Strengthening the Government Procurement System through Blockchain-Based Smart Contracts as a Responsive Measure to Combat Corruption Practices

Abstract

Introduction: Government Procurement of Goods and Services (PBJ) plays a strategic role in national development yet remains plagued by issues such as corruption, collusion, and nepotism. To address these challenges, reform is necessary through the adoption of consortium blockchain-based smart contract technology. This approach is expected to enhance transparency, efficiency, and accountability in public procurement. This research proposes a model for an ideal digital-based procurement policy aimed at establishing cleaner and more trustworthy governance.

Objectives: This research explores the integration of blockchain-based smart contracts within the government procurement sector, focusing on legal aspects, regulatory strengthening, and policy reform prospects to establish a transparent and corruption-free procurement system.

Methods: The research adopted a doctrinal legal methodology, offering a law-technology approach through blockchain-based smart contracts to reform public procurement. It emphasized the urgency of regulatory development, the effectiveness of government contracts, and solutions to corruption practices, while also addressing the legal challenges of implementation.

Results: Indonesia, as a welfare state, is mandated to ensure good governance, including within the domain of government procurement. However, the findings indicated that the PBJ sector often becomes a hotspot for corruption. The implementation of consortium blockchain technology and smart contracts can enhance transparency, and accountability, and minimize deviations. This system facilitates secure and automated transaction records, monitored by institutions such as LKPP, APIP, BPK, and KPK. With periodic audits and a legal basis under the Electronic Information and Transactions Law (UU ITE), the system is expected to realize efficient, transparent, and integrity-driven procurement in line with the principles of good governance.

Conclusions: Government procurement continues to face challenges related to effectiveness, efficiency, and accountability, which foster corruption. To overcome these issues, comprehensive reform is essential through the implementation of consortium blockchain and smart contract technologies, ensuring data transparency and integrity. The success of this transformation requires strong collaboration among stakeholders and the integration of the system into the five procurement stages as outlined in the Draft Law on Procurement, in alignment with other regulations such as the PPSK Law regarding digital currency (digital rupiah).