Cost of building a school place in Kazakhstan for 2021-2022
And the main, most serious problem of social order and progress is… the problem of having the rules obeyed or preventing cheating. As far as I can see there is no intellectual solution of that problem. No social machinery of “sanctions” will keep the game from breaking up in a quarrel, or a fight (the game of being a society can rarely dissolve!) unless the participants have an irrational preference to having it go on even when they seem individually to get worst of it. Or else the society must me maintained by force, from without- for a dictator is not a member of the society he rules- and then it is questionable whether it can be called a society in moral sense.
Frank H, Knight, Intellectual confusion of Morals and Economics
The Public Foundation “Digital Society” carried out independent research regarding the efficiency of public procurements for construction and installation works specifically, for the construction of schools in the Republic of Kazakhstan for 2021 and 9 months of 2022.
For a certain period over 200 public tenders for construction of new high schools in all regions and three cities of state importance were analyzed using the public data of the state procurement website of the Republic of Kazakhstan.
Based on the results of the analytical studies, ratings of the efficiency of spending state budget funds by akimats (regional/city authorities), a rating of the competitiveness of procurement organized by akimats, a rating of contractors – recipients of the ten largest state orders for the construction of new schools for 2021 and the first 9 months of 2022 were compiled.
We believe that the effectiveness of school construction through the public procurement system should be under the watchful eye of civil society; a responsible state bureaucratic apparatus represented by civil servants should pursue an uncompromising policy of transparency and anti-corruption in public procurement of work on the construction of new schools. All these requirements for government measures to combat corruption in public procurement and the role of public control in this process are described in detail and clearly in the UN Convention against Corruption, which was ratified by the Law of the Republic of Kazakhstan dated May 4, 2008 No. 31-IV.
PUBLIC PROCUREMENT FOR THE CONSTRUCTION OF NEW SCHOOLS IN 2021
In the message to the people of Kazakhstan from September 1, 2021, by President Kassym-Jomart Tokayev to deputies, senators, and members of the Government of Kazakhstan, gave a mandate to the state to build 1000 new schools in Kazakhstan in the next four years.
Askhat Aimagambetov, Minister of Education and Science, later said, the incentive for such a strategic plan in the area of secondary education was needed to create one million additional places for pupils by 2025 in relation to the current total number of pupils places due to urbanization and the growing birth rate in Kazakhstan. The Minister went on to say that 200 schools are planned to be launched as early as 2021. Four mechanisms will be used in cooperation with akimats: public-private partnerships, development of a network of private schools, targeted construction from the state budget, and construction of schools based on pre-engineered (rapidly buildable module) structures.
After a month this trillion-tenge construction project which signifies building of 1000 schools in five calendar years has entered the national project “Qualitative education “the Educated nation” accepted by the Decision of the Government of the Republic of Kazakhstan from October 12, 2021 No. 726 .
In the budget for the targeted construction of 1,000 new schools, starting from 2021, a total amount of 972 billion tenge is planned, of which 183.4 billion tenge is the funds of the republican budget, and 788.8 billion tenge is the funds of the local budget, that is, regional akimats and cities of republican significance of Kazakhstan.
Funds of local government amounts to 81% of total budget of target school construction, therefore orders for construction of schools come from the departments of public procurement of local authorities: Akimats of regions and cities of republican value of Kazakhstan (Almaty, Astana, Shymkent).
The market value for pupil’s place in school construction
To calculate the real cost per pupil place in situations with the lowest corruption risks, we recommend using the information from open sources on construction projects for secondary schools, which are built by private construction companies, where the customers are private sponsors who are not interested in artificial overpricing, and the contractors are laying down a reasonable margin.
The construction of a lyceum for 1,200 students in Almaty, donated to the city by the family of philanthropist and businessman Kenes Rakishev in 2017, is known. The land and external engineering networks are a contribution from the Almaty city akimat. The school was built by a private construction company in 2016 and was ready by 2017. The estimated turnkey cost of the lyceum, where educational equipment, furniture, canteen, and other school equipment were purchased in addition to the construction of the building, was 1.83 billion tenge . To bring these figures to the prices of 2021, let’s adjust them in proportion to the growth of the dollar exchange rate in tenge since 2016, because mainly all building materials were imported. Even local manufacturers of construction materials use mostly imported components to produce the finished product. According to the history of rise in the dollar exchange rate to tenge, compared to 2016, in 2021 it was 22%, and in 2022 – 35%.
Hence, a similar project for the construction of a lyceum would cost 2.23 billion tenge in 2021 and 2.47 billion tenge in 2022. The newly built lyceum is designed for 1,200 students, so the cost per student place is 1.86 million tenge in 2021 and 2.06 million tenge in 2022.
The next source of information is an interview of Ayan Zikirin, Director of Business Development BI Construction & Engineering, to the Internet publication www.capital.kz . In an article published on the website of on April 9, 2021, he reported on the following data on the cost of construction of a private school BINOM, owned by BI Group. The cost of the construction of the school for 2,000 pupils was 7.5 billion tenge, of which: 5,7 billion tenge – construction of the building, 1,3 billion, tenge – technological equipment, 350 million tenge – copyright and technical supervision, 150 million tenge – library fund. The project has passed state expertise, the cost per square meter was 260 thousand tenge, which is comparable to the prices for the construction of typical schools.
From this we can conclude that the cost of a pupil place in a fully staffed and equipped school according to the highest standards in the Republic of Kazakhstan (NIS standards) is 3.75 million tenge per pupil. To determine the market value of the order for the construction of a school for 2,000 people according to NIS standards, we need to add a 30% profit of the contractor’s construction company. Thus, the market value of the pupil place of a school built according to NIS standards should be 4.88 million tenge as of 2021 and, respectively, 5.41 million tenge in 2022, The average increase in the cost of building materials in 2022 compared to 2021 was 11% (in accordance with the increase in the value of the dollar against tenge).
Further, Ayan Zikirin explains the concept of a fully staffed and equipped school according to NIS standards. This school should have expanded laboratories, a cinema hall, game rooms, smart classrooms, a 3D printer for creative experiments, robotics classrooms. The school’s library provides laptops and interactive desks, and on the territory of the school there are greenhouses and naturalistic zones, gazebos, work-out and sports grounds. Children study in accordance with the programs that are the integration of Kazakhstan and advanced international educational systems of Finland, Great Britain, South Korea.
Thus, we have two estimates of the cost of one pupil place in the construction and commissioning of schools at the expense of private (non-state financing) in Kazakhstan on the basis of open sources in 2021. The results are shown in the following table.
|The cost of one pupil place in a fully equipped school||School type||Sources|
|KZT 1.86 million (in.) 2021 KZT2.06 million (in.) 2022||A typical lyceum for 1200 pupils in the city of Almaty, built with private money and donated to the municipality of the city.|
The Lyceum is in the status of a state lyceum on the balance sheet of Almaty with free education but was built by a private company with charitable funds of the Rakishev family.
|Website of the Rakishev family’s Saby Charitable Foundation |
|KZT4.88 million (in.)2021 г KZT5.41 million (in.)2022 г||Private school for 2000 students, meeting the NIS standards (the highest level of educational standards of the Republic of Kazakhstan)||Interview with a representative of the investor of the school  Deputy Prime Minister Roman Sklyar’s response to the deputy’s inquiry |
Now let’s look at the economics of state funding for school construction.
