As countries rapidly spend billions of dollars to fight the coronavirus pandemic, digging into government contracts is taking on a new urgency.
The crisis poses new challenges. Officials are using emergency purchasing procedures, creating barriers to public disclosure, and slowing down their handling of requests under freedom of information laws.
Despite the impediments, old and new, reporters are breaking procurement-related stories on a daily basis.
In this GIJN resource guide, we’ll provide the best tips on how to pursue such stories, along with examples. You can learn about the red flags for corruption and where to find information related to the different stages of the procurement process. Besides looking at national and local situations, we’ll address tracking funds already flowing from international institutions such as the World Bank.
GIJN’s suggestions are summarized in this one-page tipsheet on Tracking Government Contracts.
Table of Contents
GIJN is indebted to suggestions from staff members at the Open Contracting Partnership (OCP), which produces a weekly newsletter filled with media investigations about contracting. OCP has published a Guide to collect, publish & visualize COVID-19 procurement data.
The Critical Basics
A necessary first step is understanding your country’s procurement system and where to look for signs of corruption, bid-rigging, collusion, and fraud.
Here’s the crash course.
Typically there are five generic phases in the contracting process:
- Planning – When the decisions on what to acquire are discussed and made. In the current environment, the planning stage is hasty, sometimes nonpublic and leaves little paper trail.
- Tendering – This stage is when the government asks for quotes, bids or proposals. (Sometimes called by other names, including requests for proposals, approaches to market, and solicitations.)
- Awarding – Decision on who gets the contract, may be determined by high bidder or other means.
- Contracting – The details are usually laid out in writing. This is the legal agreement. Sometimes, the most interesting bits are in the amendments and extensions.
- Implementation – Does the work get done, the product get delivered, the supplier paid?
What About My Country?
Despite basic similarities, procurement systems vary widely by jurisdiction. Among other things, procurement is centralized in some places (a few), but not in others (most of them).
Learning the ropes — the technical language, the legal system and the bureaucracy — will help in reporting. To get this education try contacting public interest groups, commercial sector professionals with experience in the process, and even government officials.
To complicate matters, the COVID-19 pandemic has caused many governments to adopt emergency acquisition procedures, truncating the usual steps and reducing transparency. This change is normally enacted by an “emergency decree” that sets out when the normal rules can be circumvented.
These new rules of the game may themselves encourage corruption. For example, so-called “sole source” or “no-bid” contracts are non-competitive arrangements offering plenty of opportunity for manipulation. For example, in the European Union, governments may use a “negotiated procedure without prior publication.” Subsequent transparency also seems to be a casualty. (For information on the EU situation, and recommendations for reform, see this Access Info Europe report.)
The rules and practices on disclosure of information are of particular importance. Some countries are pretty open, even providing downloadable open data within hours of the contract being signed. Others offer very little or share it weeks after the deal is done.
The Newsgathering Process
Announcements about specific government contracts may appear in official government publications or online. Local knowledge is critical for identifying the channels.
Remember that purchasing in the context of COVID-19 may be occurring at federal, state, local, and institutional levels, such as hospitals.
Check in regularly on the potential sources of information. These might include minutes of high-level procurement committee meetings, press releases, e-procurement portals, tender notices in newspapers, etc. Look for potential sources, such as names of procurement officials.
Work with your colleagues who know the market best. Consider having health reporters team up with business reporters, for example.
Knowing what data and information is relevant at each stage of the procurement process will help you put together the pieces and identify key areas of risk for mismanagement, fraud, and corruption.
But while organized interrogation of government information is important, don’t overlook the advantage of inside information.
Prime potential sources are commercial competitors. Losing bidders may have complaints not only about the competitors, but also about the process and particular officials. Procurement agencies will usually keep a record of complaints from bidders. If you’re really lucky, they’ll share these records somewhere on their website.
Also speak to those most affected, such as hospital officials, doctors, nurses etc.
It may be necessary to make formal requests for information to supplement the publicly provided information. For suggestions on this see GIJN’s Tips on Making FOI Requests on COVID-19.
