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A red light for corruption: How the Dominican Republic is using open data, better processes & collaboration to fight corruption

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Challenge: In 2020, public procurement in the Dominican Republic lacked public trust and credibility due to several high-level corruption scandals. The island’s procurement agency faced more than 250 open complaints and allegations of collusion and low competition in the procurement process.

Approach: The new director of the procurement agency led the development of a data-driven corruption risk monitoring system and worked with a reform team to strengthen the institutional capacity of government buyers, improve cross-agency coordination and increase collaboration with civil society.

Results: Today, the Dominican Republic’s procurement agency monitors all procurement processes carried out using the country’s electronic procurement system in real-time using 21 targeted red flags. It has debarred more than 60 suppliers for violations, and reduced unresolved complaints and canceled tenders. The proportion of open procedures further increased from 93.8% in 2020 to 96% and single-bid tenders decreased across all methods – from 62.5% in 2020 to 59.7% in 2023. The measures seem to have increased trust in the reforms: more than 20,000 new suppliers have registered, competition is growing across open procurement processes, and supplier diversity is up 27%.

A cool reception

Carlos Pimentel is aware of the adversity he faced when he became head of the Dominican Republic’s public procurement agency Dirección General Contrataciones Públicas (DCGP) three years ago. 

“Building institutional processes and strengthening controls will always make some people uncomfortable when it’s easier for them to operate in a messy environment and ‘enjoy’ public resources illegally,” he says.

Pimentel joined the agency after making a name for himself as a transparency and anti-corruption campaigner, having been Executive Director at Transparency International’s local chapter Participación Ciudadana. Public contracts matter, he says: “The government allocates 32% of the country’s budget towards goods, services, and public works, to secure the rights and enhance the quality of life for citizens. Corruption in public procurement makes us poorer and takes our rights away.”

When he moved into his new role, he faced an uphill battle. The “agency was seen as forming part of the culture of impunity in the Dominican Republic.”

Now, he is frequently in the news to explain the role of the public procurement agency and his reform efforts. And he’s not afraid of bold decisions. During the pandemic, the agency suspended a tender to buy overpriced digital textbooks. As a result, the Ministry of Education worked with universities to curate the content themselves and saved the government RD$4 billion (~US$70 million). More recently, it canceled a RD$1.3 billion (~US$23 million) contract to improve traffic light management in Santo Domingo’s capital after multiple irregularities were identified in the procurement process.  

A focus on integrity and transparency

“When we started on Monday, 17 August 2020, the main challenge was linked to credibility and a lack of trust,” Pimentel reflects. 

Although the agency had made improvements in competition, adopting a transactional e-GP platform and working to include more women businesses, it continued to face major challenges. In particular, outdated regulations and a lack of capacity in purchasing agencies using the platform held back further progress. So the DGCP adopted a three-pronged approach to improve things.

1) Use of data to improve integrity: Better and open data

Preventing corruption before it happened was a priority for Pimentel. Real-time analytics were introduced and processes were automated as much as possible, replacing manual processes that detected suspicious activities when it was too late. He also supported a stronger legislative framework that institutionalized the new technology and platforms, establishing a clear mandate for their use. 

DCGP’s data quality has continuously improved over the last decade, enabling increasingly detailed analysis. Open data has been available in the Open Contracting Data Standard (OCDS) since 2020. By 2022, DGCP launched its data and monitoring system “Sistema Integral de Monitoreo y Análisis de Datos” publicly. The system includes different dashboards with specific reports on the procurement processes, contracts awarded, a catalogue of goods and services, and a registry of active government suppliers and a listing of companies that are enabled to do business with the government. 

While these are public tools, they are also used actively by buyers and government officials to alert them about unusual patterns in their processes and to track their progress against annual procurement plans.  

To ensure all processes are run and published through the transactional system, the DGCP developed a simple module that buyers can embed on their own websites, allowing them to complete the transaction for any of their procurement procedures without double-loading the information. This reduces effort and ensures the procurement agency can keep track of the process wherever it is being run. More than 80% of the country’s public procurement processes are now run through the agency.

Another tool is an “Early Warning System” that now has 21 indicators and allows the agency to monitor its processes in real-time, covering 300 procurements every day by more than 500 buyers engaging 111,000 providers

The key red flags include ties between providers and politicians, large contracts that have been broken up into smaller ones to undercut thresholds, and links to prohibited practices. The team continues to add new variables. One of the most recent examples is an indicator that analyzes providers with connections among them (to identify collusion which is widespread in the country according to Pimentel). “Some people dedicate themselves to creating new businesses but not in a good way: they create 5 or 10 businesses to participate in a procurement process,” says Pimentel.