The analysis of the data of the portal of public procurement http://www.goszakup.kz on concluded contracts of construction and installation works for construction of new public schools in 2021 demonstrated the following.
In terms of the total cost of the budget, the greatest number of tenders was held for targeting the construction of new schools in Almaty region (construction and installation works), where the cost per pupil place ranges from 1.69 million tenge to 11.68 million tenge. We will consider two completed tenders 2021 in Almaty region:
1. Tender № 5963484-1 for construction and installation works on the object “Construction of school for 1200 places in 8 micro-district of South-West residential district of Taldykorgan, Almaty region. The winner of the tender LLP Zhondeu-Kurylys with the price of 2.031 million tenge, according to the protocol of the tender commission from July 28, 2021 year;
2. Tender № 6379521-1 for construction and installation works for project “Construction of school for 80 places with a mini-centre for 25 places in Topolevka village of Sarkand district, Almaty region”. According to the protocol of the tender commission of October, 26, 2021, “Kurylyshy-TBS” LLP was defined as the winner of the tender with the price of 771,25 million tenge.
After dividing total cost of civil and installation works for these tenders to amount of pupils, we see that cost of 80-seat school with mini-centre for 25 pupils in Topolevka village made up 7,3 million tenge and it appeared 4,3 times more expensive than cost of 1200-seat school in Taldykorgan city of Almaty region, which makes up 1,69 million tenge.
Let’s consider how much the cost for construction and installation works will rise in terms of school construction, if it is built in a far away village, in comparison with the construction of a school in a city.
Let’s say we are building a similar school for 105 pupils in Taldykorgan.
The cost per pupil place in the school for 1200 pupils, which started to be built in Taldykorgan in 2021, cost 1.69 million tenge. Consequently, the cost of a school for 105 students should be 177.45 million tenge.
Let’s calculate the transportation costs of moving the construction of such a school from the city of Taldykorgan to Topolevka village in Almaty region. The length of the road between Taldykorgan and Topolevka village is 190 km. According to experts’ estimates, the school building of a typical school designed for an average number of students weighs about 2000 tons. The cost of transportation services of a fully loaded 20-ton Kamaz truck is $0.5 per 1 km. Then transporting 20 tons of construction material would cost $95, and 2,000 tons of cargo through 100 Kamaz trucks would cost $9,500. We can increase all this up to $20,000 (8.7 million KZT), with a large reserve for the total transportation costs of the whole construction process and the transportation of smaller goods.
As we see the cost of this school construction in Topolevka settlement was supposed to be KZT 177,45m + KZT 8,7m = KZT 186,15m, while the contract value according to really held tender for construction works was KZT 771,25m. From this we can conclude that the cost of one student place in Topolevka village school exceeds 4.14 times the cost of one student place in a school to be built in the city of Taldykorgan within the same year.
It is also necessary to understand that in the village, most likely, the cost of labor (qualified – not local), engineering support, etc. will be more expensive. But in general, all this gives plus or minus 10-20% to the total cost of construction, i.e. it increases, but, of course, not at times!
Rating of the effectiveness of the construction of new schools by regional akimats and akimats of cities of republican significance of the Republic of Kazakhstan for 2021
|Name of the region, city of republican significance||The range for the cost of one student place in million tenge, maximum – the minimum cost in one region||Place in terms of efficiency of budget expenditure|
|Kostanay oblast||2,23 – 1,72||1|
|Mangystau oblast||2,96 – 2,33||3|
|West-Kazakhstan oblast||3,31 – 2,53||5|
|Almaty city||4,12 – 3,92||7|
|Turkestan oblast||4,7 – 0,89||9|
|Atyrau oblast||4,76 – 2,5||11|
|Kyzylorda oblast||4,95 – 2,83||12|
|Akmola oblast||7,57 – 2,32||13|
|Almaty oblast||11,68 – 1,95||14|
The ranking of akimats in terms of efficiency of spending the government budget is based on the cost per pupil place in 2021 in finalized public tenders for construction and installation works of new schools. In front of each region there is a range (maximum – minimum) on the cost of per pupil place in millions of tenge, according to the signed contracts, based on the results of completed tenders for construction of schools in the particular area. The cost of one pupil place in school being constructed is calculated by dividing the total cost of construction and installation works of school construction project, according to the concluded contract, by the total number of planned pupil places in school
This unbiased indication demonstrates to what extent Akimat specialists, who organize and carry out tenders for procurement of construction and installation works in the market, i.e. from private construction companies, manage to abide to the principle of efficiency of the Kazakhstani budget system in practice. According to the Budget Code of the Republic of Kazakhstan, the principle of effectiveness consists in development and execution of budget based on the needs to achieve the best possible direct and final result using the approved amount of budget funds or to achieve direct and final result using a lesser amount of budget funds.
Disclaimer: in 2021 in the city of Astana there were three tenders announced for the construction of three new schools, from which the construction of one school was included in the general project of multistory building complex, which includes a kindergarten and a school for 1200 students, the project of another school for 1200 students is a project of completion of unfinished construction. Therefore, the average data on determining the cost of per pupil place is based only on the project of one school for 1,200 students.
Rating of competitiveness of public procurement of construction of new schools by akimats of Kazakhstan for 2021
|Name of the region, city of republican significance||Average number of applications for participation in tenders for the construction of new schools||Place in terms of competitiveness of public procurement|
This rating of competitiveness of public procurement for the construction of new schools by akimats of Kazakhstan reflects the degree of ensuring by akimats equal competitive conditions for all potential suppliers of construction and installation works for the construction of new schools. PF “Digital Society” believes that only through an open, maximally inclusive and fair competition between potential suppliers participating in tenders, the state customer will be able to achieve the best offer in terms of price and quality from potential suppliers. Therefore, the experts of the Digital Society Public Foundation proposed a rating of the competitiveness of procurement conducted by each akimat, based on a clear and simple criterion – thenumber of applications for participation in tenders for the construction of schools in this area is rarer. This indicator is calculated by dividing the total number of purchases made for each region or city by the total number of applications submitted for participation in all these competitions for the construction of new schools in the corresponding region or city.
The given ranking of competitiveness for government procurements for the construction of new schools by akimats of Kazakhstan reflects the extent to which akimats provide equal competitive conditions for all potential suppliers of construction and installation works for the construction of new schools. The Digital Society Fund believes that through open, very inclusive, and fair competition between potential suppliers participating in the tenders only the federal prosecutor can obtain the best price and quality offer from potential suppliers. Therefore, the experts of Public Foundation “Digital Society” suggested rating of competitiveness of procurements conducted by each akimat based on a clear and simple criterion – the average number of bids for school construction tenders in each area. This indicator is computed by dividing the total number of procurements conducted for each region by the total number of applications submitted for participation in all these tenders for the construction of new schools in the relevant region, city.
