Building smarter and better infrastructure in the U.S. through open contracting
Spending on public infrastructure this summer in the United States is “heating up” with several U.S. departments expected to announce new grants and programs worth billions of dollars. However, while spending is skyrocketing, the federal government still lacks the ability to manage and oversee it.
The White House’s Office of Management and Budget (OMB) released new guidance on how to improve reporting but it can be further strengthened by increasing coverage and making it more user-friendly as highlighted by the Government Accountability Office, Bipartisan Policy Center, and POGO.
More must be done to get infrastructure spending right from the outset. What’s wrong with infrastructure procurement is more fundamental than reporting, and goes to the heart of how infrastructure projects are planned and delivered and how contracts are awarded. These underlying pieces must be fixed to deliver better value to taxpayers.
The good news is that there are already examples of effective ways to better plan and spend money on infrastructure. Here are our top five recommendations for improving U.S. infrastructure spending:
- Focus on planning and vendor engagement. Right now, vendors in the U.S. often face barriers to accessing even basic information about upcoming contracting opportunities. By improving bid notifications and market outreach and research, more vendors will participate in the marketplace. This approach can increase competition and drive down costs.
For example, in Nuevo Leon, Mexico, the sharing of more and better open data for public works contracts led to increased competition and a rise in public trust. In Mexico City, better market research and vendor consultations meant that the city was able to secure a contract that will nearly double the reach of their bikeshare network, modernize the system, and increase usability – all at half the operating cost of the original contract. Mexico City is now scaling this approach for the renewal of its city bus infrastructure.
- Require better, more consistent award descriptions. Descriptions should have, at minimum, the following information: quantity of good or service, pricing per good service item, description of what the good or service is in detail including any unique project identifier number, and a description of what the good or service is to be used for beyond just a program number or name. Without this information, infrastructure projects can have bloated spending on items as small as gas or basic building components.
Improving award descriptions has led to better outcomes in the United Kingdom. Better award descriptions will lead to improving data quality by ensuring consistent application of data standards highlighted in the DATA Act, particularly for Award Description and Primary Place of Performance.
- Improve post-award and subcontracting reporting. This can help ensure that money is tracked in detail once it leaves the federal government, and can be accomplished by adding project IDs and standard subcontracting forms. We helped create standards for subcontracting already in use by the European Union today, which is helping track 520,000 public procurement notices per year, including many infrastructure projects. The recommended approach is assigning a project level identifier so that all contracts and subcontractors can be more easily identified. Identifiers can also help track that projects are being done on time and budget and in the right communities, because all project information can be seen in one place.
Right now, agencies are also able to take program-specific approaches for reporting. Implementing an open standard for post-award infrastructure projects for all agencies and anyone receiving money from a federal contract would also bolster transparency and accountability for federal funds.
- Add specific reporting requirements around spending goals such as sustainability, equity, and Made in America. Building in these requirements would help the government be able to measure its progress towards its broader spending targets and improve outcomes. For example thanks to procurement reforms, New Zealand is doing a better job reaching and contracting with indigenous businesses.
Fundamentally, all government procurement will need to be sustainable – and open. Government purchases are responsible for 15% of all greenhouse gas emissions. Our new toolkit on implementing Open and Sustainable Public Procurement highlights key goals and targets to address environmental, social and economic sustainability, including specific indicators and calculated worked examples for issues such as carbon and life-cycle costing and inclusion of women businesses.
- Make it easier to track beneficial ownership of companies. Anonymous shell companies — whose real, controlling beneficial owners may be hidden under layers of corporations — are vehicles for financial crime, and can obscure contractor performance records. (Three in four grand corruption cases involve anonymous shell companies, according to the World Bank.) Making ownership information more readily available and integrated into USAspending.gov would allow more efficient oversight of potential corruption through public contracting.
The U.S. has already begun planning for part of the trillions of dollars in upcoming infrastructure investments, but it’s not too late to get the best results possible by using better data, transparency, and collaboration.
