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Thwart procurement fraud

Identifying procurement integrity breaches via data analytics

As protests raged in Chile in 2020 over the cost of living and inequality, the government sought to procure body cameras for the police to monitor events on the ground. After going through a public bidding process, U.S. telecommunications equipment provider Motorola Solutions won the business to supply 300 cameras at a cost of close to 400 million Chilean pesos, or about $340 each at today’s exchange rate. Soon thereafter, those involved in the bidding process found themselves under investigation for irregularities. According to the local press, government officials accepted Motorola’s bid even though the company submitted its offer on the electronic procurement portal outside the hours stipulated by the bid rules. (See “El informe de Contraloría que complica a Katherine Martorell, la actual vocera de Sichel, por millonaria compra de cámaras GoPros para Carabineros,” El Mostrador, Oct. 15, 2021.)

In early 2021, the scandal intensified after Chile Compra, the entity that runs the electronic procurement portal — known under its Spanish name Mercado Público — revealed that Motorola’s cameras had failed to meet some basic requirements — namely an ability to keep recording for at least 120 seconds after being turned off.

The intense scrutiny over the bidding process (and what may seem like a storm in a teacup for some) reflects Chile’s seriousness in tackling corruption and its efforts to clean up its procurement process with the help of technology. In the late 1990s, Chile created what was then a first-of-its-kind electronic portal for procurement to improve the efficiency and transparency of public spending. It’s been updating the system ever since. The electronic public marketplace brings together all those involved in the procurement process onto one easy-to-find platform. (See “Martorell en problemas: informe de Chile Compra revela que Subsecretaría incumplió bases de licitación para adquisición de cámaras para Carabineros,” El Mostrador, Jan. 6, 2021; “Cámaras policiales: testigos revelan presiones para favorecer a Motorola en licitación de Martorell,” Nicolás Parra y Felipe Díaz Montero, BioBioChile, March 23, 2022; and “Martorell in trouble: Chile Compra report reveals that Undersecretariat failed to comply with bidding rules for the acquisition of cameras for Carabineros,” Archyde, Jan. 6, 2021. Also see “Chilecompra: Using Technology to Deliver Better Value for Public Money,” by Rachel Lipson, Harvard, Technology and Operations Management, Nov. 18, 2016.)

This case represents how entities — public or private — can detect and eventually prevent public procurement integrity breaches via data analytics and other types of technology. Other countries around the world have also set up systems that use technology to catch procurement fraud.

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