Fair and Transparent Blockchain Based Tendering Framework - A Step Towards Open Governance

Abstract

At a time when society is in constant transition to keep up with technological advancement, we are seeing traditional paradigms being increasingly challenged. The fundamentals of governance are one such paradigm. As society's values have shifted, so have expectations of government shifted from the traditional model to something commonly referred to as `open governance'. Though a disputed term, we take open governance to mean a concept, which encourages and facilitates openness, accountability, and responsiveness to citizens. For the success of open governance initiatives, there are some technologies, such as the internet, that are crucial. These technologies enable access to both the data and to engagement activities between citizens and government. There are also other technologies, like blockchain and smart contacts, which could be utilised to assist open governance. A sound starting point would be moving from a system where information is tediously released by a government, on an `as they please' basis, to an infrastructure where critical actions are captured with strong integrity, non-repudiation and evidential guarantees. With an added dimension that facilitates these actions record be accessible to public scrutiny in near real-time. One candidate technology for capturing such actions is blockchain. Initially, blockchains were mainly used to facilitate cryptocurrencies as a record of transactions. The notable example being bitcoin. However, in recent years, blockchains utility is being recognised through smart contracts - potentially a vital building block to realising open and transparent government activities. In this paper, we employ the concept of smart contracts to government tendering activities. The proposed scheme is based on smart contracts, enabling a fair, transparent and independently verifiable (auditable) government tendering scheme. The scheme is then implemented on the Ethereum platform to evaluate the performance and financial cost implications, along with an evaluation of the potential security and auditability challenges.