Paraguay’s transparency alchemists

How citizens are using open contracting to improve public spending

Students on the streets protesting against government waste in education. Photo: Cesar Olmedo

At midday on 5 May 2016, Paraguay’s education minister Marta Lafuente announced her resignation.

She almost certainly never expected to lose her job and certainly not over something as trivial as a catering bill.

This is the story of how the information on those contracts unearthed a wider spending scandal that triggered a formal investigation and outraged students who had grown weary of what they perceived as chronic mismanagement in their schools.

It should have been an unremarkable purchase. On 11 March 2016, the education ministry awarded a catering contract for a meeting with a group of international evaluators. There would be a cold buffet, fresh fruit, and savory snacks, hot and cold beverages, and audio equipment for the interpreters. But then a journalist saw the contracting documents and noticed some of the items had exhorbitantly high prices.

Ministry of Education buys bottles of water for 10,000 guaranies and mate for 80,000,” the front page of the Ultima Hora newspaper read on 28 March. The ministry planned to pay 200 million guaranies (around US$35,000) for the refreshments, with some of the most expensive items including two-liter bottles of mate tea, known as “cocido”, which cost more than US$14 each, and half-liter bottles of water for more than US$1.70 each (six times the sale price in a typical Paraguayan supermarket).

The public outcry was immediate. People mocked the education ministry with social media memes. Students delivered the same goods mentioned in the contract to the institution, bought at the supermarket for a fraction of the price.

At first, the education minister dismissed the criticism, justifying the spending as following standard procurement processes. But the deal was soon cancelled under public pressure. What’s more, the controversy had surfaced a long-simmering discontent among citizens with the state of Paraguay’s education system.

For a month, students and teachers kept up their protests, publishing eight reasons for doing so. Among them were the mismanagement of public funds in the “Cocido de oro” (“golden mate”) scandal, as well as a lack of serious dialogue with all sectors of the educational community, dangerously poor infrastructure in schools, the government’s low investment in education (no more than 3.9%), and Paraguay’s poor performance in education rankings.

Together with the collapse of a classroom roof at a high school in Lambare, a city next to the capital, Asunción, this was the final straw. Students went on strike, occupying more than 100 schools and boycotting classes until the education minister agreed to step down.

The scandal cost Lafuente her job and led President Cartes to sign a joint agreement with the student groups promising to speed up funding for improvements to school infrastructure, giving them an advisory position on the national development fund (Fonacide) and establishing a monthly meeting between the government and student representatives.

Thousands of students took part in the rallies demanding better schools and education. It would have been unimaginable for their parents’ generation, growing up under the Stroessner dictatorship.

Thanks to government initiatives that have sought to give citizens greater access to information about public institutions, these students, along with investigative journalists and other civil society groups, are starting to engage actively in civic affairs.

This wasn’t an isolated student demonstration. The “Cocido de oro” scandal is seen as part of a well-organized and well-informed youth movement that has sprung up in Paraguay in recent years. An equally dramatic controversy involving alleged corruption and unfair staff appointments at one of the country’s top public universities led to the resignation of the Chancellor and other senior staff in September 2015. Mostly high school and university students, they are no longer willing to tolerate the waste and corruption in public spending — a hangover from 35 years of authoritarian rule. They expect their government to be more open and accountable, and public decision-making processes to be more inclusive and democratic.

Thanks to government initiatives that have sought to give citizens greater access to information about public institutions, these students, along with investigative journalists and other civil society groups, are starting to engage actively in civic affairs. And they are data-savvy, basing recommendations on empirical evidence about government policies and processes, how they are implemented, and whether they are working.

Leading the pack is the country’s public procurement office, which runs a portal that ranks among the most open government data sources in the world. Together with information about budgets, public bodies’ payrolls, and other government data, this is helping Paraguayans to tackle some of the biggest long-standing problems faced by the government, like graft, overpricing, nepotism and influence-peddling.

How open data gained ground in Paraguay

As a small, landlocked country with an economy worth $27.5 billion, it might come as a surprise that Paraguay has had one of the most transparent procurement systems since the early 2000s.