Ranking of top 10 recipients of government procurements for new schools’ construction in 2021
|Company name||The amount of state orders received in billion (tenge)||The portion in the total volume of the government procurement for the construction of new schools in 2021.|
|LLP «BiGlobal» BIN 031240001439||32,05||24,4 %|
|LLP «KAZPACO» (КАЗПАКО) BIN 011240001485||21,75||16,6 %|
|LLP «Ondasyn Stroy» BIN 060440009800||6,74||5,1 %|
|LLP «Corporation AQ ordasy» BIN 060340003659||6,65||5 %|
|LLP «SCS Engineering» BIN 060540005386||5,6||4,3 %|
|LLP «Qurulyshy-TBS» BIN 030440000930||5,19||3,95 %|
|LLP «BatysAlyansStroi» BIN 021040004147||4,67||3,56 %|
|LLP «Coop “NEFT» BIN 050540006095||3,45||2,63 %|
|LLP «Hunn Stroy service» BIN 060240002985||2,34||1,78 %|
|LLP «Nur-Shapagat-Kurulys» BIN 061240001543||2,15||1,64 %|
As we see, two companies dominate the market of government procurements for the construction of new schools in 2021: LLP “BiGlobal” and LLP “KAZPACO”, which combined take a huge market share of 41%, which obviously creates a risk in limiting competition in this segment of the market.
Please note that both companies belong to the BI Group holding company.
Given ranking reflects the concentration rate of school construction government contractors on the market. The shares of this market captured by the largest top ten contractors who received the biggest government procurements were also calculated.
Considering that the construction business in Kazakhstan is developed, and construction of a typical public school is not a particularly challenging engineering project, domination of large construction companies holding a significant share of the government procurement market means that there are risks of restricting fair competition in the government school construction procurement market. Providing a competitive environment for business is the basic principle of the government’s policy for the development of a market economy, and therefore the reduction of competition is forbidden by the relevant clauses of the Law on Public Procurement and the Criminal Code of the Republic of Kazakhstan.
Among the tenders for construction of new schools conducted by the Akimat of Almaty region in 2021, the most expensive student seat of 11.68 million tenge (cost of construction and installation work) was in two projects where the schools will be built on the basis of pre-engineered (quickly installed module) structures.
Akimat of Almaty region held two tenders:
1. Construction of a secondary school for 110 pupils from pre-made structures in Boribai Bi village of Panfilov district of Almaty region. The number on the government procurement portal is No.6354310-1;
2. Construction of general education school for 110 pupils from pre-engineered structures in Kokdala village of Zhambyl district, Almaty region. The number on the public procurement portal is No. 6354310-1.
Both tenders were completed on November 5, 2021, and only two companies took part in them: KAZPACO LLP and Bazis Construction LLP. The first company won in the first tender and the second company won the second tender. The first company belongs to BI Group and the second to Basis-A Group. These are two of the largest construction holdings in Kazakhstan, which are the market leaders of the construction market of the country.
The estimates and feasibility reports for these two tenders have not been published on the public procurement portal. Only technical specifications were published, which show that the schools will be built of reinforced concrete structures, each school with a total area of 1,589 m2 and will be designed for 110 students. Each school will have 11 grades with a maximum enrollment of 10 pupils, indicating that these schools are intended for kids with disabilities.
The overall cost of such a school, if completed in accordance with NIS specifications, would be 536.8 million tenge. With a contractor (for construction and installation works), Akimat of the Almaty area signed a contract for the building of the school in the amount of 1284 million tenge. As a result, the school’s construction cost was 2.39 times greater than the allocated budget for building a school for 110 pupils in accordance with NIS’s high requirements.
The most expensive school construction project in 2021 was a palace of youths (a secondary school, though according to the estimate it already claims the status of a palace) for 500 pupils in Shymkent, where the construction contract was won by the construction company Bi Global on October 22, 2021 (Part of the BI Group), No. 6329148-2 on the public procurement portal. According to the results of the competition for construction and installation works, the cost of one pupil place here was 14.5 million tenge, which was undoubtedly a record for the cost of a pupil place among all tenders for the construction of schools in the Republic of Kazakhstan in 2021.
This tender was participated by two companies from the BI Group holding and BAZIS-A. BiGlobal LLP won the competition with a 5% discount on the proclaimed amount.
What is the reason for such a high price for a pupil place in the Shymkent Schoolchildren’s Palace, for which a contract has been signed with BI Group? Perhaps expensive high-quality materials or the the building’s height have a significant impact on the rise in construction costs? According to the tender documentation, the construction area of the schoolchildren’s palace is 3270 м2 on three floors. The schoolchildren’s palace is intended to teach only 500 pupils.
According to the BI Group manager’s projections, the cost of a pupil place at the BINOM school is 4.88 million tenge, which meets the NIS standards, which are the highest educational standards. This means that the budget for the construction of the schoolchildren’s palace is 2.97 times greater than the budget for the construction of the BI Group school, built to NIS (!) standards from the BI Group itself!
Express analysis of the tender’s estimate segments revealed significant overestimation in the sections “Engineering networks” and “Educational equipment.” These sections of the estimate documentation are useful for technical screening because they contain specific technical characterizations with ID-numbers from the manufacturer for some products.
The table below shows examples of inflated prices for products described in the design and estimate documentation for the schoolchildren’s palace in the city of Shymkent. A comparative analysis of the prices of goods from the design and estimate documentation of this project was carried out at the price of m 2021, that is, at the same period as the tender of the palace of schoolchildren construction was held.
