1. EBRD 2010 Regional Assessment – Scope, Focus & Main Findings on the Public Procurement Law and Practice in the EBRD region Eliza Niewiadomska Legal Transition Programme European Bank for Reconstruction and Development

2. 2 Assessment Concept First assessment of the public procurement sector covering all EBRD countries of operations (29 countries) Specially designed benchmark reflecting critical elements of the public procurement process (the EBRD Core Principles) Research analysis structured around the Legal Efficiency Approach concept – a tool developed for evaluating commercial laws

3. 3 Core Principles are based on recognised international standards: –WTO GPA –UNCITRAL Model Law –EU Directives –IFIs’ procurement policies Core Principles apply to the procurement process as a whole: –pre-tendering –tendering –post-tendering phase Public Procurement Legal Framework Core Principles AccountabilityIntegrityTransparency Fair competition EconomyEfficiencyProportionality Reasonable exemptions EnforceabilityStability Assessment benchmark: EBRD Core Principles

4. 4 Benchmarks & indicators (1) 1. Accountability of public sector spending. The legal framework should promote accountability across all stages of the procurement process, balancing public and business dimensions of the process. 2. Integrity of the procurement process. The legal framework should promote integrity between the procurement function, transparency in delivering government policy and value for money. 3. Adequate level of transparency. For public procurement to be acceptable to all stakeholders it should be seen to be transparent and objective. Integrity Safeguards

5. 5 Benchmarks & indicators (2) Efficiency Instruments 1. Competition. The legal framework should promote fair competition and prevent discrimination. Tenders and tenderers of equivalent status should be given equal treatment. Domestic preferences should not be allowed. 2. Economy. The law should enable public procurement to be accomplished professionally in a reasonable time. 3. Efficiency of the public contract. The legal framework should ensure value for money is achieved. 4. Value of proportionality. The formality of the public procurement procedure should reflect the scope and size of the contract. The contracting entity should align the value and scope of the contract with a choice of the procurement procedure.

6. 6 Benchmarks & indicators (3) Institutional & enforcement measures Uniformity. The legal framework should be comprehensive and limit derogations to reasonable exemptions. The regulation should be unitary, comprehensive and cover all public contracts. Stable, but flexible. To make the process efficient, stakeholders must learn their roles, rights and obligations, within a stable legislative framework. At the same time, the framework should be capable of flexible so as to accommodate the changing market. Enforceability. Public procurement law should be easy to enforce. Regulatory and review and remedies mechanisms should be able to assess the compliance of the contracting entities and employ corrective measures when necessary.

7. Assessment Research Core Areas ‘law on the books’ - quality of public procurement legal framework Regulatory Gap - what has been achieved and what remains to be done regarding development of legislation ‘law in practice’ - quality of local public procurement practice Implementation Gap – a gap between standards and local public procurement practice

8. Country and sub-region groupings EU Member States in the EBRD Region (Bulgaria, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia and Slovenia) Balkan Countries and Turkey (Albania, Bosnia & Herzegovina, Croatia, FYR Macedonia, Montenegro, Serbia and Turkey) Eastern European Countries and Russia (Belarus, Georgia, Moldova, Russia and Ukraine) Caucasus and Central Asian Republics (Armenia, Azerbaijan, Kazakhstan, Kyrgyz Republic, Mongolia, Tajikistan, Turkmenistan and Uzbekistan)

9. Main Findings

10. EBRD Public Procurement Assessment Results: Total Compliance Rating in the EBRD region* *Data not available for Azerbaijan, Mongolia, Kazakhstan and Turkmenistan

11. Total Compliance Rating: Legislation, Practice and Sustainability of Public Procurement ‘law on the books’‘law in practice’totalsustainability Albania83818251 Armenia73807647 Azerbaijan51000 Belarus73626710 Bosnia and Herzegovina67727013 Bulgaria778380 Croatia75807832 Estonia71767411 FYR Macedonia63847641 Georgia84788148 Hungary91788133 Kazakhstan69000 Kyrgyz Republic64737030 Latvia77807830 Lithuania79 38 Moldova71556214 Mongolia71000 Montenegro85798227 Poland69887922 Romania7172 38 Russia73797637 Serbia71677027 Slovak Republic73777435 Slovenia7581790 Tajikistan61807256 Turkey81868355 Turkmenistan26000 Ukraine59736722 Uzbekistan49706071

