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World Bank “Detailed Methodology for Procurement Country Systems Piloting Program” (2007) Evaluation and Comments 10 December 2007 Development Finance.

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Presentation on theme: "World Bank “Detailed Methodology for Procurement Country Systems Piloting Program” (2007) Evaluation and Comments 10 December 2007 Development Finance."— Presentation transcript:

1 World Bank “Detailed Methodology for Procurement Country Systems Piloting Program” (2007) Evaluation and Comments 10 December 2007 Development Finance International, Inc.

2 Public procurement is the government activity most vulnerable to corruption. - OECD (Integrity in Public Procurement, 2007) The multiplicity of rules may have a negative impact on transparency and lead to legal uncertainties and high transaction costs - OECD (Bribery in Public Procurement, 2007) Procurement agencies may also purposely use and abuse the regulatory diversity. For instance, they may privilege firms by opting for tendering procedures which require no controls. They may also formulate requirements which favour specific firms and constrain market access to specific suppliers. - OECD (Bribery in Public Procurement, 2007)

3 Industry – WB Shared Objective Industry – WB Shared Objective: Strengthen the national procurement systems of Bank borrower countries. Concerns: The proposed pilot methodology and process does not meet the standards of the World Bank’s current procurement system and 50+ years of improving practices in (i) measuring “equivalence” in selection of pilots and (ii) building local capacity. The many loopholes and omissions in the current proposal run counter to, and conflict with, the Bank’s strong position against corruption and for increased transparency.

4 Recommendation: Proposal and tools should be redrawn to preserve and maintain international best practice in procurement The WB should convene a technical working group of world-class experts to develop effective tools to assess a country’s adoption and implementation of international best practice in procurement. The working group should include experienced US and European firms who have been actively involved in analysis of the World Bank’s country system methodologies and the OECD/DAC’s assessment tools and methodologies.

5 Basis for Detailed Comments: World Bank procurement guidelines and Standard Bidding Documents side-by-side with: - Detailed Methodology for Procurement Country Systems Piloting Program, Draft for Consultations and related PowerPoint presentations - OECD/DAC Version 4 Methodology for Assessment of National Procurement Systems (laws and regs only) - CPAR data available (WB website) - Loan agreements where available (limited via WB website data; NCB side letters not available to public) Country Systems proposal indicators * Capacity Assessment, Risk Assessment tools/details are not available for review

6 Fails to articulate, maintain, and encourage international best practices Reduces transparency and accountability, increasing potential for corruption Undermines reliability and accessibility of procurement information Decreases protections for bidders in bidding and tendering processes The 2007 Proposal for Country Systems Pilot Program

7 Start country-level Qualitative Assessment Process CPAR action plan implemented? OECD/DAC Completed & Validated Complete OECD/DAC NO YES Review NCB side letter Flowchart 1: Country Level Qualitative Assessment Process (partial only – see Annex 1) Mandatory score On Critical sub-indicators? Acceptable score on other sub-indicators YES Country is cleared for equivalency

8 Fails to articulate and encourage international best practices Currently International Procurement Best Practices Under Country Systems Proposal ICB Guidelines largely omitted UNCITRAL Model Law not reflected UNCITRAL Model Law World Bank ICB Guidelines Standard Bidding Documents (SBDs) “…the Bank has developed world class standards, bidding documents and selection procedures that maximize the bidding opportunities and provide for a fair and open playing field for all eligible participants” - WB Detailed Methodology, p. 5 WTO work on transparency and multilateral guidelines is not considered New York Convention on Foreign Arbitration WTO Agreement on Government Procurement Standard Bidding Documents waived and replaced by “suggested minimum content” “suggested minimum content of bidding documents” (OECD) – undefined

9 Reduces transparency and accountability, increasing probability of corruption Under the proposal, a pilot country would not be required to: Apply Bank’s Standard Bidding Documents to international tenders (2E) Adhere to Bank norms on fraud and corruption and demonstrate a strong anti-corruption enforcement record (12B) Ensure competitively selection of country procurement personnel based upon procurement knowledge and skills (6A) Ensure that compliance auditors are sufficiently informed about procurement to conduct quality audits that contribute to compliance with regular reporting of issues to management (6A) Conduct effective procurement data collection, analysis, reporting (5B) Make Codes of Conduct / Ethics obligatory or enforceable (12G) Disclose procurement system deficiencies until after loan execution (and then only in loan agreements) (n/a)

10 Undermines reliability, transparency, and accessibility of procurement information Under the proposal, a pilot country would not be required to: Make all procurement information publicly available free of charge and both comprehensive and easy to understand (5A) Specify time frames for disseminating procurement information (invitations, procurement notices or awards) (5A) Use or regulate model tender documents – where documents exist, only a minimum set of clauses is required (2B) Regularly update and make transparent implementing regulations for the country’s procurement systems (2A) Possess a procurement manual for contracting entities (2E) Maintain procurement documents in accordance with international standards (6)

11 Decreases protections for bidders in bidding and tendering process Under the proposal, a pilot country would not be required to: Expressly state all evaluation criteria and stipulate lowest evaluated cost as the sole award criteria (1F) Provide a clear method for evaluating non-price criteria in goods and works tenders (1F) Specify the amount of time for bid preparation (1E) Supply prospective bidders with all information pertaining to a bid Ensure that all pre-qualified applicants are allowed to bid (2C) Supply all bidders with the record of bid opening and explicitly deny bids received after the close date or not read publicly (1G) Guarantee formal recourse for complaints to an independent body such as the World Bank (1H) Specify in advance in the bid documents how currency and payment will be handled (1E)

