[kictanet] eGovernment for Development

[Alex Gakuru]

http://www.egov4dev.org/indonesiatender.htm

eTransparency Case Study No.8
More Transparent Tendering for Infrastructure
Development in Indonesia

More Transparent Tendering for Infrastructure
Development in Indonesia
 
Case Study Authors

Anonymous
 
Application

In 2001, the Department of Settlement and Regional
Infrastructure in Indonesia introduced an online
information system to support the process of
tendering.

 
Application Description

The Department of Settlement and Regional
Infrastructure is responsible for public
infrastructure in Indonesia (particularly transport,
water and housing infrastructure), with a budget of
more than US$100m annually, much of which is dispersed
through a system of tenders, bids and contracts.

 

The new information system provides information about
all aspects of the procurement process:

·      Details of projects to be tendered, including
their content, duration and budget allocation.

·      Tendering process details including dates,
value, details of the pre-qualification process and
information regarding the tender winner.

·      Contact details for the relevant procurement
officer that enable queries or inputs into the
process.

 

Armed with this information, citizens and citizen
groups could then identify cases where tendering
procedures have not been followed properly, or where
contractors with close relations to government have
received many contracts, or where infrastructural
deliverables have not been constructed.

 

Contractors themselves can also benefit from the
information provided by the system.  It helps them to
know what to bid for.  They can also use e-tendering
components within the system in order to submit their
bids online.  However, full e-procurement is not yet
possible because electronic documents are yet to be
given legal status in the Indonesian courts.  Thus all
key documents must still be handled in the
conventional manner.

 

There are no specific technical standards or
benchmarks for the transparency of tendering in
Indonesia, nor is there any law regarding freedom of
information.  Normal government regulations apply to
the actual tendering/procurement processes.

 
Role of ICT

The e-tendering system is Web-based, and made
available to citizens and businesses via the Internet
in Bahasa Indonesia (the national language).  The
system uses ASP for scripting, with My-SQL for the
underlying database.

 
Application Drivers/Purpose

President Suharto ruled Indonesia from 1965 until his
resignation in 1998.  His rule is typically seen as
autocratic and as fostering corruption.  The
e-tendering application was introduced as part of
post-Suharto reform in Indonesia.  One main focus of
this reform has been good governance, including an
attempt to address widespread corruption and to reduce
the costs of government.  Another has been more
balanced regional development, which has sought to
redress earlier distortions between the disadvantaged
Eastern and better-developed Western parts of the
country, and to devolve decision-making powers away
from a small Jakarta-based clique.  All elements came
together in the development of the
e-tendering/procurement system, which aims to improve
the transparency and efficiency and costs of
tendering/procurement.  A key driving force for the
application in practice is seen to be external
pressure from international donor organisations.

 
Stakeholders

Senior officials and staff of the Department of
Settlement and Regional Infrastructure are key
internal stakeholders for this new system. 
Consultants and businesses are stakeholders since
their approach to bidding has been affected.  Finally,
citizens and NGOs are stakeholders since they have a
general interest in improvements in both the
efficiency and effectiveness of government
infrastructural contracting.

 
Transparency and the Poor

There has been no direct support for transparency to
the poor, since the service is primarily targeted at
government-to-business links.  There is also little or
no ICT infrastructure in most poor communities,
especially outside Jakarta.

 
Impact: Costs and Benefits

Project costs are unknown.

 

The main system benefits seem to be:

a) Increased awareness about tendering processes among
some citizens.  There have been a few queries about
tenders from members of the public and NGOs.  This may
have a knock-on impact to make contractors and
government officials feel they are under greater
scrutiny than previously.  It may help to create some
groundswell of demand for more freedom of information
and greater transparency.

b) Benefits of reduced costs for contractors who wish
to participate in the bidding process.  Although this
has no direct transparency benefit, it may help
broaden the range of contractors who participate.  In
general, contractors have been supportive of the
system.

 

There is a perception that, before the system's
introduction, most tender winners had a close
relationship with government officials, whereas
perhaps 25% fewer do after system introduction.  What
is not clear is the extent to which this can be
attributed to the e-tendering system, or to broader
changes in the post-Suharto era.

 

Other benefits are, at present, more a potential than
a reality.  For example, there is still confusion
about the way in which evidence derived from the Web
site could be used in a legal context.  Thus, there
are no actual cases of the system having been used to
seek redress against possible wrongdoing in
procurement, and so there is – as yet – no clear way
in which this system can be used to move beyond mere
reporting to actual accountability and control of the
procurement process.

 

Government officials perceive that the system thus far
has had no significant impact on levels of corruption.
 It is still the norm that contractors would find
themselves paying 20-40% of the overall tender value
to members of the tender committee and, in some cases,
to higher-level officials who have oversight of the
committee's work.  Some of this corruption can be
attributed to greed, but much can be attributed to
need: the need to recover money paid out to get
project budgets agreed in the first place (see below),
and the need to supplement low public sector wages. 
Breaking this cycle of need, and institutionalised
processes of corruption set in place during the
Suharto era, is not going to be easy.

