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Charles estimates that government contracts with private firms account for about 15% of the global economy or some $9 trillion a year. He argues that routinely publishing these contracts online is a no-brainer, good for citizens, governments, and the private sector. He also reviews (and easily dispatches) two arguments against such disclosure. We close by discussing some simple mechanisms for rapidly expanding disclosure efforts already underway in a handful of jurisdictions, including Miami-Dade County, Florida, in the United States.
Charles says that the strongest argument for publication of government contracts is also the most obvious: you bought it. Citizens pay for the things that governments buy, yet, “the contracts that say who is going to provide what services, where, when, and how; those contracts aren’t public so citizens don’t know what they’re paying for.”
Failure to publish government contracts also means that citizens have a hard time discovering if there’s a disparity between what’s contracted (and paid) for and what’s actually delivered.
Charles says publishing government contracts would also improve the quality of government decision-making, through more realistic budgeting.
For example, he says, imagine a minister of finance meeting with a minister of transport seeking funding for construction of a bridge. The transport minister may underestimate the actual costs to get it included in the budget, knowing that once construction is underway the project will likely proceed, cost-overruns notwithstanding. A finance minister with access to previous contracts for similar bridges would be in a better position to check the transport minister’s estimates.
Publishing government contracts would also enable governments to learn from the successes and mistakes of others, he says.
“Imagine that three other people have built a bridge like this somewhere in the world in the last five years. One of those bridges has collapsed, one came in over cost, and one was absolutely wonderful. You go back to the contract and you can see if there’s a difference…between those three contracts and then you can learn to write a better contract.”
What about the administrative burden of publishing all those contracts? Charles suggests that because nearly all contracts are in electronic form, the burden is relatively small and that “the real reason this isn’t done everywhere is inertia.” Disclosure experiments underway in diverse settings suggest that the burden is far from prohibitive. If it is burdensome, Charles says, governments could set a floor for contracts requiring disclosure, say $1 million or more, though he doubts that would be necessary.
The second objection sometimes raised involves the potential for disclosure of proprietary information and trade secrets. Charles says that there isn’t typically much of this in government contracts. As Charles says, “an asphalt road is an asphalt road” (I did have to ask him to translate that from the original British).
Charles says he has discussed this with contractors who do a lot of government business and “most of them aren’t terribly worried” about the issue, in part because most contractors already anticipate that their contracts could be published due to Freedom of Information requests in the United States or similar processes in other jurisdictions.
Where there are genuine concerns, information can be redacted if necessary, though this can increase the administrative burden and reduce the value of contract disclosure. Charles urges that the bar for withholding information in this manner should be set very high.
We close by discussing ways for greatly accelerating the incipient movement for contract disclosure. It’s pretty simple, he says: the most important step is to have a government say, “we’re going to do this.” One possibility for a dramatic shift would be a G-20 statement endorsing the idea. A small secretariat to provide technical advice and perhaps track which governments are disclosing their contracts could also be useful. Charles says it would require just a few people and could be easily set up within an existing institution (he mentions the World Bank as one possibility).
Listen to the Wonkcast to hear the full conversation, including Charles’s examples of how various jurisdictions are doing this now. Read the paper to learn more and to see examples of disclosed government contracts.
My thanks to Alexandra Gordon for her production assistance on the Wonkcast recording and Beth Schwanke for a draft of this blog post.