Learn About Red Flags for Corruption
Experts on procurement fraud have developed red flags to help identify suspect scenarios. The flags signal situations where the corruption or illicit behavior has been seen before.
We’ll flag up what to watch for on coronavirus-related purchasing.
“Each step in the contracting process has its own red flags,” advises the OCP. “Maintain credibility in reporting by fact-checking and clearly stating where available data is insufficient. Don’t rely on one red flag: triangulate your data whenever possible. Don’t jump to conclusions on conflicts of interest. Sometimes things look fishier than they are. Often, it’s lack of context and/or bad data behind it.”
Further down, find a reading list about red flags that may provide deeper suggestions.
Red Flags at the Planning Stage
In the current context, planning processes are often accelerated and abbreviated.
Still, a crucial question is whether the goods or services were needed and what agencies anticipated.
Getting at this may be aided by documents. But getting documents through a freedom of information (FOI) request takes time, and many governments have significantly slowed down their handling of requests.
What to look for? Government agencies may have defined their goals in strategy documents or annual budgets. Other reports might have evaluated inventories, predicted needs, or described technical specifications. The process may also identify expected timelines, or potential suppliers of drugs or equipment. Bid evaluation standards may have been set. Also of interest may be who did the planning. Scrutinizing how the government plans to exit the emergency can provide insights into procurement priorities.
Making FOI requests early may produce documents that will produce analysis articles later.
Red Flags at the Tendering Stage
The first real signals on government spending come when bids are solicited, and how.
The tendering documents have to be detailed enough for companies to make an educated bid. In addition, they may contain names of government officials responsible for the project. The language of the tender may provide tip-offs to potential corruption. Here are some red flags to watch for:
- Specifications that may favor a particular bidder.
- Unreasonably tight qualification requirements, for a particular product, or a certain level of prior experience, can be used to limit competition or favor a particular bidder.
- Are there new requirements, not seen in comparable previous tenders?
- On the flip side, broad or vague specifications can allow unqualified bidders to compete.
Another thing to look for is whether project officials leaked helpful information to a favored bidder. Potential sources for this information are the likely bidders and industry experts. Looking at past contracts for similar products or services might yield clues.
Some common sense sorts of inquiries might provide leads, such as whether there really is a need for the goods, whether the quantity being purchased seems appropriate, and when the same products were last purchased.
The process itself may be suspect. Here are some other signs of suspicious activity:
- Was enough notice provided?
- Was the circulation of the bid invitation wide enough, for example, was it only advertised locally?
- Were time extensions made?
- Were the documents, and any subsequent changes, made available to all bidders?
Finally, has a competitive bidding process been avoided? Using “sole source” or “non-competitive” contracts may be allowable, but these exceptions can be manipulated.
The existence of these situations may not surface until the announcement of the contract.
Red Flags at the Award Stage
The process around the selection and announcement of the winning bid can be manipulated by government officials and by the prospective bidders. So a lack of transparency is an obvious red flag. Was the opening of bids delayed? Was the bid opening public?
In observing the outcome, here are a few classic indicators that suggest further inquiry is warranted:
- Too many bidders, or too few.
- Very new bidder.
- Very low winning bid.
- Bids rejected, possibly for arbitrary reasons.
- Qualified companies didn’t bid. (You may be able to learn who requested the materials needed to make a bid.)
Look at the details of the winning bid, and the also-rans, when available. Things to question would be significant differences in line items. (For more on the nuances, see a description of unbalanced bidding set out by the International Anti-Corruption Resource Center, the IACRC.)
The bid documents, if not publicly available, may be a good target for a FOI request. Other FOI candidates include the agency documents used in evaluating the bids, and communications with bidders and others about the project.
Interviewing the unsuccessful bidders, particularly those disqualified, may yield complaints. These need cautious evaluation. If there is a formal process for challenges, keep an eye on that.
Analyzing winning bids over time may reveal patterns.
What does it mean if numerous contracts go to the same bidder? Sometimes competitors share the business by rotating who wins. Losing bidders may show up as subcontractors. How does the winning price (look at unit costs) compare to previous purchases?
Other things to look for? Disguises and consortia.
