Complete Contract Transparency as a Cost of Doing Business

In a blog post on the World Bank’s website, Marcos Siqueira lays out the case for total public contract transparency, including disclosure of unredacted contracts, associated financial deals, unredacted bids, unredacted amendments, performance reports, financial data of the project company, and fiscal commitments and risks.  Marcos was a member of the CGD Working Group on Contract Transparency, and his knowledge shaped a lot of what was in the group’s report.  He knows whereof he speaks: Siqueira was CEO of the Public-Private Partnership program of the state of Minas Gerais in Brazil, managing more than US$3 billion worth of transactions.

Two things worth noting about Marcos’s proposal: first, for those who say unredacted contract publication around PPPs is impossible, Marcos has $3 billion worth of contracts to show you — the Minas Gerais PPP unit publishes such information already. But second, he admits there might be some costs involved for the firms that bid on or win under a fully transparent system.  His point: they are not that big, and they’re worth it. 

We usually look at transparency from a binary legal perspective — if something is commercially secret, it shouldn’t be published.  If it isn’t, it should be published.  Marcos has a different and more nuanced point of view.  Publishing commercial secrets might be a cost to a firm.  If it is, they will demand a higher price to deliver services under a fully transparent contracting regime.   Is that higher price worth paying?  Based on his experience, Marcos suggests it is:

In my opinion, when companies are involved in PPP deals, the contractual or regulatory exclusion of any commercial secrecy right seems to me a very small price to pay in order to bring users’ and taxpayers’ concerns into the core of the PPP project cycle. In other words, if the private sector were to price all costs associated with disclosing the commercial secrets related to PPPs, and include them in the costs of the project, there would still be value for money compared to the opaque (and costly) alternative.

Perhaps that conclusion would vary by type of contract, type of service, or even which country you are in.  But moving from a zero-one decision about commercial secrecy in contract publication to one that looks at costs and benefits is a real step forward in the discussion.  You can join that discussion Thursday May 21 when Marcos will be leading a webinar on his experience — it should be well worth tuning in.