|Purchased goods||Estimated price||Sources of information||Comments|
|S5735-L24P4X-A1 Huawei||1 228 392 tenge||Huawei S5735-L24P4X-A1 Switch RUB 99158 /USD 1350 https://bouz.ru/catalog/s5700/kommutator_huawei_s5735_l24p4x_a1/ 590 867 tenge||Affected with inflation rate by 2.07 times compared to the retail price published on the dealer’s website|
|Circuit breaker 2P 16A C, A9F79216 Schneider Electric||30 362 tenge||Schneider Electric Acti 9 iC60N C 16A 2P Automatic Circuit Breaker A9F79216.1 437 rubles = 8 388 tenge https://rushop. se. com/avtomaty-i-shchitki/avtomaticheskie-vyklyuchateli/avtomaticheskiy-vyklyuchatel-schneider-electric-acti-9-ic 60 n-c-16 a-2p -a9f79216. .html||Inflated by 3.6 times compared to the retail price in the manufacturer’s online store|
|Circuit breaker 1P 2A V, A9F73102 Schneider Electric||53 379 tenge||Circuit breaker automatic single-pole iC60N 2A B 6kA | A9F73102 Schneider Electric 2 453.40 rubles in tenge = 14321,82 tenge https://e-kc.ru/cena/avt-vyklic60n-1p-2a-b-schneider-electric-a9f73102||Inflated by 3.7 times compared to the retail price in the manufacturer’s online store|
|Power socket on DIN rail A9A15310 Schneider Electric||18 860 tenge||SCHNEIDER ELECTRIC IPC Power socket on DIN rail 2П+T 16A 250В A9A15310 974 rubles/pcs = 5685 tenge||Inflated by 3.3 times compared to the retail price in the manufacturer’s online store|
|Communication interface Acti 9 Smartlink A9XMSB11 Schneider Electric||512 688 tenge||https://schneider-24.ru/product/acti-9-smartlink-interfeys-svyazi-razem-modbus-pitaniya-24v-krep-multiclip-80/ 39 660 rublei/pc = 231701 tenge||Inflated by 2.2 times compared to the retail price in the online store of the manufacturer’s dealer|
|Conference system (1 chairman’s console + 9 delegate consoles)||9 974 395 tenge (22 thousand 971 US dollars)||EDC CONFERENCE SYSTEM KIT FOR 10 CONSOLES 1 035 700 tenge https://bit1.kz/p54133943-komplekt-konferents-sistemy.html||Inflated by 9.6 times compared to the price published on the website of the trading company from Astana. Such a high cost of this conference call is not justified by the technical requirements for the equipment in the estimate documentation|
|Cameras complete with interchangeable lenses, battery and flash – 1 set||14 053 667 tenge (32 thousand 367 US dollars)||This item does not contain any specific specifications, which makes it easy to make such a set using a budget of 2 million tenge in any retail photographic store.||On average, the overestimation can bea 7-fold increase from the cost of a standard set of photographic equipment. Such a high cost of a set of photographic equipment is not justified by the technical requirements for the equipment in the estimate documentation.|
|Training stand for training in the basics of pneumatic and electrical circuitry, relay logic, programming of industrial controllers and mechatronics. Complete with manual and tutorial||23 354 614 tenge||The cost of a two-way training stand: DID-BASE-2T-2R12-2P2E, produced by the Italian concern CAMOZZI, aboutthe bottom of the world leaders in the field of industrial pneumatics – 9 188 070 tenge. price may vary depending on the configuration). The price for the stand is provided by Camozzi Pneumatic Kazakhstan LLP on 30.11.2021. All CAMOZZI training stands are accompanied by a methodical manual “Pneumatics for all”, developed by the corporate scientific and technical center and laboratory work in 2 versions: for the teacher (with solutions) and for students (respectively without solutions)||Inflated by 2.5 times compared to an expensive premium quality stand from CAMOZZI. The estimate does not provide technical specifications for the training stand that could guarantee high quality, so there are risks that a stand of much lower quality will be purchased at a very cheap price|
PUBLIC PROCUREMENT FOR NEW SCHOOL CONSTRUCTION IN 2022
Rating of the effectiveness of new school construction by regional akimats and akimats of cities with republican significance in the Republic of Kazakhstan for the first nine months of 2022
|Name of the region, city of republican significance||The range for the cost of one student place in millions of tenge, the maximum – the minimum cost of one in the region||Place in terms of efficiency of budget expenditure|
|Mangystau oblast||2,96 – 1,4||1|
|Pavlodar oblast||3,55 – 2,2||2|
|West-Kazakhstan oblast||4,24 – 2,99||3|
|Kyzylorda oblast||5,03 – 1,49||5|
|Zhambyl oblast||5,07 – 1,52||6|
|North-Kazakhstan oblast||5,51 – 3,22||9|
|Almaty oblast||5,95 – 2,2||11|
|Aktobe oblast||6,22 – 1,77||12|
|Karaganda oblast||6,36 – 3,36||13|
|Turkestan oblast||6,43 – 1,47||14|
|Akmola oblast||7,57 – 1,77||15|
|Atyrau oblast||8,01 – 3,02||16|
|Almaty city||11,97 – 2,46||17|
Rating of competitiveness of public procurement of construction of new schools by akimats of Kazakhstan for for the first nine months of 2022
|Name of the region||Average number of applications for participation in tenders for the construction of new schools||Place in terms of competitiveness of public procurement|
|Mangystau oblast||5, 6||3|
|East Kazakhstan oblast||3||15|
Rating of top 10 recipients of government procurements for new schools’ construction for the first nine months of 2022
|Company Name||The volume of received state orders in billion tenge||Share in the total volume of the state order for the construction of new schools for the first 9 months 2022 г|
|KAZPACO LLP BIN 011240001485||32,94||14 %|
|BiGlobal LLP BIN 031240001439||16,14||6,7 %|
|“TarazKurylysInvest” LLP BIN 060940001596||12,38||5,3 %|
|AK Ordasy Corporation LLP BIN 060340003659||10,99||4,7 %|
|SHEBERBUILD LLP BIN 070240017648||7,47||3,2 %|
|JV NEFT LLP BIN 050540006095||7,4||3,2 %|
|Alliance LTD LLP BIN 980740001739||7,33||3,1 %|
|“Eurostroy-A” LLP BIN 020240000426||7,31||3,1 %|
|BatysAllianceStroy LLP BIN 021040004147||7,13||3%|
|“Ondasyn Stroy” LLP BIN 060440009800||6,2||2,6 %|
As we can see, the degree of dominance of KAZPACO LLP and BiGlobal LLP in the market of state tenders for school construction in 2022 decreased with a total market share of 20.7%, which is nearly two times less than their combined share of 41% according to 2021 data. We believe that this is a positive signal, indicating an improvement in the quality of public administration of the school construction procurement process in the direction of transparency and ensuring a competitive environment when akimats conduct public school procurement in 2022.
Nonetheless, the fact that these two companies, which are part of the same BI Group holding, have a 20.7% market share does not provide public observers with a 100% guarantee of the absence of risks of limiting competition in the market of state orders for the construction of new schools.
The most expensive public procurement of new school construction works for 2021 and the first nine months of 2022
|Name of the project||Region||The cost of a student place in million tenge||Supplier|
|Construction of the palace of schoolchildren in Shymkent e in the district of Nursat (about secondary school), 500 places||Shymkent city||14,5||ТОО «BiGlobal» BIN 031240001439|
|“Construction of a center of innovative creativity for school-age children in the Nauryzbay district of Almaty” for the KSU “Department of Comfortable Urban Environment of Almaty”, 675 seats||Almaty city||11,97||ТОО «BiGlobal» BIN 031240001439|
|“Construction of a center of innovative creativity for school-age children in the Alatau district of Almaty” for KSU “Department of Comfortable Urban Environment of Almaty”, 675 seats||Almaty city||11,97||ТОО «BiGlobal» BIN 031240001439|
|Construction of a secondary school for 110 students from prefabricated (prefabricated modular) structures in the village of Boribay Bi, Panfilov district, Almaty region||Almaty oblast||11,68||ТОО «Bazis Construction» BIN 980540001197|
|Construction of a secondary school for 110 students from prefabricated (prefabricated modular) structures in the village of Kokdala, Zhambyl district, Almaty regionand||Almaty oblast||11,68||ТОО «KAZPACO» (KAZPAKO) BIN 980540001197|
|Construction and installation works on the object “Construction of a school for 80 places with a mini-center for 25 places in the village of Topolevka, Sarkan district, Almaty region”, 125 places||Almaty oblast||8,1||«Kurylyshy-TBS» LLP BIN 030440000930|
|Construction of a school for 80 places in the village of Bulandy on B. Momyshuly Street No. 65, Birzhan Sal district, Akmola region||Akmola oblast||7,6||“Construction Company” LLP Yer-Kanat Service” BIN 110840000328|
|Construction of a school for 80 places in the village of Zhanazhol, Tselinograd district, Akmola region||Akmola oblast||7,3||“Construction Company” LLP Yer-Kanat Service” BIN 110840000328|
|Construction and installation works on the object “Construction of a secondary school for 120 places with a mini-center for 25 places in the village of Beskainar, Koksu district, Almaty region”, 145 places||Almaty oblast||7,3||ТОО «AK Construction Company» BIN 040440006426|
The media began to actively raise the issue of low-quality new state secondary schools in the second half of 2022. According to media reports, the regions of West Kazakhstan, Aktobe, and Turkestan have the highest number of low-quality school buildings.