The first of Paraguay’s sweeping reforms were introduced in 2003 to root out rampant corruption. Procurement, which had been unregulated until then, was seen as an easy route to enrichment for the ruling party, whose members were known to have ties to the country’s former dictator, Alfredo Stroessner. Patronage in civil service was endemic too — research suggests that meritocratic hiring was non-existent in Paraguay’s public institutions before 2003; under President Nicanor Duarte, meritocratic hiring was practised in around 2% of civil service appointments. That figure rose to 26% under his successor, Fernando Lugo. A new law, passed in 2003, modernized public procurement with the introduction of a transparent system for conducting tenders in public institutions and the creation of the Dirección Nacional de Contrataciones Públicas (DNCP) as an oversight body to monitor procurement processes and publish information about all contracts online.

Paraguay joined the Open Government Partnership (OGP) in 2012 as a way of cementing its commitment to to promote transparency in public institutions, engage citizens in public decision-making, fight corruption and harness the power of new technologies to strengthen governance.

But it wasn’t until 2014 that the open government work really gained momentum. There was a change in government in 2013, and the new administration — urged on by civil society advocates and reformers within the public sector — sought to improve the investment climate with a series of measures related to competition, and transparency in civil service payrolls and assets.

A decade-long campaign by José Daniel Vargas-Téllez, a radio host at a small community station in Asunción, and other right to information advocates, culminated in congress also passing a new access to public information act (Law 5282 or the “Free Citizen Access to Public Information Act and Government Transparency Act”) which established the right to request information and set minimum requirements for what information various government institutions must publish (in practice, on their websites).

That same year, the second OGP plan process kicked in. In its focus: commitments on transparency, technology and open data in line with the implementation of the new access to information law.

The 2014–2016 plan had more success because it started with a new government, says Federico Sosa, Director General of Paraguay’s Open Government Unit. Technical personnel and mid-level senior staff felt protected and could leverage the process to propose what looked like technical reforms, he explains. The second plan became “an effective outlet” for the new administration’s efforts towards fighting corruption and increasing transparency.

“I think the stars have aligned to a certain extent: you have an increasingly reform-minded government that employs meritocratic structures to bring in more empowered, technocratic, focused public sector employees, who have the self-sufficient tools to be able to pull off these reforms,” Sosa said.

An approach known as open contracting proved to be a perfect fit for the changes the government sought to make to the procurement system as part of these OGP reforms. It aims to make as much information about procurement available to as many people as possible in a way that is most useful to them. It is underpinned by a belief that increased disclosure and participation in public contracting will help make contracting more competitive and fair, improve contract performance, and secure development outcomes. Although it seems technical on one level, it can have a profound impact on public accountability.

Santiago Jure, Director of the DNCP highlights that the adoption of open contracting meant “the renewal of a commitment that goes back to when the institution was first created, to bet on transparency and access to information. Our effort to spread this large quantity of information has substantially improved the channels to access publicly relevant information on public contracting, creating and strengthening mechanisms for independent monitoring by civil society.”

What, when, to whom and how much? Paraguay introduces the Open Contracting Data Standard to open up its contracts

Publishing information is one thing; getting people to use it is something else entirely. Despite increasing access to government data for over a decade (the agency’s first public online portal was launched in 2004), the DNCP found the only people really using the information were suppliers, economists and computer scientists.

Graphic on yearly data on companies registered on the portal: Since 2007, companies had to register to sell to the government via the e-procurement portal.

They also saw a lot of agencies overspending on everyday purchases like food and office supplies. Basically, no one was checking in on what was happening with the $2.4 billion being spent on more than 10,000 contracts per year.

They needed a system that would foster greater accountability from government agencies by encouraging non-specialist groups, like journalists, civil society and citizens, to become more involved in scrutinizing public spending.