DGCP also developed a business intelligence tool, using the country’s OCDS data, in collaboration with OCP and Microsoft Advanced Cloud Transparency Services, to identify more corruption red flags. It is now being piloted and refined and a version of the tool will then be open to the public and for business and civic monitoring.

2) Strengthening institutional capacity, compliance and efficiency

The second pillar in DGCP’s strategy was to double down on strengthening the efficiency and institutional capacity of purchasing agencies to ensure existing regulations and processes can be tracked in a timely manner.

“Efficiency is key. It’s not only about buying just to buy, but about buying in the correct timeframes and to fulfill actual needs in the population,” says Carlos Romero, administrative director of the country’s procurement system.  

They introduced a Code of Ethics and assigned official compliance officers in 17 key public buyers, those with the largest budget, such as health, education, medicine purchases, agriculture, housing and the police. DGCP accompanied the institutions in identifying the corruption risks and inefficiencies in their organizations and working collaboratively on approaches to improve the procurement process based on their needs.

One of these institutions is the National Institute for Student Welfare (INABIE). DGCP trained staff on public procurement, risk management, and supplier due diligence. Additional personnel were hired and as a result, processes trigger fewer alerts. The institute has also decentralized the bidding process for school lunches, improving its management. 

“The purchasing entities really value the initiative, as it helps them strengthen efficiency and transparency mechanisms and perform due diligence both for suppliers as well as within their institutions. It also helps strengthen their internal processes and builds confidence that decision-making happens in accordance with the law,” says Jenniffer Polanco, responsible for the program at DGCP.

Better performance in how government buyers are doing their procurement is included in the national indicators at the presidential level, the so-called “Metas Presidenciales”, as well as in the indicators measured by the Ministry of Public Administration. Indicators include publishing procurement information in a timely manner and improving the implementation of the annual procurement plan year-on-year. They are linked to performance pay bonuses.

3) Collaboration and cross-agency coordination

Finally, DGCP realizes that the public procurement agency can’t solve all of these issues alone. 

In Pimentel’s view, it is key to take partners with you in your idea. That’s why their third pillar was to increase the collaboration and inter-institutional coordination with key institutions elevating the role of public procurement in a systemic approach to address corruption. DGCP  engaged key institutions from the Ministry of Industry and Commerce responsible for SMEs and the corporate register to the Auditor General, the public prosecutors and integrity institutions to make sure they were involved in the plans too.  

An “intelligence unit” was set up at DGCP to support these agencies to analyze and use their data. For example, all of the alerts from their internal monitoring systems are emailed to the procuring entities for corrections. Specific red flags indicating for example potential conflicts of interest or collusion are passed on to the competition agency that has the responsibility to ensure competition with the power to take action. 

DGCP also looked beyond government institutions, providing data and information about procurement widely, and directly engaging with academia, civil society and journalists. 

They recently signed a memorandum of understanding with the public procurement observatory at the Universidad Iberoamericana (UNIBE), and have developed specialized guides and training for public procurement for investigative journalists. As Carlos Romero says: “The more eyes, the more we can identify potential cases of corruption.” 

Results

The reforms are working. 

While before, monitoring was entirely manual, DGCP now assesses all procurement processes going through the system automatically and can still manually select processes for further investigation. And more public buyers are using the system – up from 314 in 2020 to 437 in 2023. 

Cross-referencing public procurement data against the business registries has helped uncover conflicts of interest. When public officials such as senators or mayors have more than 10% of ownership in a business, they are not allowed to do business with the government. While first done manually, this process has now been automated and integrated as a red flag. DGCP suspended the businesses of more than 200 officials after cross-checking and new legislation proposes to restrict business ownership conditions even further.

In 2023, DGCP debarred more than 60 suppliers for violations that included fraud, legal investigations or breach of contract. The number of open complaints and canceled tenders have also declined. The proportion of open procedures further increased from 93.8% in 2020 to 96% in 2023. Single-bid tenders decreased from 62.5% in 2020 to 59.7% in 2023. 

These measures seem to be increasing trust in the process. More than 20,000 new suppliers registered, competition across the different open procurement processes has increased by nearly 50% on average across the different open procurement methods since 2018 and supplier diversity is up by 27%. 

Perceptions of corruption have reduced and assessments such as the regional Capacity to Combat Corruption Index sees the Dominican Republic improve its capacity for a third year in a row. 

Anti-corruption as a means to an end

As the procurement agency further develops its data monitoring systems, they are becoming more sophisticated, integrating new variables and machine learning.

But “public procurement systems are not primarily about anti-corruption, but about guaranteeing development and public investment,” Pimentel says. “We want to increase the contracts directed to SMEs from 20% to 30%.” It’s about integrating, for example, 22 families selling local produce in the small city of Constanza into the system – even if it means going personally and registering them as suppliers

Sometimes raising a red flag can mean giving a green light to a more transparent and fairer process that benefits all.