According to Channel 31, by September 2022, Kazakhstan would have 33 emergency schools with failed foundations and cracked walls. This channel also discovered that many contracting firms in Kazakhstan win tenders and construct buildings with state funds where it is impossible to conduct lessons.
Thus, by September 2022, the Ministry of Education of the Republic of Kazakhstan had a clear picture of the shortcomings of regional akimats’ implementation of the National Program for the Construction of New Schools .
This is due to:
– the use of low-quality materials in the construction of the school, which will require major repairs in 3-5 years;
-the cost of equipping schools with equipment is estimated 4-10% of the total project cost;
-the lack of timely financing of construction also leads to an increase in the cost of construction projects, the appearance of long-term construction projects, and the deterioration of building materials.
A meeting of the Supreme Council for Reforms, appointed by President of the Republic of Kazakhstan Kassym-Jomart, was held to discuss how to address the problems that had accumulated due to the ineffective execution of school construction projects as well as the large number of operating three-shift, emergency, and crumbling schools in Kazakhstan. 28 September 2022 in Tokayev.
The discussion covered the progress of the national “Comfortable School” project, which aims are a methodical approach to the issue of a scarcity of student spaces and the construction of standard conditions for secondary education.
It is projected that the project’s realization will make it possible to construct new-style schools for 800,000 kids. 2.6 trillion tenge of the National Fund were provided for the execution of the National Project.
Samruk-Kazyna Construction JSC is to be established by the Government of the Republic of Kazakhstan as a single entity that chooses and enters into contracts with contractors, manages construction, and transfers schools to THE MINISTRY of Education and Science (local executive bodies).
It is important to point out that during this meeting, the President of the Republic of Kazakhstan publicly stated the key performance indicators for managers and staff members of the Government, the Ministry of Finance, and the Accounts Committee in the implementation of the program for the construction of new schools, stating that they will be especially needed to ensure the use of every tenge for its intended purpose .
CONCLUSIONS AND RECOMMENDATIONS
Analysis of documentation from submitted tender contracts
It is well-known that the risks of corruption schemes in construction contracts appear with an obvious exaggerated cost of materials, equipment, and labor in comparison with similar projects, and even in situations where there is very little and weak competition (only 2 bidders, who often turn out to be the same companies. ). The inaccuracy and blurriness of technical specifications, which allow you to get the cheapest alternatives at the costs of pricey high-quality materials and equipment, is one of the main forms of overpricing.
In terms of pricing, the analysis of the estimates revealed a very heterogeneous situation in the preparation of project and estimate documentation for the construction of new schools. Sometimes the estimates correspond to current market prices, taking into account the construction company’s reasonable market margin. This is demonstrated by the cost of one student place in the Almaty region’s akimat tender in 2021, which was 1.77 million tenge. Sometime – this figure increases several times in other tender documents for the same akimat in the same calendar year. It is possible that these prices are inflated due to the objective difficulty of the facility’s construction or real market factors, but justifications must be provided.
We encountered a technical problem while analyzing the tender documentation uploaded to the public procurement portal, the technical documentation was either damaged and did not open, or it was incomplete – there was no estimate in entirety or in part. And such documentation could not be analyzed. The tables below show examples of such purchases.
Example 1. Two purchases have an identical problem, documents are available, but they do not open
|No lease||Tender title||Number of pupils||Contract amount excluding VAT||Amount of 1 place without VAT||Purchase start date||Number of participants||Winner|
|6385915-1||“Construction of a center of innovative creativity for school-age children in the Alatau district of Almaty” for the KSU “Department of Comfortable Urban Environment of Almaty”||675||8054605639,40 contract amount excluding VAT||11 932 749,10 seat pricea||02.11.2021 19:04||4||BiGlobal LLP BIN 031240001439|
|6386036-1||“Construction of a center for innovative creativity for school-age children in the Nauryzbay district of Almaty” for the KSU “Department of Comfortable Urban Environment of Almaty”||675||8081501831,35 contract amount excluding VAT||11 972 595,31 seat price||02.11.2021 19:05||5||«BiGlobal» LLP BIN 031240001439|
Example 2. The outlay is present, but not complete (from pages 5 to 12)
|No lease||title of the tender||Number of pupils||Contract amount excluding VAT||Amount of 1 place without VAT||Purchase start date||Number of participants|
|5289551-2Lots: 1||Construction and installation works on the object “Construction of a secondary school for 1500 places in the village of Kokkainar, Ili district, Almaty region”||1 500||4 214 916 414,90||2 809 944,28||5||«BiGlobal» LLP BIN 031240001439|
|5289606-2Lots: 1||Construction and installation works on the object “Construction of a secondary school for 1500 places in the village of Uzynagash, Uzynagash rural district, Zhambyl district of Almaty region”||1 500||3 953 981 793,60||2 635 987,86||5||«BiGlobal» LLP BIN 031240001439|
|5289622-2Lots: 1||Construction and installation works on the object “Construction of a secondary school for 1500 places in Esik, Enbekshikazakh district, Almaty region”||1 500||3 850 562 763,90||2 567 041,84||6||«BiGlobal» LLP BIN 031240001439|
|5289634-2Lots: 1||Construction and installation works on the object “Construction of a secondary school for 1500 places in Kaskelen, Karasai district of Almaty region”||1 500||3 894 874 562,70||2 596 583,04||6||BiGlobal LLP BIN 031240001439|
|5289649-2Lots: 1||Construction and installation works on the object “Construction of a secondary school for 1500 places in the village of Mezhdurechensk, Ili district, Almaty region”||1 500||3 965 069 781,90||2 643 379,85||5||BiGlobal LLP BIN 031240001439|
|5289657-2Lots: 1||Construction and installation works on the object “Construction of a secondary school for 1500 places in the village of Boraldai, Ili district, Almaty region”||1 500||3 875 271 512,40||2 583 514,34||11||BiGlobal LLP BIN 031240001439|
Example 3: Because there is no outlay documentation, the Digital Society Public Foundation was asked to come to Taldykorgan in order to receive an outlay in the Department of Construction and Almaty region
|No. Purchase||Tender title||Number of seats||Contract amount excluding VAT||Amount of 1 place without VAT||Number of applications||Winner|
|6354310-1 Lots: 1||Construction of a secondary school for 110 students from prefabricated (prefabricated modular) structures in the village of Boribay Bi, Panfilov district, Almaty oblast||110||1 284 500 000,00||11 677 272,73||2||«Bazis Construction» LLP BIN 980540001197|
|6354542-1 Lots: 1||Construction of a secondary school for 110 students from prefabricated (prefabricated modular) structures in the village of Kokdala, Zhambyl district, Almaty oblast||110||1 284 500 000,00||11 677 272,73||2||KAZPACO LLP BIN 980540001197|
The organization of the above-mentioned procurement tenders for the construction of new schools by the akimats of Kazakhstan violates Article 21 of the Law of the Republic of Kazakhstan on Public Procurement. The tender documentation for the implementation of public procurement of works requiring outlay and estimate documentation must include a technical specification approved in accordance with the established procedure, outlay estimate documentation, and a positive conclusion from a comprehensive non-departmental expertise, according to this article of the Law.
