Zindex

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zIndex - measure of transparency in public procurement

Summary

The zIndex.cz project aims to rate economic subjects according to their practice in public procurement (PP), these are typically ministries, municipalities but also semi-state firms. zIndex combines data on PP from publicly available sources and rates purchases of each institution by set of 10 objective criteria. The criteria are methodologically founded in various PP best practice guidelines. In short zIndex measures distance of institution's performance from the best practice ideal, and might be considered an indicator of potential corruption. Effectively, the project should provide feedback for the institutions, and understandable yet well founded messages to voter's. As of February 2011, the project only produces results in the Czech Republic, and the possibility of using it abroad is being considered.

What exactly does zIndex rate?

The rating of a particular institution is given by a combination of 10 components. Each component reflects an aspect of institution's public procurement over past 4 years. The index is thus suitable for comparing institutions, as well as monitoring their development over time. The components monitor more or less the whole PP process, which can be divided into three categories:

1. Openess (Are PPs obtainable for various suppliers?)
2. Competition (Are the suppliers really competing for PPs?)
3. Accountability (Can the public track where money went for PPs?)

The following is a list of individual components. Some of them are relatively complex and will not be explained at length ( see documentation in Czech available at zIndex).

Openess:

1. PP share on total spending on purchases - punishes avoidance of PP (through portioning), or extending contracts beyond their limits.
2. PP openess - rates according to openness of legal regimes used for PP
3. Elementary violations of transparency - punishes failure to announce PPs or their price

Competition:

1. Winner's concentration - punishes repetitive PP awarding to one or few suppliers
2. Bidder count - measures average number of firms competing for PP (a single bidder is hardly unusual!)
3. Deadlines - punishes setting unrealistically close deadlines for placing bids

Accountability:

1. Legal violations - measures number of errorneous PPs detected by regulatory office
2. Supplier rating - a supplier transparency measure composed of several subindicators
3. Data quality - counts mistakes in crucial published data (mainly company identification, preventing traceability)
4. Information provision - measures time and quality of an institution's response to information inquiries

What are the project's outputs?

The zIndex, which is a 1 to 100 scale rating of institutions, is the flagship output of whole project. It can be used for comparison of similar institutions according their distance from PP best practice. This methodologically sound yet popular approach draws attention to the soundness of public spending and may induce democratic pressure to improve PP practices and guidelines.

The main contribution of the zIndex lays in it's capacity to make sense of somewhat messy and largely disjointed data on public spending. Aside from the zIndex, select underlying data is published as well. This includes the 10 components as well as individual PP cases. This should help to provide feedback to the institutions being rated themselves (through comparison with others), as well as enhance practical policy debates (through providing new, solid data).

Status of the project

Currently, the project has finished gathering and checking data on roughly 4500 institutions in the Czech Republic, and the results are gradually being made public (as of February 2011). This was made possible through enthusiastic research by young economists at Charles University. Today, the project is working on its professionalization and getting greater funding in order to continue the cutting-edge, yet very demanding, research they do. After the publication of the first results (Jan 2011) some Czech stakeholders have been asked for financial support. Meanwhile, the possibility of expanding the project abroad are beingexamined.

How the data is gathered

The majority of data, including broad information about roughly 55.000 public tenders over the years 2006-2011, was been collected from several public data sources and combined into single database. Self-made software was used, combining various web-crawling and data cleaning techniques together with manual quality checks.

The resulting dataset is quite unique (even within the borders of the Czech Republic), and it is used in zIndex.cz rating practice, as well as in economic research.

External Links

The academic paper with original proposition of rating methodology:

• Chvalkovská, J., Skuhrovec, J. (2010): Measuring transparency in public spending: Case of Czech Public e-Procurement Information System, IES Working Paper 11/2010

Project website with technical documentation:

• Zindex.cz (in Czech only)

The best practice guides

key sources for rating methodology:

• OECD Recommendation on Enhancing Integrity in Public Procurement (EN) OECD, 2008
• Public Procurement in the European Union: Key EC Documents (EN) EU, 2010
• Integrity in Public Procurement OECD (2007)
• Procurring ICT's International Chamber of Commerce, 2004
• Procurement Best Practice Guidance OGC, United Kingdom government.
• European Code of Best Practices Facilitating Access by SME’s to Public Procurement Contract European commission (2008)