Juan Pane was one of the people brought on board to implement the open government reforms. A computer scientist with experience working on open data projects in Italy, Pane was hired to lead the technical implementation of the government’s open data systems, as part of the Democracy and Governance Program, a collaboration between the non-profit Centro de Estudios Ambientales y Sociales (CEAMSO), and key government institutions, with funding from the United States Agency for International Development (USAID).

When working with the DNCP, Pane shopped around, exploring existing models for publishing procurement data in Spain, the EU, USA and UK. But it was a framework in beta phase, called the Open Contracting Data Standard, that appealed to him most.

“Paraguay started implementing the Open Contracting Data Standard when it wasn’t a standard yet.” Pane said. “A decision was made to publish open data on public procurement data, and that was the best technical solution. [The standard] was well-structured, so it was much simpler to operate, telling you what to publish and how, and that made all the difference.”

The standard formed the foundations on which the DNCP’s new, fully transparent open contracting portal was built. The easy-to-use interface, which links to the DNCP’s centralized procurement database, allows users to search for detailed information about all tenders and contracts awarded by national and municipal government institutions dating back to 2010. The portal automatically synchronizes with the database in real time, the data are machine-readable, and an API allows users to create new apps to reuse the data and combine it with other data sets.

This open contracting site complements the DNCP’s other tools, including a public procurement portal tailored towards the needs of buyers and suppliers, Qué Compramos (which displays data on public purchases in easy-to-understand visualizations), E-jogua (a virtual store for certain public purchases), and a statistics module for analyzing data to inform high-level strategic decisions, to name a few.

Over the past two years, several of the DNCP’s online tools were launched (like the open contracting portal) or redesigned (like the public procurement portal). In that time, there’s been a notable increase in savings on procurement costs (1.4% from 2015 to 2016, which, given the size of the procurement budget, is a significant sum). Adjustments and amendments to contracting processes have dropped, from 19% of all contracts in 2013 to just 3% in 2016. Visits to the public procurement portal website have risen by 32% from 2.5 million in 2015 to 3.4 million in 2016.

The launch of the latest tools does not appear to have had a significant influence on competition, but then suppliers have already been using the government’s online procurement tools for a decade — since 2007, companies must register online with the DNCP to participate in public tenders. The number of suppliers has risen steadily over the years, with more than 21,000 companies registered in the procurement database as of July 2017.

The DNCP noticed a rapid rise in news articles about public purchases after visiting media organizations and teaching them how to use the new open contracting portal.

Juan Cálcena Ramírez, a journalist at the newspaper ABC Color who worked on the Panama Papers exposé, said the value of open data, such as procurement data, is that it opens the door to doing more investigations.

“As journalists, what we are looking for in open data is to find projects that are poorly implemented or waste public money,” he said. “Another thing it led to was the availability of an official, relatively reliable source for the media to refer to.”

The power of open data is also that different data sets can be connected to draw meaningful insights. Pane describes this using the analogy of a cake.

“Open data is information that I can easily access, use and process. They are like ingredients that can be used to do other things. For example, to make a cake you need X ingredients. Each data set is an ingredient — budget, payments, contracts — and with them I can analyze how Paraguay’s public money is being spent,” he said.

“The impact [of open contracting] was immediate,” said Melinna Vázquez, who is responsible for open government and communications at the DNCP.

“Before introducing the new system, we would generally know what was going to appear in the newspaper one day before, because journalists called and asked for the information. We’d get a request about how much the ministry spent on school kits, for example, then prepare an Excel file and send it to the journalist. Now, they manage to do it alone, using the portal.” Vázquez said.

One of the key challenges came with being a pioneer in the implementation of open contracting data, including as basic as the question of translating the English terms into Spanish. How to map the existing data in Paraguay to the Open Contracting Data Standard? What happens when a data point didn’t exist? How would this information be added?

Juan Pane. Foto: Cesar Olmedo

Presenting the information in an open format, rather than PDFs or proprietary software (or even worse, paper hard copies) increases their potential applications. “It’s like asking me to dig an Olympic pool and giving me an excavator instead of a teaspoon,” Pane said. “If the information is in tables that can be processed, I will do the same job much more easily and faster.”