12. EBRD Public Procurement Assessment Results: Total Compliance of the National PP Legislation

13. EBRD Public Procurement Assessment Results: Total Compliance of the Local PP Practice 15 4 1 7

14. EU countries - Summary of Results Average high to very high compliance with the benchmark PP legislation ensures competition, transparency, legal and institutional PP framework is comprehensive Good procurement capacity, in practice local contracting entities adopt internal procurement rules to increase economy and efficiency of procurement Room for further improvement – procurement planning, methods of contract valuation, eProcurement solutions, public contract management, openness to other than national currencies and languages

15. EU countries: the case of Hungary Very high compliance in ‘law on the book’ assessment High compliance in local practice assessment Implementation Gap: –transparency –enforceability –proportionality 1. Accountability, 2. Integrity, 3. Transparency, 4. Competition, 5. Economy of the process, 6. Efficiency of public contract, 7. Proportionality, 8. Uniformity, 9. Stability, 10. Flexibility, 11. Enforceability. ‘law on the books’ practice

16. Balkan Countries & Turkey - Summary of Results Average medium to high compliance with the benchmark PP legislation promotes competition and transparency High scores in the enforceability indicators due to dedicated mechanisms (simple and fit to context) Medium procurement capacity but widely standardised tendering documents, notices and reports Room for further improvement: economy and efficiency of procurements, eProcurement solutions, procurement capacity

17. Balkan Countries & Turkey: the case of Turkey High compliance in legislation and local practice assessment Implementation Gap in integrity indicators Strengths in practice: –Stability of the process –Focus on economy and efficiency of procurements ‘law on the books’ practice 1. Accountability, 2. Integrity, 3. Transparency, 4. Competition, 5. Economy of the process, 6. Efficiency of public contract, 7. Proportionality, 8. Uniformity, 9. Stability, 10. Flexibility, 11. Enforceability.

18. Eastern European Countries & Russia - Summary of Results Average medium to high compliance with the benchmark PP legislation promotes competition and transparency Inadequate, complicated or expensive enforcement ‘Combating corruption, ignoring efficiency’ Room for further improvement – economy and efficiency of procurements, eProcurement solutions, procurement capacity, removing barriers to foreign tenderers

19. Eastern European Countries & Russia : the case of Georgia High compliance in legislation and local practice assessment Strengths in practice: –Appropriate balance between integrity safeguards and efficiency instruments –Focus on economy and efficiency of procurements –Proportionality ‘law on the books’ practice 1. Accountability, 2. Integrity, 3. Transparency, 4. Competition, 5. Economy of the process, 6. Efficiency of public contract, 7. Proportionality, 8. Uniformity, 9. Stability, 10. Flexibility, 11. Enforceability.

20. Caucasus & Central Asian Republics - Summary of Results Average low to medium compliance with the benchmark PP legislation based on outdated standards is now incomprehensive Inadequate, complicated or expensive enforcement Room for further improvement – implementing both integrity safeguards and efficiency instruments, eProcurement solutions, procurement capacity, removing barriers to foreign tenderers

21. CIS & Mongolia: the case of Armenia Medium compliance in legislation assessment High compliance in practice assessment Regulatory Gap: Institutional framework Strengths in practice: Focus on economy and efficiency of procurements ‘law on the books’ practice 1. Accountability, 2. Integrity, 3. Transparency, 4. Competition, 5. Economy of the process, 6. Efficiency of public contract, 7. Proportionality, 8. Uniformity, 9. Stability, 10. Flexibility, 11. Enforceability.

22. Summary of Results Several regulatory gaps in most of the countries in the EBRD region Substantial implementation gaps or the opposite, where practice is driven by the market Frequently unbalanced legal frameworks; significant gaps in both integrity safeguards and efficiency instruments Outdated legislation regarding communication: no electronic communication enabled and usually no access to tender documentation on the Internet, eProcurement is uncommon Insufficient attention to the procurement capacity and qualification of public procurement staff Review mechanism available, but frequently only administrative Low fees for tender documents but still high participation costs due to the formal requirements

23. Trends in the EBRD Region PP Legislation: low to medium compliance Local PP Practice: medium to high compliance Regulatory Institutions: frequently lacking capacity Sustainability: a new concept, not implemented in many countries Adequacy of policy-making: frequently unbalanced or irresponsive to local business culture and market requirements eProcurement: generally unavailable, some countries are advanced (Albania, Armenia, Lithuania, Turkey)

24. Thank you for your attention.