Prototyping a smart contract based public procurement to fight corruption

Abstract

Corruption in public procurement is a worldwide appearance that causes immense financial and reputational damages. Especially in developing countries, corruption is a widespread issue due to secrecy and lack of transparency. An important instrument for transparency and accounta-bility assurance is the record which is managed and controlled by recordkeeping systems. Block-chain technology and more precisely blockchain-based smart contracts are emerging technological tools that can be used as recordkeeping systems and a tool to mitigate some of the fraud involving public procurement records. Immutability, transparency, distribution and automation are some of the features of smart contracts already implemented in several applications to avoid malicious human interference. In this paper, we discuss some of the frauds in public procurement, and we pro-pose smart contracts to automatize different stages of the public procurement procedure attempting to fix their biggest current weaknesses. The processes we have focused on include the bidding pro-cess, supplier habilitation and delivery verification. In the three subprocesses, common irregulari-ties include human fallibility, improper information disclosure and hidden agreements which con-cern not only governments but also civil society. To show the feasibility and usability of our pro-posal, we have implemented a prototype that demonstrates the process using sample data.