Additionally, many estimates include information that is prohibited by the Law on Public Procurement, such as the identifying the brand of items by a certain manufacturer. Mentioning the model or manufacturer is against Article 21 of Law A on Public Procurement because all tenders for the purchase of construction materials for new schools do not require the completion of equipment in the current school.
Article 21. Tender documentation, clause 3 :
It is prohibited in the tender documentation to establish conditions for public procurement that imply a limitation on the number of potential suppliers in cases not provided for by this Law, including those relating to:
1) defining any non-quantifiable and/or non-administrable requirements for potential suppliers;
2) the content of indications for trademarks, service marks, trade names, patents, utility models, industrial designs, appellation of origin of goods, and the name of the manufacturer, as well as other characteristics that determine ownership of the purchased goods, works, and services to a separate potential supplier, with the exception of the following cases of public procurement:
– to finish, update, and re-equip the primary (installed) equipment, as well as the installed software (licensed software);
– to identify the service provider for the provision of items for lease and the requirement for a thorough description of the leasing subject;
– for repair and (or) maintenance of the goods available to the customer”.
As an example, consider the object “Construction of a school for 80 pupils in the village of Bulandy on B. Momyshuly Street 65, Birzhan Sal district of Akmola region.”
Because technical documentation and estimates lack a complete description and technical characteristics, the price of the purchased goods is unreasonably overestimated.
Another example is the estimate for the object “Construction of the schoolchildren’s palace in the city of Shymkente in the district of Nursat (about the secondary school).”
The estimate is for a “Bench of individual manufacture, covering elements for retaining benches (oval) made of marble stone “ARCHITAS”, white color, with wooden flooring WPK” worth 7,047,857.14 tenge, with four such benches specified. Because there are no dimensions or specific characteristics, it is impossible to assess the feasibility of such a purchase at the expense of budget funds objectively.
There is also a connection in the estimate for the purchase “5 x boxing ring with a platform of 6.1 x5 м6,1 м. Model of sports and training 1 м “. The ability to quickly uninstall and reinstall the ring on the locations is a distinct advantage over the other rings. The ring on the stretches can be used in a multifunctional hall because after dismantling, only a small steel embedded flush with the floor surface remains in the fastening places. However, the ring of this model requires more space than the ring on the x stopx, which costs 3 142 260,00 tenge. As the exact characteristics are indicated, finding a price on the market is not difficult; the same ring with similar characteristics can be purchased for 1,725,000 tenge. As a result, the difference between the estimated cost and the market price is 1,417,260 tenge.
The main risk indicators (indicators of corruption risks) in public procurement for the construction of new schools
Corruption has always been the root cause of poor-quality construction and wasteful budgetary spending. Unfortunately, the construction industry is no exception; however, for such socially significant objects as the construction of public secondary schools, we must do everything possible to eliminate all corruption risks created by state management practices, loopholes in the current regulatory framework, and fraudulent actions of unscrupulous customers and suppliers.
Low-quality construction during the planning stage, as well as the use of low-quality building materials, endangers the lives of children. To combat corruption, we must strive to make all stages of public procurement as transparent and accessible to the public as possible, beginning with the decision to begin construction and continuing through the choice of a supplier, the signing of an agreement with, and the acceptance of the completed school. Every parent should be confident that the school to which his or her child will be sent is safe and reliable.
We identified several of the most common risk indicators of corruption after analyzing the contract and protocols of public procurement for the construction of new schools in 2021-2022:
- Almost all suppliers have at least three additional agreements after the main contract is signed, and all of these changes enter into force within a month of the contract being signed. Only the terms of delivery of the object and payment change in some contracts. In others, the main contract’s value rises. Tables e and f provide examples.
- Exaggerated estimate of goods and materials costs;
- Construction contracts for socially significant objects, such as schools, kindergartens, and medical institutions, should be as competitive as possible in order to ensure better and higher-quality construction.
- The absence of basic technical documentation on the public procurement portal as a project draft and estimate, is a violation of the Public Procurement Law;
- Incorrect loading of those documents when the documents are present but not on one of them open on computer devices due to an unknown error.
Public procurement examples with risk indicators
|No Lease||Tender title||Number of pupils||Contract amount excluding VAT||Amount of 1 place without VAT||Purchase start date||Winner||Via lease||Comments|
|5279996-1||Repeated public procurement “Construction of a school for 1500 places in the microdistrict “Tomiris” (Trudovik), Alatau district of Almaty” for the KSU “Department of Comfortable Urban Environment of Almaty”||1500||6 180 241 274,40||4 120 160,85||23.12.2020 09:00||KAZPACO LLP BIN 011240001485||Pcb||1. The difference between the main contract and the additional one: 1 990 498 819 tenge (including VAT). 2. The contract was renewed and extended 7 times, the last – 15.02.2022 g.|
|5279994-1||Repeated public procurement “Construction of a school for 1800 places in the microdistrict “Sayaly” of the Alatau district of Almaty” for the KSU “Department of Comfortable Urban Environment of Almaty”||1800||7 221 471 595,89||4 011 928,66||23.12.2020 09:00||KAZPACO LLP BIN 011240001485||Pcb||1.The difference between the main contract and additional tax: 2 126 069 004 tenge (including VAT). 2. The contract was renewed and extended 8 times, the last – 14.02.2022.|
|5279981-1||Repeated public procurement “Construction of a school for 1800 places in the microdistrict “Kalkaman-2″ of the Nauryzbay district of Almaty” for the KSU “Department of Comfortable Urban Environment of Almaty”||1800||7 063 951 139,13||3 924 417,30||23.12.2020 09:00||KAZPACO LLP BIN 011240001485||Pcb||The difference between the main contract and the additional one: 2 236 195 834 tenge (including VAT). 2. The contract was renewed and extended 7 times, the last – 15.02.2022.|
|5270316-1||“Construction of a school for 1500 places in the Kalkaman-2 microdistrict of the Nauryzbay district of Almaty” for the KSU “Department of Comfortable Urban Environment of Almaty”||1500||7 466 894 253,79||4 977 929,50||14.12.2020 09:00||KAZPACO LLP BIN 011240001485||Pcb||1. The difference between the main contract and additional one: 2 314 493 716,61 tenge (including VAT). 2. The contract was renewed and extended 10 times, the last – 30.03.2022.|
|5270318-1||“Construction of a school for 1500 places in the Kairat microdistrict of the Turksib district of Almaty” for the KSU “Department of Comfortable Urban Environment of Almaty”||1500||6 365 364 451,12||4 243 576,30||14.12.2020 09:00||KAZPACO LLP BIN 011240001485||Pcb||The difference between the main contract and the additional one: 2 153 122 453,33 tenge (including VAT). 2. The contract was renewed and extended 13 times, the last – 12.05.2022.|
|5270413-1||“Construction of a school for 1500 places in the Madeniet microdistrict of the Alatau district of Almaty” for the KSU “Department of Comfortable Urban Environment of Almaty”||1500||6 253 973 545,79||4 169 315,70||14.12.2020 09:00||KAZPACO LLP BIN 011240001485||Pcb||The difference between the main contract and the additional one: 1 944 076 622.85 tenge (including VAT). 2. The contract was renewed and extended 11 times, the last – 12.05.2022.|
|5270464-1||“Construction of a school for 1500 places in the Darkhan microdistrict of the Alatau district of Almaty” for the KSU “Department of Comfortable Urban Environment of Almaty”||1500||6 507 604 230,00||4 338 402,82||14.12.2020 09:00||ТОО «KAZPACO» (KAZPAKO) BIN 011240001485||Pcb||The difference between the main contract and the additional one: 2 238 090 832.31 tenge (including VAT). 2. The contract was renewed and extended 14 times, the last on 27.06.2022.|
|5270465-1||“Construction of a school for 1500 places in the Nurkent microdistrict of the Alatau district of Almaty” for the KSU “Department of Comfortable Urban Environment of Almaty”||1500||6 346 892 914,60||4 231 261,94||14.12.2020 09:00||KAZPACO LLP BIN 011240001485||Pcb||The difference between the main contract and the additional one: 2 167 043 824.95 tenge (including VAT). 2. The contract was renewed and extended 13 times, the last – on 30.03.2022.|
Options for public management decisions to improve the transparency and efficiency of public construction and new school procurement
We will think about new actions that can be implemented while taking into account the control and accountability systems that have been in operation.
