The Anti-Corruption and Open Government category looks at initiatives that promote open and accountable government and curb corruption.
Finalist of the World Justice Challenge 2022, Datanomix project allows auditors and NGOs to analyze procurement proposals, with particular attention to high-risk red-flag contracts. This helps to prevent illegal cases at the planning stage, thereby saving taxpayers money.
The Problem
18,373 procuring entities conclude more than 1.5 million public procurement contracts in Kazakhstan annually. The sheer volume of contracts makes it impossible for relevant authorities to monitor for compliance and efficiency. Before the introduction of Datanomix’s project, the monitoring process was carried out manually. As a result, a large share of non-competitive overpriced purchases had been overlooked by auditors. The annual losses to the state budget were estimated to be $470 million.
The Approach
The Datanomix team developed an information system that automatically analyzes all stages of the public procurement process, including three million items in the procurement plans, 1.5 million contracts, and 700,000 lots. The system identifies risky planning processes, tenders, and contracts, narrowing the sample for auditors and focusing their attention from three million items to 130,000 items with the highest risks of non-efficient spending. The analytical system has been integrated with the treasury, the register of legal entities, the register of state enterprises, the database for certificates of origin of goods, and other registers to boost the analytical capabilities of the auditors.
The Datanomix team has developed a methodology of 43 risks at all stages, from planning to contract execution. One example is overpricing in single-source procurements. Datanomix algorithms analyze the median price for each specific product during the year and identify price anomalies. Then, auditors analyze these anomalies and take necessary actions to adjust the price and change the procurement method to a competitive one.
The Impact
- The analytical system has automatically analyzed 2,115,344 items in the procurement plans and 1,159,639 contracts worth over US$ 14 billion.
- 132,929 items with risk factors have been identified.
- The Committee of the Internal Public Audit reported that it identified US$ 305 million in financial violations.
- Almost 70% of red flags were identified and prevented at the planning stage.
- 1,685 procurement officers were brought to disciplinary responsibility.
- 190 cases were transferred to law enforcement agencies.
- Over US$ 86 million of taxpayer's money has been saved.
The Future
Datanomix will upgrade the analytical tool with a CRM system for NGOs to be able to analyze risky procurements and automatically generate letters to procuring entities and control agencies to follow due process. There are already ten Kazakh NGOs ready to establish a platform of interested parties in Kazakhstan.
Source: worldjusticeproject.org