Blockchain in E-Tendering Systems: A New Anti-Corruption Technique or A False Hope

Public procurement is a highly profitable field for the parties involved, making it vulnerable to a high level of fraudulent activities, particularly corruption. Several initiatives have been adopted on the EU level in order to “treat” corrupted tendering systems by digitalizing the tendering process. For instance, all European states have to adopt an e-procurement system, where all operators involved must submit tenders online, in an attempt to improve the transparency of the procedure by making the listing and bidding publicly available online. However, the transparency measures already in place have been proved to be insufficient to tackle the problem of corruption due to the data quality barriers in the current system. In that respect, one of the main struggles is the effective identification of fraud due to the present data silos regarding the internal procurement procedures. Moreover, the arguably unstructured nature and a significant heterogeneity of the available to the public data makes the barrier even stronger and precludes the citizens from effectively comprehending the decision-making process behind tendering. As a result, it can not only facilitate the prosperity of corruption in the public procurement field, but also distort public trust in the tendering process as a whole.This article argues for the use of blockchain technology in public procurement platforms to reduce corruption in public procurement in the EU by improving transparency and thereby increasing government accountability. The use of blockchain technology in the public procurement platforms can contribute to combat corruption in public procurement for a number of reasons. Blockchain is characterized by being a very transparent, easily auditable, and trustworthy system, which can record and store all the data that were involved in the public procurement process. Blockchain can also ensure equality of all tenders’ participants by ensuring that the same amount of information has been provided to each and every participant. The blockchain technology therefore increases transparency of the procurement process, and hence enables the stakeholders involved, such as tender applicants and citizens, to recognize fraudulent activities within the system, and consequently hold governments accountable.