It is probably best to begin with the project stage, especially regarding, the development and approval of several standard projects (and, consequently, standard estimates) for all schools (conditionally: small schools – up to 300 pupils, secondary schools – from 300 to 800 pupils and large schools – from 800 pupils and more).
Another option is to use the layout and estimate documentation of previously constructed public schools. The state can create a database of standard school projects with suitable estimates and the best price-quality ratio. Then, this project database should be made available for free to constructions firms that prepare layout and estimate documentation for the construction of new schools.
In the existence of such standard projects, the layout organization’s task would be to finalize the projects while keeping the territory in mind. This would save the state budget on the cost of designing new schools from scratch all the time
Such measures would restrict the “creative space” for overspending public funds and exaggerating procurement costs.
It is proposed that the Ministry of Finance of the Republic of Kazakhstan implement a system of regular random audit of the ten most expensive (in terms of the cost of building a school) layout and estimate documentations, calculated at the cost for one pupil place. To achieve maximum transparency and objectivity of expertise, audits should include experts from National Chamber of Entrepreneurs of the Republic of Kazakhstan “Atameken”, industry business associations (construction, building material production, electrical engineering, heat engineering, and communication facilities), research institutes, and universities.
The goal of such audit, which includes active engagement from the public and academic community, is to evaluate the estimate for unreasonable overpricing of materials, goods, and equipment.
The incorporation of a market advice tool in procurement procedures is another important method for improving the efficiency of public procurement. It will enable transparency in public procurement and, because of competition among potential suppliers, will enable the creation of objective and correct technical specifications for the upcoming tender, the prevention of corruption risks and collusion among potential suppliers through the competition mechanism, and the establishment of an appeal mechanism for suppliers who consider the tender unfair and make efforts to cancel the tender.
Increasing the level of transparency and competitiveness of public procurement through the use of a market consulting instrument and division into specialized lots
To increase the transparency, competitiveness, and, as a result, efficiency of public procurement, we propose the use of a management tool known as “consultations with the market” in the construction of new schools, as well as the procurement of works on the construction of new schools through the division of construction and installation works into separate lots and the finalization of the school with equipment, furniture, sports equipment, and so on. This approach will create a more competitive environment for potential suppliers in the organization of public procurement for the construction of a new school.
The procedure of the tool “consultation with the market” means the following for the government contractor. The maximum number of potential suppliers is invited, and then a pool of participating suppliers is established, to whom a draft of the tender documentation (including standard construction blueprints and estimate documentation) is sent ahead of time. After studying the tender conditions, all potential suppliers will present their proposals either in written form or orally at a dialogue conference organized by the government contractor.
The government client benefits in two ways:
- Potential suppliers will be able to prepare a more competitive bid than other potential suppliers, conduct a quality marketing analysis, negotiate with suppliers of building materials in the most efficient way, and, finally, determine the ideal balance “price-quality” for their bid for the tender if they are aware of the planned tender in advance.
- If the government client has complex engineering requirements for ordered projects and goods, they will be able to develop more appropriate and unbiased technical specifications in consultation with potential suppliers, using free expertise and consultations of engineers of potential suppliers who are motivated to participate in the tender and possibly win the competition.
Market research aims to improve market options for suppliers, products, and services, as well as to identify future opportunities. Research may include market trends, which can also be used to forecast price changes, innovation, and overall competition.
Market research updates and additions on existing information on prices, costs, and potential technical solutions, can be obtained, for example, from previous contracts. Market research includes new suppliers, innovation, and lower-cost solutions. Customers and suppliers who understand markets can start preparing to tenders that reflect market conditions.
An examination of other countries’ approaches to this issue demonstrates clearly how through Internet addresses transparency/equal treatment issues may be solved. On their website, purchasing organizations are encouraged to provide market consultations. Websites are also used as a permanent means of providing suggestions and ideas from businesses, unless a specific project is planned.
Questionnaires are frequently used as the first stage of the consultation process for businesses. Examples demonstrate that such questionnaires serve as an important foundation for further consultation, as the procurement organization can “manage” the consultation process and focus it on specific topics.
In the case of larger and more complex projects, interested businesses are frequently invited to a dialogue conference to obtain additional information and present their ideas at direct talks. The stated purpose of such events is sometimes to create a forum for businesses to discuss collaboration.
The use of conferences and additional dialogue can be interpreted as an attempt to structure the dialogue and thus ensure transparency beyond the simple issue of access to the process.
During the consultations there will be an opportunity to pay attention to both actual and additional recommendations of enterprises.
In general, in order to arrange transparent and effective pre-enhanced consultations and to implement a common approach to market consultancy based on EU practice, international consultants recommend:
- Invitations for any business entities are posted on the website and/or Facebook page (if available) of the client and can be sent to all found/known business entities – the idea to invite/attract the maximum possible business entities to the relevant market for quality advice and further intense competition (and the more business representatives come to the meeting, the less risks for possible collusion).
- Creation of a database for potential bidders based on Goszakup.kz data. Pre-tender advice can be quite logical and important for expensive and complex procurement positions.
- It is recommended to conduct a video recording or, at a minimum, record a meeting with the subsequent publication of the protocol to familiarize business entities that did not participate in it, as well as to ensure transparency.