Some bidders may appear to be different, but may be the same. Look for identical names, phone numbers, and addresses. Watch for similar language in the bids, even identical typefaces and errors. Sometimes, winning bidders invent non-existent companies to give the appearance of competition. (For more, see the IACRC’s page on collusive bidding schemes.)
Cost has proved to be the major area of exploration around COVID-19 contracts.
ProPublica developed a story after its analysis of federal contracting data showed that a sizable contract was the first for the company in question “and had been awarded without the usual bidding meant to weed out companies that can’t deliver.”
In Brazil, The Intercept reported on a no-compete contract for masks, showing that they were 67% more expensive than those of a usual government supplier.
On the Italian island of Sardinia, the government paid high prices for 4 million masks, reported Il Fatto Quotidiano.
The rising price of respirators in Paraguay was tracked by Centro Latinoamericano de Investigación Periodística.
The Latin American Journalists’ Network for Transparency and Anti-Corruption (PALTA) is reporting from seven countries using open contracting data.
Investigate the Contractors, Government Officials
There are many reasons to investigate the contractors and consultants hired. The most obvious problems are connections with government officials, from low-level project officials to those in high office, past or present. In the context of COVID-19, some suppliers are intermediaries who don’t even control the materials, and unprepared service providers.
The suggestions below are culled from an IACRC list of due diligence background checks to use and other sources.
Questions to ask include:
- Does the company have credentials/experience/legitimacy?
- Has the company ever been in official trouble?
- What’s its reputation and business track record?
- Does it have the capacity to do the work?
- Does it have any history in the area?
- What individuals, corporate officers, and employees are involved? (All of the above questions about skills and reputation apply to the officials.)
Where to Look for Information
Investigating the relevant corporate and government officials for possible suspicious connections means looking in many corners.
Of course, check both companies and officials through Google and social media searches. (Learn to use advanced searches on Google — it’s not that hard. See entry on GIJN’s Help Desk.) But what else?
In some countries, financial disclosures are made by government officials. But more often than not, and particularly if corruption is afoot, the ties are purposefully hidden. See GIJN’s resource page on Asset Disclosure. (العربية|Русский)
Explore the business interests of government officials, and those of their relatives and associates.
For contractors, look at whether they have been debarred from bidding in the past.
Check national records, if they exist, or those of international bodies, such as the World Bank, African Development Bank, Asian Development Bank, and Asian Infrastructure Investment Bank, etc.
Probe official corporation papers, such as formation documents, to learn more about the owners, their finances, and how long they’ve been around.
See what other government contracts they have won. What is their reputation with customers? Have complaints been filed with government agencies?
Again, besides looking at documents, talk to people. These might include competing business people, employees, former employees, customers, former customers, and industry experts.
“Call and make an unannounced visit to the listed premises of the suspect firm …” suggests the IACRC page on “hidden interests.”
This investigation by Важные истории (Important Stories) found that contracts for ventilator equipment in Russia were awarded to unknown companies with dubious front men.
In the United States, The Washington Post found that a $55 million contract for N95 masks went to Panthera Worldwide LLC, a company with no history of manufacturing or procuring medical equipment, “according to a review of records produced as a result of legal disputes involving the company and its affiliates.”
Two Italian businessmen accused of fraud obtained state contracts for the supply of protective equipment to public authorities amid the crisis caused by the spread of COVID-19 in the country, the Investigative Reporting Project Italy reported. (See English version.)
A Bosnian raspberry farm obtained a contract for ventilators, the Organized Crime and Corruption Reporting Project’s Zdravko Ljubas revealed.
Investigate the Terms of the Contract
A contract document includes important details, possibly including specifications, unit costs, and the benchmark for performance.
One pretty obvious check should be whether there is a variation between the winning bid and the contract amount.
From there, look at deadlines.
The failure to disclose the contract is a big warning sign.
Reporters for Oštro in Slovenia found that the winning bidder for a protective equipment contract was “a powerful businessman with investments in gambling, electronics, and real estate, but no known experience in healthcare.” Moreover, the article says the contract contains no description of “protective equipment.”
In the context of COVID-19, lots of attention has been paid to whether ventilators and personal protective equipment reached the hospital on time.