12 Public Procurement Legislative and Regulatory Framework Existence of Implementing Regulations / Documentation Public Procurement System Integrated with Governance System Country has a Functioning Regulatory Body Existence of Institutional Development Capacity Country Procurement Operations and Practices are Efficient Functionality of the Public Procurement Market Existence of Contract Admin. and Dispute Resolution Country has Effective Control and Audit Systems Efficiency of Appeals Mechanism Degree of Access to Information Country has in place Ethics and Anticorruption Measures 1a1b1c1d1e1f1g1h 2a2b2c2d2e2f 3a 3b3c3d 4a4b4c4d 5a5b5c5d 6a6b6c6d 7a7b7c 7d/ 9e 8a8b8c 9a9b9c9d 10a10b10c10d10e 11a 12a12b12d12e12f12g12c Requires 3 Requires 2 + Capacity Development Plan* Requires 2 OECD/DAC Tool vis-à-vis 2005 WB Proposal * Set forth in Loan Agreement only; no methodology for monitoring; consequences for non-compliance unclear

13 2005 proposal: Withdrawn amidst concerns that procurement standards were “set too low” by making only 35% sub-indicators “mandatory” 2007 proposal: While 40% of sub-indicators now require “full compliance” for country systems pilot program eligibility, some have been downgraded, others watered down. Many are less rigorous than WB’s ICB. 1a1b1c1d1e1f1g1h 2a2b2c2d2e2f 3a 3b3c3d 4a4b4c4d 5a5b5c5d 6a6b6c6d 7a7b7c 7d/ 9e 8a8b8c 9a9b9c9d 10a10b10c10d10e 11a 12a12b12d12e12f12g12c Requires 3 Requires 2 + Capacity Development Plan Requires 2 40% 60% OR Check OECD/DAC Tool Against WB Rated Indicators

14 Equivalence Methodology Comments

15 “Detailed” Methodology is vague on key procedures OECD/DAC baseline indicators are substantially more ambiguous than current ICB Guidelines; even “critical” indicators do not require the same degree of rigor as the current ICB Guidelines OECD/DAC v.4 lacks meaningful operational assessment tools or methodology Unclear how OECD/DAC v. 4 Benchmarking Tool will be applied or how it will be validated (NB: Will it remain a country self-assessment and self-validation as it is today?) Unclear why only a select few deficiencies require improvement through a Capacity Development Plan. Further the deficiencies will be included in the loan agreement only post-effectiveness. Today, loan agreements are withheld by the Bank pending effectiveness and are not easily available to the public, if at all, on Bank’s website. Unclear why certain sub-indicators are “critical” meaning required to qualify for pilot, others are “critical” but not required to qualify for pilot, and others “non- critical”

16 “Detailed” Methodology is vague on key procedures Unclear how the Bank’s CPAR, NCB Side Letter, and OECD/DAC assessments are factored into a measurement of “equivalence” Lacks comprehensive details of the “step-by-step analysis” to determine “equivalence” (who is involved, how it proceeds, how it is assessed and validated, and to whom testing results will be made available) Unspecified time frame for implementation of agreed upon Capacity Development Plan or guidance regarding assessment and validation No evident procedures for assessing progress required by the Loan Agreement, or specifics should a country fail to take effective actions. No detail provided for new project risk assessment or capacity assessment tools and methodology

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18 Summary: ICB Guidelines Acceptably Covered by Required Sub-Indicators GL : Notification and Advertising* GL 1.10: Joint Ventures GL 2.43: Dispute Settlement* GL 1.15: Fraud Provisions / Bid Documents of Large Contracts** GL 1.12: Misprocurement GL : Standards and Brand Names

19 Summary: ICB Guidelines Acceptably Covered by Required Sub-Indicators GL : Notification and Advertising* GL 1.10: Joint Ventures GL 2.43: Dispute Settlement* GL 1.15: Fraud Provisions / Bid Documents of Large Contracts** GL 1.12: Misprocurement GL : Standards and Brand Names ICB Guidelines NOT Acceptably Covered GL : Appropriate International Procurement GL : Eligibility GL 1.16: Procurement Plan GL 2.6: Two-Stage Bidding GL : Prequalification of Bidders GL : General Principles of Bidding Documents GL : Bid Validity and Security GL 2.15: Language GL : Clarity of Bidding Documents GL : Pricing GL : Price Adjustment GL : Transportation and Insurance GL : Currency Provisions GL : Terms of Payment GL 2.38: Conditions of Contract GL : Performance Security GL 2.41: Liquidated Damages and Bonus Clauses GL 2.44: Time for Preparation of Bids GL 2.45: Bid Opening Procedures GL 2.46: Clarifications or Alterations of Bids GL 2.37: Alternative Bids GL : Evaluation and Comparison of Bids GL : Domestic Preferences GL 2.57: Extension and Validity of Bids GL 2.58: Postqualification GL 2.59: Award of Contract GL : Rejection of All Bids GL 2.65: Debriefing GL 2.47: Confidentiality GL Appendix 3: Complaints GL 2.42: Force Majeure GL : Type and Size of Contracts GL 1.9: Advance Contracting GL 1.14: Fraud and Corruption

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21 ICB guidelines acceptably covered 12% ICB guidelines NOT acceptably covered 88% Conclusions The 2007 methodology for assessing laws / regulations does not improve upon the withdrawn 2005 proposal. The proposal offers no methodology to assess day-to- day operational procurement practices. The proposal does not measure equivalence with current Bank procurement rules and practice. Essential elements of the proposal are omitted (compliance and risk assessment tools)

22 Fails to articulate, maintain, and encourage international best practice Reduces transparency and accountability, increasing potential for corruption Undermines reliability and accessibility of procurement information Decreases protections for bidders in bidding and tendering processes A step backwards in effective and accountable international procurement Counter to good governance and sustainable economic growth The 2007 Proposal for Country Systems Pilot Program =


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