The Open Contracting Data Standard Could be the Future of Federal Procurement

By Ashley Nelle-Davis 

Starting last May, every federal agency began reporting spending as open data, under the DATA Act of 2014, delivering transparency outside the government and new opportunities for efficiency inside.

At the center of this new process is a data standard, the DATA Act Information Model Schema (DAIMS). The DAIMS expresses the basic data elements of agencies’ spending reports and how they relate to one another. Because every agency must follow the DAIMS, and because the Treasury Department has aggregated all their reports into a single open data set, Americans can now view a single, electronic picture of the entire executive branch’s finances.

Still obscure, after the DATA Act: federal procurement!

But the open data transformation has not yet reached federal procurement. Most procurement information hasn’t been systematically standardized or published, the way we have seen it done through the DATA Act, regarding agencies’ finances.

Each agency must report a basic summary of each of its contracts to the Federal Procurement Data System (FPDS), and those summaries are now part of the DAIMS’ structure. However, the rest of the procurement picture is beyond the DAIMS’, and the DATA Act’s, reach.

First, the information that contractors must submit to contracting agencies and to the General Services Administration is not consistently standardized. Second, details about the timing and amounts of payments are tracked differently from agency to agency. Third, agencies’ records of contract award processes and bidding also have yet to be standardized.

Because contractors’ reports, payment details, and agency award processes are not part of any standardized electronic picture, taxpayers have only a murky picture of how their funds are used.

Globally, governments spend around $9.5 trillion on public-private contracts each year. The United States invests a little over 10 percent of the country’s GDP (Purchasing Power Parity) in procurement, which rounds out to about $1.8 trillion. In this exchange, the government contracts business to secure goods and services through a bidding process, which can be partially followed here in the United States. But, in the space of $1.8 trillion, there’s plenty of room for inefficiencies and some ambiguity.

The quickest route to procurement transparency: the Open Contracting Data Standard

Fortunately, a data standard already exists that could bring together federal procurement information in one electronic picture - just as the DAIMS has done for agencies’ finances. It is called the Open Contracting Data Standard (OCDS).

The OCDS is a global, non-proprietary data standard applied during the public contracting process that results in “shareable, reusable, machine-readable open data” across the life-cycle of public procurement. It was built, and is maintained, by a global nonprofit organization, the Open Contracting Partnership.

It’s in use by many national governments, notably in Ukraine, where it has saved taxpayers money and reduced corruption. The United States is not one of them - not yet.

The OCDS schema covers the whole procurement process – from opening bids to all the way to contract fulfillment. By adopting the OCDS and applying it to all procurement information, then publishing that information on one public platform, governments can open their procurement processes to scrutiny and analysis - both externally and internally.

Citizens, contractors, watchdog groups, and government offices can, then, assess returns on investment and adjust to secure competitive, high-quality bids, while increasing transparency.

The Organisation for Economic Co-operation and Development (OECD) estimates that veiled, or corrupt, procurement practices consume between 20 and 25 percent of national budgets (global average). What might be seen as the cost of doing business in some countries ultimately poisons relations between citizens and their government.

The OCDS is the only comprehensive data standard for procurement. Governments seeking to bring transparency to procurement no longer need to invent their own, thanks to the Open Contracting Partnership.

The Open Contracting Data Standard’s Ukrainian success story

Ukraine, a country known for associated costs of doing business, now stands as an example of procurement transparency as citizens and leaders seek to bring lasting reform in a post-revolution society. The Euromaidan Revolution (Fall 2013 – Spring 2014) in Ukraine was fed, in large part, by the full breach of trust between Ukrainians and their leaders. Following the revolution, a group of talented volunteers decided to bring reform to public procurement, which had seen an annual loss of $2 billion in bribery and favoritism.

Inspired by public procurement reforms in Georgia (Tbilisi), like-minded social activists developed an e-procurement system for all Ukrainian public agencies. This e-procurement system, ProZorro, uses the OCDS for its data structure.

With ProZorro (which means ‘Transparent’ in Ukrainian), Ukraine opened the state procurement process, including bids, awards, and reports, to anyone who cared to monitor the process. Since its introduction, ProZorro has supported the growth of awarded contracts and has started to compromise the previously healthy system of procurement grafts. As Ukrainian leaders and citizens work towards reform, the tools provided through ProZorro have aided in the progress towards greater transparency.

Using the OCDS, ProZorro connects to a central database that collects all information related to the procurement process – including pre- and post-award figures – and can be viewed by anyone. The architects of ProZorro use an API so that all information, regardless of the platform can be updated in the database. It is an open, non-proprietary, and replicable system that has garnered international recognition for procurement reform.

U.S. policymakers: time to adopt the OCDS!

Over 22 countries have adopted the OCDS and similar e-procurement platforms, including Canada, the United Kingdom, South Korea, Ukraine, Moldova, Slovakia, Colombia, Mexico, Paraguay, and Uganda. Vietnam and Nepal have developed pilot programs, and stand ready to pursue full implementation in the near future.

The United States lacks a comprehensive data standard for procurement. We ought to consider fixing that by requiring the OCDS on pre-award activities, contractor reports, payments, and the whole procurement process.

An OCDS-based system in the United States would aid government agencies in rooting out waste, increase competitive bids, and provide U.S. citizens with greater insights into how their taxes are used on goods and services procured by the U.S. government.

Taxpayers should expect full transparency into the $1.8 trillion of their money that goes through federal procurement. The OCDS could be the mechanism to usher that expectation to reality.