 

The system ought to make the tendering process easier
and quicker for government officials (indeed, this
benefit is identified by the Department's own
evaluation).  However, informal feedback from
government officials is not particularly positive. 
Those procurement officials who have computer
expertise feel that the e-tendering system is creating
additional work for them, yet for no additional
income.  They prefer to use their computing skills and
what should be their government work time to earn
money undertaking unofficial outside consultancy work;
they then pay a small amount to more junior government
staff to do the tendering data entry for them. 
Procurement officials without computer expertise,
despite their training, feel the e-tendering system is
something they do not understand.  In both cases the
result – coupled with general absence of a culture of
transparency – has meant officials have little to do
with the system, getting more junior staff to actually
interact with it.  This has tended to undermine both
the perceived value and usage of the system.

 
Evaluation: Failure or Success?

The system won first prize in 2002 in the e-government
category of a competition held by the Indonesian
magazine "Warta Ekonomi".  A formal evaluation of the
project has been conducted by the Department of
Settlement and Regional Infrastructure.  On the
technical side, the main concerns arising from the
evaluation were access difficulties, particularly
caused by ICT infrastructural constraints.  On the
non-technical side, contractors supported the system
but wanted full e-procurement to be introduced. 
Issues identified by independent evaluations are
described above in the Impact section and below in the
Challenges section.  Overall, the e-tendering system
at present can be given the category of partial
success/partial failure overall and as largely
unsuccessful so far in addressing corruption, though
the Department does appear committed to trying to
improve the system.

 

One additional concern remains the fact that, by
turning the spotlight on tendering, the system may be
reducing the attention paid to a major source of
corruption: the budgeting process.  In order to get
local projects agreed for funding, money passes
upwards to bribe both executive and legislative
officials at first provincial and then national level.
 That money has then somehow to be recouped at the
local level, which may explain the lack of progress to
date against corruption in tendering and procurement.

 
Enablers/Critical Success Factors

1.      Political support.  Although this
e-transparency system has met with indifference or
resistance from a number of middle-level officials, it
has been pushed along by support from a number of key
groups – senior officials in the Department of
Settlement and Regional Infrastructure who needed to
show support for the good governance agenda; public
groups who lobby for greater transparency; and some
fraction of contractors who felt their business
opportunities would be enhanced by a more transparent
system.

2.      ICT awareness.  It only needed a small cadre
of staff in the Department to be aware of the
potential role of ICTs in supporting transparency to
help get the ball rolling on this type of
e-transparency project.

 
Constraints/Challenges

1.      Lack of legal infrastructure.  This
e-transparency system is limited in a number of ways
by legal constraints.  The operation of the
e-tendering system is constrained by the absence of
"cyber-laws" that would recognise the legitimacy of
electronic documents and electronic transactions.  The
transparency aspects of the system are constrained by
the lack of freedom of information and transparency
laws that could give legal 'teeth' to attempts to use
the system to hold government officials to account.

2.      Staff resistance.  This arises from a variety
of causes.  Some officials are resentful or fearful
about the potential loss of bribe income the system
could entail; they tend to manipulate what data goes
into the system to their own advantage.  Others lack
the skills to use the system and so tend to ignore it.
 Others still are resentful of what they see as an
additional workload without any commensurate
additional reward; as noted above, they pay juniors to
do that work for them.

3.      Lack of broader engagement/awareness.  Even as
it currently stands, the e-tendering system could be
used by citizen groups and other NGOs to maintain
pressure on government to deliver on infrastructural
commitments, and to reduce corruption in the tendering
process.  NGOs and academic groups could also help
spread awareness about the system, and disseminate
information drawn from the system.  As yet, though,
few NGOs or academic groups are engaged or involved
with the e-tendering system.

 
Recommendations

1.      Involve citizen groups.  Although citizens as
individuals can play a role in transparency, that role
is better taken on by representative groups such as
NGOs or academic organisations.  Such groups should be
involved in both the design and implementation of
e-transparency systems if those systems are credibly
to affect the accountability of government officials.

2.      Don't just focus on technical skills.  Lack of
technical skills is still an issue for this
e-transparency system, both inside and outside
government.  However, the 'transparency' aspects of
the system are more important than that 'e' aspects,
and training and change management should thus also
focus on introducing more transparent procedures,
systems and culture into government.

3.      Don't just focus on digital ICTs.  Digital
ICTs only penetrate so far.  To really reach out to a
developing country's citizens, e-transparency systems
must either a) make use of more pervasive technologies
such as radio or television, and/or b) make active use
of ICT-owning intermediaries who can then trickle-down
information and services by non-ICT means.

 
Further Information

http://www.kimpraswil.go.id/publik/proyek/semieproc/index.asp

 
Case Details

Case Editor: Richard Heeks.

Author Data Sources/Role: Web Site, Documents and
Interviews; No Direct Role.

Centrality of Transparency: Mixed.  Type: Transaction.
 Audience: External.  Content: Contractual.  Sector:
Economic Services.  Outcome: Largely Unsuccessful.

Region: South-East Asia.  Start Date: 2001. 
Submission Date: December 2003.

The "eGovernment for Development Information Exchange"
project is coordinated by the University of
Manchester's Institute for Development Policy and
Management.  The project is funded and managed by the
Commonwealth Telecommunications Organisation as part
of the UK Department for International Development's
"Building Digital Opportunities" programme.
 


       
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