Study on Corruption within the Public Procurement System in Kyrgyzstan


Economy and Development 06.12.2021

ЦАБ_коррупция в системе госзакупок.pdf

Press Release:

“Study on Corruption within the Public Procurement System in Kyrgyzstan”

Central Asia Barometer, with the financial support of the Soros-Kyrgyzstan Foundation, recently conducted an applied research project which focused on corruption within the public procurement system of the Kyrgyz Republic. 

The purpose of the project was to identify conditions that are contributing to corruption in the Kyrgyz public procurement system during its initial stages, by conducting anonymous in-depth interviews with individuals who have interacted directly with this system. In other words, our research focused on understanding what local conditions contribute the most to corruption in the initial stages of the public procurement process, which is conducted via the system’s online Public Procurement Portal (PPP). We also sought to offer recommendations on improving this portal considering local context and feedback from our participants. This research is important and relevant given that the system’s portal is currently under development and is actively undergoing changes. Thus, there is a need to collect feedback from its users to further improve the work being done on the PPP. 

To collect data during our research, we conducted in-depth anonymous interviews with participants of the public procurement process and performed a qualitative analysis to answer our main research question – what conditions contribute the most to corruption during the initial stages of the public procurement process, which is conducted via the PPP? This method of data collection was considered to be the most appropriate, given the sensitive nature of the topic. 

It is clear from our research that corruption in the public procurement system exists, and on a significant scale. The results of our research have allowed us to identify four main corruption-prone weaknesses of the Kyrgyz Republic’s PPP, as well as provide practical recommendations for its improvement.

Weakness No. 1: The portal cannot effectively prevent the use of tender documents for corrupt purposes. 

We found that the most common method of artificially restricting competition on the PPP – in order to make the supplier with whom there is collusion the winning bidder – is through the use of tender documents. There are several different ways in which these documents are used to artificially exclude some suppliers from the bidding process: 

  • Unrealistic deadlines 
  • Excessive demands for required experience and past scope of work
  • Price manipulation
  • Excessive detail in terms of specifications
  • Excessive requirements (bank guarantees, letters from manufacturers, unnecessary references, superfluous balance sheets and licenses, etc.)
  • The sudden cancellation of tenders (when the supplier with whom there is collusion is not the winning bidder)

We have developed several recommendations in terms of how the PPP can be improved to address this issue so that it ensures that there is a level playing field for competitors:  

  • Implement the red flag system, developed by Transparency International, within the PPP, to monitor the legality of tenders
  • Foster a monitoring community and culture amongst users
  • Integrate the PPP’s electronic appeal mechanism and its mechanism for clarification and amendment of bidding documents – this way, bidders may challenge excessive or biased requirements during the pre-competition stage and thus are more likely to file complaints and filter out corruption in the system

Weakness No. 2: The portal does not effectively provide its users with information concerning the public procurement process.

Through our research, we also found that the portal does not provide its users with quick and easy access to information on the public procurement process. In addition to this, our respondents pointed out that another issue they face is the low qualification of members of procuring entities, which they say is especially evident in these entities’ illiterate preparation of tender procurement documents. Basic standards for drafting these documents are often not followed – not always as a result of ill-intent, but of ignorance. This opens the door for serious risks of corruption, as then contractors have to personally contact procuring entities for clarification on these documents, given that the portal’s function for this clarification is often not utilized. 

Representatives of procuring organizations also noted that in general the level of awareness of the portal and the public procurement process among contractors is also quite low. Given that the PPP is relatively new, it takes some time to become familiar with the system. The portal should provide its users with the necessary information to navigate the site, as well as the general public procurement process, and have the necessary functionality to be used efficiently by any participant. There are a few main issues we have identified which limit the accessibility of the portal:

  • The PPP does not have intuitive navigation
  • There is not a convenient online support system or guidance on the webpage detailing how to use the portal 
  • There is a lack of text and video training materials available for the various participants in the public procurement process

There are several ways in which the PPP can be improved, to educate its users and increase its accessibility. This will limit opportunities for corruption. Mainly, we recommend to: 

  • Integrate an effective reference and support system in the PPP in the form of a call center, online chat, guides for participants, and a Q&A section
  • Develop and include both text and video training materials on all types and stages of public procurement, categorized for the various participants in the process on the portal
  • Make training on public procurement accessible for all participants
  • Ensure that members of civil society conducting research projects do not have an accusatory tone towards participants in public procurement and that they differentiate between corrupt practices resulting from a lack of awareness and qualification and corruption resulting from malicious intent 

Weakness No. 3: The portal does not effectively engage contractors in tenders.

Our interviews indicated that tenders often lack a sufficient number of bidders. This is especially a problem for smaller, rural procuring organizations. This shortage of contractors responding to tenders poses a serious corruption risk for several reasons:

  • Promotes direct contact between procuring entities and contractors, with the former searching themselves for the latter to participate in their tenders 
  • Promotes pre-collision and encourages long-term relationships with an individual contractor with no competition
  • Reduces transparency

We have developed several recommendations in terms of how the PPP can be improved to attract as many contractors as possible to participate in tenders: 

  • Introduce a tender filtering system, so that contractors can easily find relevant tenders
  • Create an email notification system to notify contractors when new, relevant tenders have been posted 
  • Legislate the right for procuring agencies to outsource some purchases 
  • Make improvements to the electronic Tandoo catalogue (linked to the PPP) through which procurement entities can purchase goods and services without bidding, and conduct information campaigns to attract suppliers

Weakness No. 4: The portal does not allow participants in the public procurement process to leave structured feedback about tenders, procuring entities, contractors, etc. which could be used to develop a rating system.

Other countries, such as Ukraine, have implemented a rating and points system to help determine the winners of bids. Creating such a system for both contractors and procuring entities may prove to be very useful for Kyrgyzstan’s PPP. Currently, there is an “Unreliable Suppliers” section on the portal, but this page does not account for suppliers with more nuanced issues. For example, a supplier may formally meet all of the requirements of a tender (and thus not be published on this page) but provide sub-par goods and/or services. 

A glaring issue with the portal is that there is no such page for procuring entities at all. We recommend the creation of a point-rating feedback system for procuring entities as well. This will benefit contractors, who want to work with reliable partners and procuring entities to motivate them to improve their ratings. It will also allow contractors to voice complaints and negative experiences which they may not have been inclined to share without an online feedback system. 

The results of this project have clearly shown that corruption exists in the Kyrgyz Public Procurement Portal on a significant scale. This report also includes direct quotes from our interviewees, which provide further detail and context.