ABSTRACT. Corruption, low efficiency and untransparent procurement are among problems of the urban governance of the public procurement. Blockchain powered Smart contracts are a potentially useful solution to these problems. This is a study on automating public procurement to minimize corruption in cities using smart contracts. It studies their capability to render processes open, effective and just. Smart contract is a form of contract which executes itself and works on codes, so that tasks such as bidding and awarding of contracts and payment of funds occur instantaneously without the intercession of man. This minimizes errors and fraudsters. The paper evaluates some of the advantages of smart contracts, including more efficient procedures, reduced expenses, and greater confidence between citizens. It also examines some of the challenges, such as complex technicality, high implementation expenses, and legal rules that are not explorable. The study proves that, based on the survey findings, there is substantial evidence on the effectiveness of smart contracts in enhancing transparency and accountability, but underlying issues on its usability and legality still existed. The findings indicate that smart contracts may revolutionize the procurement process in urban areas and make it reliable and open. But the cities must overcome obstacles such as training and regulations so as to reap the full benefit. The article advises that one should invest in user-friendly technology and understandable legal framework as an adoption aid. Smart contracts will enable urban governance to be more effective, efficient, transparent, and corruption-free and this will result in improved city services and sustainable cities. The study has pragmatic knowledge that can be helpful to policy makers and urban planners in the discharge of modernizing procurement systems.

Keywords: smart contracts; public procurement; urban governance; blockchain; transparency; corruption

How to cite: Nica, E., & Bîgu, A.-M. (2023). “Smart Contracts in Urban Governance: Automating Public Procurement and Reducing Corruption,” Smart Governance 2(2): 7–21. doi: 10.22381/sg2220231.

Received 12 February 2023 • Received in revised form 25 June 2023
Accepted 27 June 2023 • Available online 28 June 2023