“It’s like asking me to dig an Olympic pool and giving me an excavator instead of a teaspoon.”

Involving a wider community in that “excavation” work, was one of the goals of the new DNCP open contracting portal, developed in 2014.

From hackathon to a blooming business

“Before 2014, our data were publicly available but they were not in a machine-readable format,” said David Rees from the DNCP. “The difference with the open data is that any citizen, supplier, or start-up can develop their own system using it.”

Hackathons have been a cradle for developing public tools that draw on the data for practical uses.

“We want to generate added value to what has already been released; to identify needs that can be solved with this data,” explains Gabriela Gaona, who led the team that developed an Android and iPhone app that uses open data in real time. In December 2014, the app won a hackathon, (organized as part of the same program that funded several government open data portals), and was the inspiration behind other tools built for the health ministry and other public institutions. Gaona and her team used the US$10,000 prize money from the competition to form a new company, Codium, which recently moved to a smart new office in the heart of the capital, Asunción. What started as a loose collaboration of eight developers and one administrator, is now a women-owned company with 17 staff and a revenue of over $200,000.

Gabriela Ganoa presents ContratacionesPY, an app to access Paraguay’s contract information.

A major advantage of the DNCP’s latest procurement tools is that the information is available in real time, allowing citizens to scrutinize public spending and report wasteful purchases before the deals are set in stone.

A golden era for investigations

Juan Carlos Lezcano, then a journalist at ABC Color, used contracting documents published online by the DNCP to reveal that the federal police had bought 10 office chairs, using 46 million guaranies (around US$8,000) that had been earmarked for repairing infrastructure.

At $800 each, the chairs cost 10 times their market value, according to ABC Color. Claiming the sum was a data entry error, the police commissioner said an extra zero had been added by mistake to the minutes of the award in the electronic procurement system. But the contracting documents told another story — that supposed “extra zero” was already visible at the tender phase and in the proposal submitted by the winning bidder. The contract was subsequently cancelled before any payments were made.

René González, the reporter who conducted the “Cocido de oro” investigation, used the DNCP’s online tools for his research. He was able to access all the data about the catering contract and the prices of the unsuccessful bidders. The government data portals continue to be a valuable resource for the Ultima Hora journalist.

“Open data progressed rapidly thanks to the laws passed,” González said.

“Now, it would be good for public institutions to have all the information on their websites proactively and within a reasonable timeframe.”

From opening data to improving public procurement policy

Recurring scandals like the “golden” mate and “golden” chairs prompted the procurement agency to adopt a series of new government-wide policies in 2016 to combat overpricing.

“This increase in active participation by civil society (including the press) has allowed us, as the regulatory body for public contracting in the country, to identify opportunities to develop new policies, regulations or instruments that help optimize the national public procurement system,” said Jure, the DNCP’s director.

The resolutions require procuring entities to provide better, up-to-date pricing information to use as a reference when evaluating bids, improve the process for determining cost estimates, and specify the maximum range allowed when purchasing goods. Although it’s hard to attribute change to one particular factor, these resolutions are believed to be a major contributor to the significant increase in savings on contracts over the last two years (8.3% in 2016 and 8.7% as of July 2017, compared to 6.8% in 2015).

“Today, public buyers are more concerned about getting a better price. They are beginning to learn how to manage public money better. If a price does not make sense, they re-evaluate or postpone the contract, or cancel it. They might open a new call for proposals. Because if they don’t, society will come and hold them accountable,” said Vázquez from the DNCP.

Making the case for better use of money in school infrastructure

In the city of Ciudad del Este, the NGO reAcción uses government data sets to monitor how development funds for school infrastructure projects (from the Fondo Nacional de Inversión Pública y Desarrollo or Fonacide) are allocated and spent.

reAcción volunteers visiting a school. Foto: reAcción.

