Encouraging Transparency and Participation in Procurement (ID0135)

Brief Description of the Commitment

This commitment encourages transparency in government procurement of goods/services (PBJ) including in emergency procurement, increases the participation of Micro, Small and Medium Enterprises in government procurement of goods/services, and expands community involvement in monitoring the government procurement of goods/services.

Problem Definition

1. What problems does the commitment aim to address? Every year the Central and Regional Governments allocate an abundant amount of Government Goods/Services Procurement (PBJ) budget, where in 2021 LKPP recorded PBJ spending reaching Rp1,214T or around 52.1% of the total Budget State Revenue and Expenditure (APBN). Covid-19 pandemic also give the conditions for the existence of special procurement in form of Emergency PBJ. Such a large budget allocation coupled with the existence of special procurement mechanism in form of Emergency PBJ could increase the potential corruption in Government PBJ. The phenomenon of corruption in the Government's PBJ nationally is the second most corruption case handled by the Corruption Eradication Commission (KPK). It was recorded from the year 2004 until July 2021 there are 240 corruption cases in the context of Government’s PBJ (KPK, 2022). Therefore, one way that can be done to prevent and reduce the potential for corruption in the context of PBJ is to open crucial procurement information so this will open up opportunities for the public to participate in supervising the PBJ process. On the other hand, this can form the better understanding of business actors to know the needs of the government and see the potential for involvement in PBJ so as to increase competition and healthier business competition in PBJ.

2. What are the causes of the problem? The existing problems are caused by several things, namely, first, the lack of transparency of government procurement information, especially information that is important and can be used to confirm whether the allocated budget is appropriate or not. Although Indonesia has used electronic procurement, there is still a lot of procurement information that has not been published. Second, there are still Ministries/Institutions/Local Governments (K/L/PD) that consider procurement information to be excluded information or not public information. Third, low public participation to participate in monitoring the government procurement process. This is because the procurement process is complex, making it difficult for public to monitor. Therefore, if it’s needed to increase the role of community supervision in the context of the Government's PBJ, so it is also necessary to increase capacity for the public before conducting procurement monitoring.

Commitment Description

1. What has been done so far to solve the problem? In 2021, Central Information Commission Regulation No. 1 of 2021 concerning Public Information Service Standards (Perkislip 1/2021) was issued which contains an article regulating the detailed explanation of PBJ information that must be opened by Public Bodies. In addition, the PBJ Openness Indicator has also been included as one of the indicators in the Public Information Disclosure Index (IKIP). In the electronic procurement system, LKPP has also published the Emergency PBJ dashboard in the Electronic Procurement Service (LPSE) channel.

2. What solution are you proposing? This commitment will encourage Public Bodies related to Government PBJs to publish in more detail related to K/L/PD transactions including emergency procurement information, expand community participation in monitoring Government PBJs, improve the efficiency of complaint handling mechanism channels for Government PBJs, expand MSME involvement in Government PBJs, ensure the implementation of Perkislip 1/2021 in Government PBJs, and strengthen the community in involvement and supervision PBJ Government.

3. What results do you want to achieve by implementing this commitment? Opening procurement information will provide space for the public to participate in monitoring and providing input to the government on the procurement process carried out. So far, one of the obstacles in the supervision of the Government's PBJ is the lack of detailed information that can be accessed through the procurement system, while requests for information sometimes take a long time. In addition, the opening of procurement information will also make it easier for business actors to be involved in the procurement market, which will also make it easier for business actors to get involved in the government procurement market which leads to a more competitive and efficient procurement process, as well as producing quality goods/services. Furthermore, governments, civil society organizations, academics, and journalists can also use the data for further analysis of the effectiveness and potential of fraud in the Government's PBJ.

Commitment Analysis

1. How will the commitment promote transparency? The publication of Government PBJ information will increase public access to information that can be used to conduct studies, monitor, and participate in government procurement. This commitment is in line with the value of transparency described in Law No. 14 of 2008 concerning Public Information Disclosure, Perkislip 1/2021, and Presidential Regulation No. 16 of 2018 concerning Government Procurement of Goods and Services.

2. How will the commitment help foster accountability? Publishing procurement information is a form of government accountability for the use of budgets that have been allocated and spent. With this information, the public can see, analyze, and know how the implementation of planning and absorption of the budget that has been allocated.

3. How will the commitment improve citizen participation in defining, implementing, and monitoring solutions? This commitment will encourage wider participation for the public to participate in procurement, monitor procurement carried out, and use the data to encourage policy improvements in government procurement.