To follow the performance of the contract, it may help to interview government officials and official performance reports may exist, but it’s more likely that the best sources will be those affected.
- Timing of delivery.
- Quality of product, services.
- Payment without delivery.
- The quality of government oversight. Who is doing it? Conflicts of interest?
Spanish health authorities returned a shipment of rapid diagnostic tests purchased from a Chinese manufacturer after they were found to be unreliable, according to an article in El Pais.
The Guardian reported on problems at a testing center in the United Kingdom.
The Washington Post drilled into a haphazard White House effort to get supplies, spearheaded by President Trump’s son-in-law, Jared Kushner.
Change Orders Spell Trouble
“Change orders” — amendments approved after the contract is awarded — alter the terms of the contract. They may be necessary, but they also are a convenient forum for mischief or an indicator of poor planning.
The red flags from the IACRC warn about change orders that:
- Increase the value of a contract without adequate justification or documentation.
- Increase the price of a “sole source” contract award above the “sole source” threshold.
- Promptly follow a low bid award, making the contract price higher than other bid prices.
- Are disproportionately approved for certain contractors, i.e., certain contractors receive multiple questionable change orders when others do not.
Yet another area to watch, if possible, is the payment process. See IACRC guidance on questionable invoices and payment documentation. To hunt these issues out, relevant documents might include invoices and supporting documents, work completion reports, and inspection reports.
Amendments are also used to adjust delivery dates, especially critical in emergencies.
Using Procurement Data
Patterns can be discovered using procurement data, understanding that you will be working with incomplete information that comes from disconnected databases.
- Comparing the cost of certain items.
- Evaluating the amounts purchased.
- Identifying the network of suppliers.
- Showing delivery performance.
- Compiling total expenditures.
- Insights from when information on tenders, awards, and contracts was published.
Note: this may be a great area for collaborative projects, perhaps to look for regional differences.
Citizen groups in Africa are demonstrating the value of collective documentation about how COVID-19 funds are being spent, with results described here.
OjoPúblico, The Intercept and El Mercurio de Ecuador created a database of the 110 most important companies selling test kits and tracked Peru’s purchases.
In some countries, procurement data can be downloaded or accessed through an Application Programming Interface (API). Such changes have been pushed by “open contracting” reformers such as the OCP.
This document — Monitoring COVID-19 Emergency Procurement with Data — by Camila Salazar of OCP is the best place to start. Salazar looks at the use of government data, citing examples in Colombia and Chile.
Another OCP document provides step-by-step guidance on how to access and analyze Ukraine’s COVID-19 dashboard.
She also discusses how to structure your own database, suggesting the use of the Open Contracting Data Standard (OCDS). OCP’s Open Contracting Tools Directory shows software tools that can be used to create, use, visualize, or analyze OCDS data.
For general technical help on subjects such as scraping, see the GIJN Data Journalism Resource Center. Ideas on data visualization are contained in the March newsletter from They Buy for You, a European NGO working on contracting policy.
In the absence of official downloadable data, reporters should consider creating their own databases. Even a simple exercise compiling comparative prices for a product, such as masks, may yield a story.
In the United States, ProPublica has made its contracts database publicly accessible and searchable.
A tool developed by the nongovernmental organization They Buy It for You aims at detecting patterns and anomalies in spending data.
La Silla Vacía uncovered inflated food prices in purchases by municipalities in Colombia.
State and local governments across the US obtained about 30 million doses of a malaria drug touted by President Trump to treat patients with COVID-19, despite warnings from doctors that more research is needed, the Associated Press discovered.
Dataphyte in Nigeria analyzed what resources could be purchased for each state with the projected government spending.
New York State spent $686 million on medical supplies, according to a Rochester Times Union review of available state records.
The Guardian reported that $50 million went to fossil fuel companies with ties to the Trump administration.
“Federal agencies have hired contractors with no experience to find respirators and masks, fueling a black market filled with price gouging and multiple layers of profiteering brokers,” reported ProPublica.
Reporter J. David McSwane described in the article that the starting point for the story was a ProPublica analysis of contracting data that showed the big contract was the first one for the company.
