Open Procurement: The Vaccine Against Corruption and Skepticism

* This article was written by Oscar Hernández and Camilo Cetina.

The secrecy in the negotiations between governments and the pharmaceutical industry around COVID-19 vaccine supply contracts and the strategic importance of vaccines for recovery have been a source of controversy in Latin America. According to the Peruvian NGO Ojo Público, at least 13 Latin American countries changed their laws between September 2020 and February 2021 to purchase the vaccine, in order to guarantee economic indemnity and confidentiality for the pharmaceutical companies that manufactured the vaccines.

The controversy over secrecy in vaccine public procurement contracts reached the judiciary in Colombia. On August 10, the State Council declared inadmissible a lawsuit filed by pharmaceutical companies to prevent information on the COVID-19 vaccine purchase contracts from being published. The contracts were reportedly attached to the judgment “by mistake.”. According to government of Colombia, the disclosure of contracts puts the supply of vaccines at risk by violating confidentiality agreements.

Contrary to speculation, transparency in public vaccine procurement is a minimum prerequisite to ensure the vaccination plan’s effectiveness. In particular, open data in relation to such purchases would improve the planning, implementation, monitoring and cost structuring in national vaccination plans.

First, it is not true that the publication of contract-related information jeopardizes the vaccination plan or violates trade secrets. On the contrary, secrecy encourages oligopolistic behaviors that limit access to vaccines and limit public scrutiny of government spending. The evidence is notorious. The prices and conditions for COVID vaccine supply are no secret in places like United States, Australia and the European Union.  The development and procurement of vaccines has in most cases been funded with taxpayer money. A handful of suppliers dominate a market that, according to some estimates exceeds USD 9 billion , coming from public procurement. Thus, it is important for taxpayers to know about supply conditions as transparently as possible.

Consequently, this information has been made public in several countries. Precisely in early August a rise in vaccine prices paid by the European Union was reported, and at the same time, UNICEF published a dashboard on the prices being paid for vaccines. It is in the public interest to know if the prices paid are competitive, if vaccine delivery schedules are being met, and what controls are in place to avoid payment of surcharges.

Second, the pandemic will not end with mass vaccination. The proliferation of new COVID-19 strains suggests that new vaccine purchases will be needed in months and years to come. In that regard, transparency, open data and accountability are not merely aesthetic issues in the way countries manage the pandemic. Without these measures, the procurement and distribution of vaccines will be more vulnerable to corruption and abuse of power. Countries such as Brazil have already faced serious allegations of bribery surrounding these contracts. Globally, emergency purchases, made with reduced oversight mechanisms, have been more vulnerable to abuse, embezzlement and corruption. A fundamental mechanism to identify cases of corruption or anticipate these risks is precisely verifying the price paid and under what delivery and quality conditions the good or service is purchased.

Additionally, if the possibility opens up for the private sector, sub-national governments or multilateral entities to purchase vaccines, the effectiveness of this measure is enhanced if all these sectors can access the same information and data when deciding how to allocate their scarce resources, as well as efficiently structure supply contracts under competitive conditions for the entire market.

A third reason to advocate for greater openness in procurement is to regain citizen trust in government actions to fight the pandemic. Secrecy could negatively impact public perceptions of governments’ abilities to carry out these tasks and thus the effectiveness of the vaccination plan. Citizens have legitimate concerns about the vaccination strategy. Many want to understand what vaccines are being purchased, what guarantees are in place for their safety, how and when each brand will be distributed and whether there are reliable and effective distribution channels. All this information is organized and made public in the structuring of public procurement under strict openness and efficiency standards.

When executing public spending, opacity is always a recipe for failure. Countries such as Colombia, Chile and Paraguay have made significant strides in terms of public procurement transparency. Data openness and citizen feedback have helped boost competitiveness throughout the processes, avoid corruption risks and improve the results of critical services such as public works. Thanks to data analytics, oversight bodies such as State Auditor in Colombia as well as the Comptroller’s Officess de in Colombia and Brazil have detected corruption networks in a timely manner. It makes no sense to let the governments’ recurrent public purchase of vaccines become another target of corruption networks, and only then recognize the importance of transparency and open data in the management of the COVID-19 crisis.

(*) Oscar Hernández is the Open Contracting Partnership (OCP) Regional Manager in Latin America. From this position, he works with teams from governments, civil society, journalists and academia in the region to improve the quality of public services through open procurement strategies. Prior to joining OCP, he was an Innovation Associate at the Government Performance Lab at Harvard University School of Government, where he led results-based procurement projects with U.S. cities. He has also worked with the Colombian Ministry of Defense and MIT’s Poverty Action Lab (J-PAL). Oscar holds a Master's Degree in Public Policy from Princeton University (USA). He is an economist and philosopher from the Universidad de los Andes (Colombia).