- Topics for discussion/presentation at the consultation meeting may include initial tender conditions, consideration of the most appropriate tender procedure (open or restricted tender or competitive dialogue), division into lots or a single contract, best timeframe for the tender, details of contract performance taking into account internal organizational aspects of the customer, acceptance procedure (quality control) of the goods/services/works supplied or some logistical aspects, payment procedures, etc.;
- A thoughtful approach to the selection of a team representing the client at the meetings, which will include an expert / head of the procurement process, a representative of the procurement initiation unit, persons involved in the development of terms for reference and relevant tender conditions, as well as persons responsible for contract management on behalf of the client, possibly a representative of the internal audit and/or anti-corruption (compliance) department employee.
It should be noted that the procurement work on the construction of new schools through the division of construction and installation works into separate lots, as well as the finalization of the school with equipment, furniture, sports equipment, and other necessary materials and technologies of the school educational process, will significantly assist in achieving transparency and guaranteeing a more competitive environment. All of this, combined with competition among potential suppliers specializing in narrow market segments, will contribute to a more profitable purchase of school equipment, materials, and goods.
Open contracting data standards
If we look at the current situation with corruption risks in public procurement of the Republic of Kazakhstan as a whole, the following question arises:
How can the State Administration, Society, and Business ensure an increase in transparency and public control, effective counteraction, and elimination of corruption in public procurement to the country’s political leadership, to ensure a developed civil society, socially responsible business, and the necessary legislative framework, in practice?
When the World Bank started the development of the Open Contracting Partnership (OSR), an independent, global non-profit program, in 2014, it provided the solution to this significant socio-political issue, which is on the agenda of legislators in many nations of the world.
The mission of OCP is to implement the Open Contracting Data Standard, political and administrative tool for regulating public procurement in a nation, on a worldwide scale (OCDS – Open Contracting Data Standard).
The idea of transparent contracting itself is based on two elements: open management and open data on public procurement. Open management includes the involvement of stakeholders from government agencies, private companies and civil society to work together on reforms, consult with users, and respond to feedback. For open data, it is necessary to collect, publish and analyze information, share this information, and develop tools for implementing system changes.
The modern economy needs an established ecosystem for public procurement contracts, which would be based on data.
The Open Contracting Data Standard (OCDS) is a free, publicly available open data standard for government contracts that has already been implemented by governments of more than 30 countries and regions around the world.
This is the only international open standard for publishing information related to planning, tendering and execution of government contracts, which has been approved by the G20, G7 and major international organizations.
An international expert group organized by the World Bank (WB) and the Organization for Economic Cooperation and Development (OECD) with the participation of the European Bank for Reconstruction and Development (EBRD), the Islamic Development Bank (IDB) and the Asian Development Bank (ADB) strongly recommended that the Republic of Kazakhstan adopt the Transparent Contracting Data Standard (OCDS) for the system of public Procurement of the Republic of Kazakhstan and the Joint-Stock Company “National Welfare Fund Samruk-Kazyna”. A group of experts evaluated the public procurement system of Kazakhstan and the procurement of the Samruk-Kazyna Fund in 2018-2019 under a contract with the Government of the Republic of Kazakhstan .
In all phases of the contracting process, OCDS provides instructions on how to publish data and documents. It was developed to help enterprises increase contractual transparency and give them access to a more in-depth examination of contract data from a variety of users.
The following services are offered by OCDS:
- a list of suggested data fields and documents for publication;
- a general structured data model;
- instructions and tools for implementing and using data;
- profiles for public-private partnerships;
- the General Procurement Agreement in the Seven Trade Organization;
- an extension mechanism to allow for the addition of additional key information to the OCDS data;
- and a free international support service.
In the process of the public contracting process, data is modeled and released according to the Open Data Standard. It is not an information management system or an e-procurement technology solution. The information contained in such systems can be published in compliance with the Standard and utilized for visualization, monitoring, and analysis. However, the Standard can be used to construct an information database of an electronic procurement system.
It is considerably simpler to modify and reuse tools from other sources because the information is standard.
The sharing, comparing, and analysis of government contract data provided in OCDS format is simplified. This lowers costs and promotes creativity by enabling data publishers to modify and reuse already-existing visualization and analysis tools.
OCDS provides guidance on what to publish and how to publish the most important information about government contracts, the importance of which is confirmed by practitioners, researchers, and other stakeholders.
Governments can use open contracting as part of the broader reforms to get better value for money on goods, works, and services, as well as to build trust in themselves from private companies, civil society, and citizens in general.
Today, the Open Contracting Data Standard is an internationally recognized standard with a growing user community across over 30 countries, which means that different jurisdictions can share approaches to tracking and measuring improvements.
More than 30 national and subnational governments around the world are currently implementing OCDS, including Australia, Buenos Aires, Chile, Colombia, France, Paraguay, the United Kingdom, Ukraine, and Zambia. The Open Contracting Partnership keeps a list of organizations that collaborate with OCDS.
The European Commission improves its online communication (i.e., the standards used for the publication of public procurement information in conformity with EU regulations) and the work of its Working Group on the Ontology of Electronic Procurement to align data publication with the Standard. Many of the most recent changes to electronic forms (eForms) that the EU has implemented have been directly or indirectly based on OCDS, whether in terms of modeling or in the context of general expansion. in the application of codes and identification lists.
The European Commission is also encouraging Member States to implement the Standard through contract registers. Through the Uniting Europe Fund, the Commission has provided funding to Finland and Italy for these and other purposes.
The ideas of open conclusion of state contracts were embraced by both the Group of Seven and the Group of Twenty. The OECD Procurement Systems Evaluation Methodology has also adopted them. The Open Government Partnership suggests open contracting as a revolutionary change.
Brief information about the authors
Rakhmanov Nurgali – Director of “Digital Society” Social Fund
Kanibay Dinara – Analyst of “Digital Society” Social Fund
Thank you Nicolette Westfall for proofreading this article
Kazakhstan – Republic of Kazakhstan
UN – United Nations
EU – European Union
OECD – Organization for Economic Cooperation and Development
WB – World Bank
EBRD – European Bank for Reconstruction and Development
ADB – Asian Development Bank
IDB – Islamic Development Bank
OF – Public Foundation
KSU – Municipal State Institution
OK – About the open competition
PKB – Competition using a special procedure
IMRC -Oncourse with pre-qualification
IOI – And from a single source
IOI – Local Executive Bodies
NIS – Nazarbayev Intellectual Schools
OCDS – Open Contracting Data Standard
OCP – Open Contract Partnership
Mass media – Mass media
Research Institutes – Research Institutes
University – Higher education institution
LLP – Limited Liability Partnership
JSC – Joint Stock Company
WPC – wood-polymer composite
- https://www.saby.kz/, website of the Rakishev family’s Sabi Charitable Foundation
- https://www. inform. kz/ru/podryadchiki-ispol-zuyut-nekachestvennye-materialy-pri-stroitel-stve-shkol-minprosvescheniya_a3978336
- https://www. the chord. kz/ru/head-gosudarstva-provel-zasedanie-vysshego-soveta-po-reformam-28850