A Closer Look at Federal COVID Contractors Reveals Inexperience, Fraud Accusations and a Weapons Dealer Operating Out of Someone’s House This ProPublica interrogation of government data found that the Trump administration “has promised at least $1.8 billion to 335 first-time contractors, often without competitive bidding or thorough vetting of their backgrounds.”
Don’t Forget Lobbying
Efforts to influence the government go hand-in-hand with government spending, providing extra rationale for tracking lobbying activity and lobbying expenses.
National Public Radio in the US found that: “Gilead Sciences, the drug-maker behind the experimental COVID-19 treatment remdesivir, spent more on lobbying Congress and the administration in the first quarter of 2020 than it ever has before, according to federal filings.”
In Canada, the NGO Democracy Watch learned that the Ontario government allowed businesses to do “secret lobbying” by inviting them to ask for temporary law changes during the COVID-19 outbreak.
After One Tweet To President Trump, This Man Got $69 Million From New York For Ventilators, was the headline on a BuzzFeed story about a New York State contract with “no apparent experience in government contracting or medical devices.”
Plaza Pública used Guatemala’s public procurement portal to identify companies with suspected ties to the deputy health minister.
Cover the Transparency Story Itself
Restrictions on getting procurement information is also worth covering. Especially where that information is not available.
This might include looking at special rules blocking the release of information, restrictions on the processing of FOI requests, and specific information denials.
The most-affected states in Brazil are the least transparent about their pandemic spending, according to reporting by Folha de S.Paulo.
Direkt36 in Hungary, pointed out numerous information gaps in this article, also about a ministry advisor whose father’s company got a contract for masks. “In most cases … the exact type, price, and the producer of the delivered products were not disclosed,” the article says.
Firms given £1bn of state contracts without tender in COVID-19 crisis, according to a count done by the Guardian.
Bloomberg and The Los Angeles Times have both reported that the Trump administration is refusing to disclose details of a medical supply channel known as Project Air Bridge, run by Donald Trump’s son-in-law Jared Kushner.
In Japan, Mainichi wrote that the Ministry of Health, Labor and Welfare refused to disclose the name of one of the four companies supplying cloth masks for pregnant women, “raising suspicion over what lies behind the nondisclosure.”
In Nigeria, Dataphyte wrote about donations made to the government, stressing that the government has not released any spending details.
Tracking Aid from International Organizations
The World Bank and other development institutions have jumped in with grants, loans, and debt relief to help countries affected by COVID-19.
The extra funding is typically dispersed through national procurement systems, not through the international institutions themselves. However, the institutions exert influence on the procurement process and may provide some oversight of how the money gets spent.
NGOs have raised concerns about the potential for fraud and corruption as procurement procedures get conducted quickly. It appears that reforms are being put in place in some countries to control and monitor the spending.
What does this mean for those tracking the spending of the World Bank, the International Monetary Fund and regional development agencies? Their sites include documents that describe the overall funding levels and the conditions of the loans and grants. Within documents about the funding for each country may lurk hints for reporting. However, as described below, there are limits on the transparency provided by the international organizations. Learning how their funds are spent will depend on research within each country.
Devex is tracked international spending, reporting here that “between Jan. 1 and May 24, there were 1,714 funding activities announced with more than $15.9 trillion for the fight against COVID-19.” Devex, which reports on global development issues, maintains a database on the topic.
Emphasizing the difficulty of following the money, Devex wrote that “a lack of transparency and accountability around funding announcements means it is difficult to know who is responsible for the delivery of these funds, how and where they are being delivered, and who they aim to benefit.” Devex held a webinar on the subject.
Tracking World Bank Funding
About $160 billion in funding is coming from the World Bank, which produces documents about projected spending. The Bank’s page on COVID-19 is here. Also see this key document describing the organization’s project to tackle the coronavirus.
To research specific countries, go to the Bank’s advanced search page, which is available in multiple languages.
Enter “Covid-19 Response” in the key word block and select a time-frame. Pick the desired country, but don’t select type of document. A variety of documents are involved: the Project Information Document, the Stakeholder Engagement Plan, the Environmental and Social Commitment Plan, the Project Appraisal Document, and the Procurement Plan. (If you change your search, don’t forget to unclick previously chosen items.)