Commitment Planning (Milestones | Expected Output | Expected Completion Date)

Publication of Ministry/Institution/Local Government transactions in the e-catalog | Availability of publication of the components of K/L/PD transaction information in the e-catalog | December 2024

Publication of detailed emergency procurement information | Published in detail of emergency procurement information | December 2024

Encouraging the effectiveness of the e-complaint channel in handling community complaints | Availability of an effective ecomplaint channel in handling community complaints | December 2024

Development of an integrated and open Provider Performance Information System (SIKAP) database | Implementation of the development of an integrated and open SIKAP database | December 2024

Publication of information or documents on Government Procurement of Goods/Services regulated in Perkislip 1/2021 at SPSE in accordance with LKPP’s authorities | The availability of publication of information or Government PBJ documents regulated in Perkislip 1/2021 at SPSE in accordance with LKPP’s authorities | December 2024

Community strengthening in the involvement and supervision of Government Procurement of Goods/Services | Implementation of community strengthening in the involvement and supervision of Government PBJs | December 2024

Implementation of Government Procurement Information according to Perkislip 1/2021 | Implementation of Government PBJ information according to Perkislip 1/2021 | December 2024

Action Plan Review

Commitment 1. Transparency and participation in government procurement

• Verifiable: Yes
• Does it have an open government lens? Yes
• Potential for results: Substantial

National Public Procurement Agency (LKPP), Central Information Commission (KIP), Indonesia Corruption Watch (ICW), Transparency International Indonesia (TII)

For a complete description of the commitment, see Commitment 1 in Indonesia’s 2022–2024 action plan: https://www.opengovpartnership.org/wp-content/uploads/2023/01/Indonesia_Action-Plan_2023-2024_EN.pdf.

Context and objectives

Proposed by Indonesia Corruption Watch (ICW) and Transparency International Indonesia (TII), this commitment continues the previous two action plans’ efforts to improve transparency and participation in public procurement. Government procurement accounted for over half of all national public spending (1,214 trillion rupiah) in 2021, [1] and was the most frequent source of public corruption between 2004 and 2022. [2] In 2021, under the previous action plan, the Central Information Commission (KIP) revised its Regulation on Public Information Service Standards (Perki SLIP), which introduced stronger legal basis for transparency in public procurement. However, by early 2023, public bodies were still reluctant to release this information. Since the onset of the COVID-19 pandemic, the government has published narrow emergency procurement information on the national e-procurement portal. ^[3] Other central and local government units were also not providing necessary information, and there was no implementing regulation on what types of procurement information should be disclosed during states of emergency. ^[4] Meanwhile, e-complaint channels are not sufficiently utilized [5] and citizens lack the capacity to make targeted complaints on suspicion of fraud, mismanagement, and criminal acts, or to follow up on these concerns. [6]

Following the issuance of a 2018 Presidential Regulation on Procurement of Goods and Services, the government has begun to institutionalize the management of Procurement Information Technology Service (LPSE) and further develop the E-Procurement System (SPSE). [7] Certain aspects of the SPSE are crucial to procurement reform and public monitoring. The e-catalogue [8] lists detailed specifications of goods and services that can be procured by the government through e-purchasing. The Provider Performance Information System (SIKAP) [9] lists information of potential providers of goods and services and their performance record. The National Public Procurement Agency (LKPP) uses its e-complaint portals [10] to gather public feedback on procurement irregularities and periodically emails these complaints to the government internal supervisor staff, who is responsible for investigating potential fraud. Separately, Indonesia Corruption Watch manages opentender.net, a civil society portal that also collects public complaints related to government procurement.

This commitment aims to encourage government bodies to publish public procurement information in more detail by increasing accessible information on the e-catalogue and SIKAP, expanding government publication of emergency procurement information, and supporting the implementation of Perki SLIP. It also intends to facilitate civic participation by improving the e-complaint channel’s reporting procedures and supporting its uptake for public monitoring. LKPP and KIP will lead the implementation of these reforms.

Potential for results: Substantial

This commitment could improve the efficacy of the LKPP e-complaint channel as a mechanism for public participation in procurement monitoring. As of 2023, the LKPP website listed that out of the 296 complaints it had received, almost none had been resolved. [11] Planned improvements reportedly include routing complaints received through opentender.net as well as automatically forwarding complaints to the government internal supervisor staff, as opposed to relying on LKPP to do so manually. This is intended to speed up the management of complaints, increase the number of complaints forwarded to the government internal supervisor staff, and improve their use in potential fraud investigation. Under the commitment, it is also anticipated that LKPP will add a feature that allows the public to track progress and follow up on their complaints. [12] Implementers plan to support public uptake by disseminating information about the e-complaint channel to the public and conducting capacity building training on online monitoring of government procurement [13] to strengthen citizens’ ability in monitoring government procurement and reporting suspicious activities. [14]

In terms of access to public procurement information, full implementation of Perki SLIP is considered to be a critical element, given that many government agencies are not yet compliant with disclosure requirements. [15] KIP conducted preliminary public dissemination and developed a monitoring and evaluation form for public bodies to self-assess their compliance with procurement information disclosure requirements following the issuance of the revised standard, which is available on e-monev.komisiinformasi.go.id. Under this commitment, KIP reports that it intends to create consultation opportunities for government agencies on the implementation of the standard and facilitate dispute resolution related to the standards, which is within its mandate. [16]

