IT utilisation to encourage accountability and transparency in governance. One of ICW’s initiatives was the creation of a monitoring tool for the sector of electronic-based government procurement of goods and services, called This web-based instrument is useful for identifying potentials of fraud in government procurement of goods and services that have been conducted through electronic tenders. By finding out the potential of fraud, the public can then put pressure the government, as it is supported by the strength of information and data that are accountable.

In developing this instrument, ICW has been fully supported by the National Public Procurement Agency (LKPP), which is an autonomous agency under the President. A significant support is the provision of data from all e-tenders of the government, both national and regional, based on all Electronic Procurement Services (LPSE) in Indonesia. The data are processed in to produce five types of basic information used for determining the potential for fraud in each tender.

It has to be recognised that each community-based monitoring instrument has its life and death dependent on the community itself. If no one, or only a few people, understand and use the monitoring instrument, public control becomes less effective. Thus, ICW cooperates with various parties, especially the civil society in various regions and journalists, to be able to use through fellowship activities.
With the support of MAVC-Hivos, fellowship activities targeting journalists in various regions have been implemented. Participants are invited to become familiar with in a session of special training, and then requested to utilise the tool in their investigative work. The result is quite satisfactory, as much potential for violations in public procurement in the regions where the programs were sampled were found, despite the procurement having been done electronically.

Using, journalists participating in the fellowship easily identify the type of the procurement project to be selected for further investigation. The next step for the journalists was to search for additional documents, such as contracts, company registration, deed of establishment, project specifications, comparative market prices; and investigate the truth of the information, such as corporate address, name of companies participating in the tender, owner or controller of the company, etc.

In the utilisation of developed through investigative journalism work, at least we find a more accurate illustration on how the application of information technology in the management of public sector budget does not necessarily mean that governance will improve. It means that the assumption that technological intervention in the public sector will improve the quality of governance and reduce corruption is not an unqualified one.

Referring to the findings of the investigative work of the fellowship participants, several modes of misappropriation in the procurement of government goods and services continue to occur despite the electronic tender mechanism being used. These include, first, indications of rigging in the tender process, where the number of participants in the bidding is adequate to avoid accusations of monopoly, but in the final stage of the bidding project, most participants do not submit an offer price. There are indications that the bidding participants are ‘encouraged’ to withdraw, so that in the final stage, the winner would be the company that has been appointed since early on.

Second, multiple companies participating in the e-tenders in a project are controlled by a single person. The many participants registering are merely formality, as the controller or owner is the same person. In order to control these companies, the businessperson can ‘borrow’ another person’s company at a cost, which is paid up in front.
Third, several companies participating in the tender do not have clear addresses. While in the tender documents they mention addresses, when these addresses are visited, often the companies are nowhere to be found. Often the addresses are residences instead of offices, or shops whose activities differ from what have been mentioned in the tender documents.

Through the investigation of the journalists participating in the fellowship, the e-tender ‘game’ can be discovered in full view. Their findings also confirm the validity of the instrument made by ICW to help the people monitor the work of the government, especially in the public procurement sector. Besides journalists, CSOs, students, researchers and the public in general can benefit from the tool for monitoring, due to the ease of which the tool is used.

We hope that the works of the journalists participating in the fellowship can inspire more journalists to make use of the website in conducting their journalistic work. Of course, the investigative work of the fellowship participants can be made even sharper with other evidence and documents, however, due to the limited time and budget, these factors have shown to be constraints to the investigation of the fellowship participants. 

Kalibata, 23 September 2017

Adnan Topan Husodo
ICW Coordinator