Open Contracting: Towards a smarter way of doing business

Title: Open Contracting: Towards a smarter way of doing business
Publication: New Europe / The European Political Newspaper
Date: 17 February 2013
Author: Dr. Sanjay Pradhan

We live in unsettling times, where the effects of a persistent global financial crisis and corporate and government scandals call into question the viability of capitalism as we know it. The private sector is toofocused on shortterm profit and pays insufficient consideration to broader societal issues.

It is therefore understandable that public trustin business has fallen substantially since 2008. As shown by the 2011European Trust & Purpose survey, “trust in multinationals has decreased by 36% over the past two years and trust in CEOs has decreased by almost 50% during the same time.“

Yet we do know that trust is one of the most important commodities that any organization – governmental or private – can have.But the interests of business and society do not have to be mutually exclusive. We need to reinforce innovative approaches whereby businessgenerates – as a core value proposition – economic value including by tackling society’s major needs and challenges. Business is part of the problem, but also a vital part of the solution. One innovative way torestore some of that trust is to strengthen transparency and accounta- bility in dealings between the public and private sectors. In this time of deep financial constraints, it is even more important that public resources be utilized as effectively and efficiently as possible.

Public-privatecontracts represent an estimated US $9.5 trillion each year. Failingsin public contracting –corruption, opaque contracting processes andpoor oversight of contract implementation—are undermining development outcomes as well as the legitimacy of our institutions.Open Contracting is a new collaborative effort focused on tacklingthese issues through enhanced disclosure and monitoring of contracts. Supported by a growing list of government, civil society and donorpartners, including the World Bank Institute, Open Contracting is building a global movement to establish contract disclosure as thenorm and ensure effective capacity across a wide set of actors—government, private sector and citizens—to monitor contracts. Signs of progress are already evident at global and country levels.

Governmentagencies from Brazil to Timor Leste to the United Kingdom are ope-ning up contract documents. There are Open Contracting coalitionsin 21 countries, from Mongolia to Ghana, working in a wide range of projects, from monitoring the construction of schools to advocatingfor improved procedures for the award of natural resource concessions. The private sector is already an essential part of this work and I encourage more companies and industry associations to play a leadershiprole. While openness may seem somewhat unsettling for some at first, ultimately, environments that are more open lead to more stable investments and spur competition. Open Contracting initiatives are directly connected to and can complement many similar efforts in support of transparency, clean practices and the pursuit of value for money. Weneed to make use of available platforms for engagement that can bringtogether industry, government and civil society.

The World Forum for Ethics in Business (WFEB), where I spoke recently, is one such platform. One of the unique valuepropositions of the WFEB is the promotion of a frontal focus on values and ethics at the level of the individual and corporate organizational cultures, an approach that is neededas the foundation of this new paradigm for business. The time is right for a new approach to capitalism that is imbued witha social purpose and is founded on strong ethical values. By joining the broader movement towards increased participation and transparency and by making commitments to such efforts as Open Contracting, the public and private sectors will be reinforcing their common long terminterests. If we join forces to level the playing field, decrease corruptionand improve the business environment, we can ensure value for money, improve the delivery of basic services, while promoting socially inclusive economic growth, sustainable development and ultimately a better world for all