For the last three years, the group has linked data published on the Ministry of Education’s portal with that of the DNCP’s portals to show that the Fonacide money isn’t going to the schools most in need. For example, in 2015, the DNCP data showed that contracts were awarded at 28 schools using Fonacide funds allocated to the municipality of Ciudad del Este; only one of those schools appeared among the top 15 educational institutions on the priority list for infrastructure works; and three of the 28 schools weren’t even in Ciudad del Este, they were in the neighboring municipality, Presidente Franco.

Schools that received repeated funds between 2014 and 2016. Only one was highlighted as most in need. Calculation ReAcción.

There was also a lack of communication with administrators. Principals interviewed by reAcción’s student volunteers didn’t know whether they were on the priority list, sometimes only learning they had been allocated funds when workers showed up to do the job. In 2015, half of the schools on the priority list weren’t even on land belonging to the Ministry of Education — a prerequisite to being eligible for the funds in the first place.

ReAcción has created a methodology that could be replicated by citizen groups at schools around the country, according to David Riveros García, the organization’s 26-year-old founder and executive director. One group of volunteers (the high school students) conduct site visits, interviewing school principals and taking photos of the facilities, while a second group (university students) works with the open data from the government portals.

When they first carried out their study, before the access to information law and open data portals were established, it cost them US$2,600 and took eight months to conducting their monitoring. This year, it took two weeks and around US$200–300.

Improvements to the Ministry of Education’s portal (more up-to-date information, less data entry errors, non-proprietary software) could cut that down to a weekend.

Riveros García says the DNCP portal is the best open data portal Paraguay currently has. “If you use it a lot like we do, you can see that they have taken the time to step back and see what’s working.”

The DNCP has been responsive to reAcción’s feedback, he says, adding extra features to the portal that make it easier to search specifically for Fonacide contracts.

Despite the reforms, Rivero Garcia says, transparency and openness are just the first step in the fight against corruption, and the government should be doing more to act on the findings revealed by the data.

“Even though there are places, like the public procurement office, where a lot of information is being published and facilitated in open data format, we have not yet seen any follow up from government to end impunity,” he said.

Foto: reAcción

The next frontier: expanding data and increasing use

The government recognizes there’s still a long way to go in their quest to open up public data. Few institutions have opened their databases or publish their data on an open data portal, and use of the data that has been published is still limited, according to a report on the country’s third OGP Action Plan. Priority data sets aren’t accessible in ways that meet the needs of civil society, the report adds.

And yet, the tremors of a tectonic shift in transparency and accountability in Paraguay are already being felt. In a short time, armed with access to information, citizens have started engaging with how public money is and should be spent.

The government is now doubling down on its strategy of fostering public participation, using cutting-edge technology to increase citizens’ access to data about their state institutions. Health, education, and municipal-level government, and procurement spending across these areas are being prioritized.

Since April 2017, it’s mandatory for anyone making complaints about procurement procedures to submit them electronically via the complaints function on the DNCP’s public procurement portal, which allows users to see the nature and status of all complaints.

There are plans to improve data about the development fund Fonacide, linking it to data from the DNCP, the comptroller general’s office and the finance ministry, and to create a citizen monitoring function with its own mobile app.

In November, the ministry of finance plans to expand their publication of open data to include links to budgets and transactions.

More citizen participation and greater transparency in public spending is being encouraged through town hall meetings to discuss government audit reports.

Further down the line, the DNCP is set to create “plain-language” training courses on using the data and to develop an interactive map of public works awarded, with the option for users to submit complaints.

“The opportunities are endless,” says Pane, the technical expert, who now works for the Latin American Open Data Initiative (ILDA) that runs the Open Contracting Partnership’s Latin America helpdesk advising others in the region on how to implement open contracting.

And while there’s much work to do, when it comes to opening up procurement data, Pane points out, Paraguay rivals global giants like the UK and USA, with a fraction of their GDP and investment in transparency. It’s important not to forget how far the country has already come.

Open data and public feedback may be important elements to enable Paraguay’s transparency alchemists to transform government contracting even more.

Story written by Sophie Brown and Georg Neumann. With contributions by Melisa Martinez and Gerardo Miranda, M-Comunicaciones.