Publication of detailed national and local government emergency procurement information under the commitment would close a significant gap in procurement transparency. To support this objective, the Ministry of Home Affairs, LKPP, and KIP are reportedly planning to issue a joint decree on open procurement in emergency situations. [17] Meanwhile, Transparency International notes that risk of fraud is exacerbated by the flexibility of emergency procurement process and overall lack of transparency. It suggests that efforts to enhance the transparency of emergency procurement information could focus on the publication of needs assessment documents, price standards, and providers on a specialized dashboard. [18]

The commitment intends to increase the number of providers of government goods and services on the Provider Performance Information System (SIKAP). While this centralized database was first launched during 2020 and 2021, there are still gaps in the information available. As of March 2023, there were 330,323 potential providers registered. [19] Information on 593 of these providers was linked to beneficial ownership information from bo.ahu.go.id, [20] although only 5 were verified. Verification ensures that the representation of ownership reflects the reality of who owns or controls a particular corporate vehicle. [21] Linked beneficial ownership information is based on a cooperation agreement between LKPP and the Ministry of Law and Human Rights. [22]

During the procurement process, providers registered on SIKAP get certain privileges, which include the ability to compete in quick tenders. [23] According to LKPP and Indonesia Corruption Watch, beneficial ownership information of providers is critical to ensure proper allocation of government procurement i.e., awarding contracts to entities with the qualifications and track record that are necessary to effectively provide goods and services. [24] Increasing the availability of information on SIKAP would also provide an avenue for public monitoring. [25]

Despite planned significant improvements, the commitment has certain limitations. Each milestone lists a key targeted improvement to public procurement, but the text does not specify the measures that will be taken to achieve these objectives. While stakeholders interviewed by IRM clarified plans for certain milestones, the specific indicators of expected results could be more concrete. For instance, the commitment intends to publish transaction information on the e-catalogue system but does not specify its scope (although Transparency International interprets this as adding transaction history). [26] In terms of ambition level, Indonesia Corruption Watch and the Open Contracting Partnership noted a gap in the commitment’s design, which does not address post-tender activities. In particular, presently the public does not have access to information on payment processes, progress on mandatory work, and program handover. [27]

Overall, compared to the previous action plans, Indonesia Corruption Watch acknowledged that this commitment takes a more systematic approach and could generate substantial progress on the institutionalization of transparency and participation in government procurement. [28] Successful implementation of each milestone could lead to the development of a public procurement information system that is more accessible and user friendly. This could in turn minimize the need for civil society organizations to file freedom of information requests to monitor government procurement. Likewise, the envisioned improvements to the public complaints channel would automatically forward complaints to the responsible authorities, increasing accountability. [29]

Opportunities, challenges, and recommendations during implementation

Civil society organizations (CSOs) have reported strong support from LKPP in developing strategies for more transparent and participatory procurement. [30] Given the progress in this policy area under previous action plans, implementation of this commitment can build on the long-term collaborative relationships between relevant CSOs and government agencies, particularly LKPP.

The commitment may face certain challenges in funding the process of improving procurement information systems and ensuring the compliance of local and national government bodies to disclosure requirements, especially given LKPP’s lack of enforcement authority and initial resistance towards Perki SLIP from government officials. [31] Furthermore, the extent of accessible procurement information will depend on the centralization of its publication since not all public institutions are linked to the national e-procurement system. For example, government units link to LPSE while state-owned enterprises and political parties develop their own e-procurement systems. In the education sector, autonomous public universities (PTN-BH) are linked to LPSE while semi-autonomous public universities (PTN-BLU) are linked to different systems following their parent ministries, especially in managing non-tax income.

To optimize implementation, IRM recommends the following:

· Identify organizations that will coordinate enforcement to ensure compliance of local and national government bodies with disclosure requirements. The Ministry of Home Affairs could play the role for local governments but was not actively engaged in development of the commitment. It is essential the Ministry is centrally engaged by OGI in implementation.

· Seek alternative funding to finance the implementation of this commitment as a collaboration between CSOs and government agencies. Planned improvements to the e-procurement system will require the development of new features and programming to connect the different systems, which may not be covered fully by LKPP budget. The Ministry of National Development Planning could also provide support in securing the funding.

· Revisit commitment milestones and agree on more concrete measures for implementation in consultation with civil society. In particular, collaborate on defining the scope of public information on government procurement and location for publication. Implementation will benefit from more specific indicators on the elements required for procurement information disclosure in line with Perki SLIP. Collaborative workshops between experts on transparency, practitioners across relevant ministries and agencies (particularly the LKPP and KIP), local governments, and civil society organizations can overcome potential disagreement and maximize targeting actionable procurement information for publication.

· Expand the scope of disclosure. As next steps, publication of procurement information needs to adopt a more holistic approach and cover post-tender activities, such as payment process and progress on performed work.