The best overall document is probably the Project Appraisal Document. But the Procurement Plan goes into detail on the process, with text and a chart breaking down the components of the grant.
Countries use their own procurement systems, potentially getting help from procurement specialists from the World Bank. It launched the Fast Track COVID-19 Facility at the start of April, and prepared a set of templates and guidance notes, including fast-track procurement measures. “A client government can now choose from several streamlined and simplified processes, and contracts are now subject to ex-post review to accelerate procurement,” according to a blog post.
Other funds will support private companies affected by the pandemic, but the identity of the beneficiaries is not being disclosed. Nor is what they plan to do with the funds, which are being distributed by the International Finance Corporation. For more detail see this article by Christian Donaldson, economic justice senior policy advisor at Oxfam International’s Washington, DC. office.
IMF Funding Lacks Transparency
In early May, a group of 99 NGOs sent a letter urging the IMF to “consistently apply transparency and anti-corruption measures to all loans, such as requiring governments to conduct independent audits and publish procurement plans, including the names and beneficial owners of all companies awarded contracts.”
“We have noticed an uptick in anti-corruption measures being included in Letters of Intent in the past few weeks,” said Sarah Saadoun of Human Rights Watch.
A subsequent IMF fact sheet says among other things that the Fund has asked member countries requesting emergency assistance to commit to (i) enhanced reporting of crisis-related spending (ii) undertaking and publishing independent ex-post audits of crisis-related spending (iii) ensuring procurement transparency …” It lists several countries that have made such pledges: including Gabon, Moldova, Nigeria, Afghanistan, Bolivia, Dominican Republic, the Kyrgyz Republic, Mauritania, Pakistan, and São Tomé and Príncipe. (The links go to IMF documents. The IMF document search page is here.)
All IMF emergency funding approved can be seen here. It takes a few days for the document with letters of intent (where the commitments are) to be uploaded, after which a press release is available. The IMF also has a running list of countries’ policy responses.
Asian Development Bank
See lists of projects here, with links to documents.
The main document is the Project Administration Manual, such as this one for Bangladesh. Emergency procurement procedures are in effect and are described in Section VI. The procurement risk is rated “High.”
Other Information Sources
The Early Warning System from the International Accountability Project has a page on COVID-19 funding. Scroll down the chart on the right or use the map to explore.
The Center for Global Development (CGD) wrote about the difficulty of tracking such funding in this blog post.
More Reading Suggestions
COVID-19 and investigating contracts / a how to guide, a slide show from OCP.
A similar compilation of warning flags, 42 of them, is in a table on page 26 of a report about using data to locate corruption, prepared by the OCP and Development Gateway.
Eight red flags were used in an analysis of World Bank projects by Global Integrity.
See a World Bank summary of 11 Warning Signs of Fraud and Corruption in Procurement.
Twelve Red Flags: Corruption Risks in the Award of Extractive Sector Licenses and Contracts, a handbook from the Natural Resource Governance Institute. (Available in English, French, and Indonesian.)
Idiot’s Guide to Looting Public Procurement and Getting Rich Quick is a fun read from the OCP.
Indicators to diagnose the performance of a procurement market, OCP’s technical guide to analyzing the overall health of a government’s procurement system.
Talk with Someone for Advice
OCP’s helpdesk can help with questions if you’re working on a public interest investigation. Email firstname.lastname@example.org or email@example.com.
OCCRP is doing lots of work in this space and offers help to journalists. In Europe’s Scramble to Buy COVID-19 Supplies, Anti-Corruption Measures Fall Away, an April 21 article by Ilya Lozovsky of OCCRP, is an enthusiastic and informative look at the scene.
GIJN’s Help Desk is also available.
Toby McIntosh is GIJN’s Resource Center senior advisor. He was with Bloomberg BNA in Washington for 39 years. He is also the former editor of FreedomInfo.org (2010-2017), where he wrote about FOI policies worldwide. His blog is eyeonglobaltransparency.net.