1. 1 Use of Country Procurement System (UCS) HIGH LEVEL PROCUREMENT FORUM V. S. (Krish) Krishnakumar Regional Procurement Manager Africa Region - The World Bank Tunis – November 16 to 17, 2009 Challenges and Opportunities

2. 2 CONTENTS What Do We Mean by Country Procurement System? Experience and Support Country System Assessments and Piloting Program Status of Assessments Identified Gaps in the Current System The way forward

3. 3 What is Country Procurement System? There is widespread misconception amongst governments, donors and other stakeholders: What Do They Say? –“Country Procurement Laws and Regulations” –“Country Internal Procurement Process and Procedures” –“Country X has its Laws and Regulations, Don’t Insist on Use of Donor Procedures and Guidelines” –“Use Country Contract Approval Process. No Reviews by Financing Institutions/Agencies”

4. 4 What Does Country Procurement System Really Mean? –Public Procurement Legislative and Regulatory Framework –Implementing Regulations and Documentation – Bidding, Contract Documents –Mainstreaming and Integration of Public Procurement System into the Public Sector Governance System - b udget law and financial procedures support timely procurement, contract execution, and payment –Functional Regulatory body - separation and clarity to avoid conflict of interest and direct involvement in the execution of procurement transactions –Institutional Development Capacity – d ata collection and analysis, training, staff development, performance measurement –Efficient Procurement Operations and Practices - capacity, competence of staff, records keeping –Functionality of the public procurement market – competition, open access –Existence of contract administration and dispute resolution - Contracts include dispute resolution procedures, competent contract management –Effective Control and Audit systems –Efficient Appeals Mechanism –Access to information –Ethics and Anticorruption Measures

5. 5 Bank’s Experience and Support From early 90’s, the Bank, in conjunction with other partners and governments, carried out several Country Procurement Assessment Report (CPAR) in over 40 countries in Africa. Institutional Development Funds (IDFs), Specific Procurement Reform Components in Investment Lending Operations (e.g. Public Sector Reforms, Governance and Transparency Projects etc.) and Poverty Reduction Support Credits (PRSCs) provide support to implement CPAR action plans towards the strengthening of country systems. Progress To Date: Since the early 90s, 80% of the countries have set up sound legal and regulatory framework; and are at different stages of implementation of Institutional and Management Capacity; and of Credible Integrity and Transparency of Public Procurement System. There is Full Commitment from ALL stakeholders to Improve and Strengthen the Country Systems.

6. Financial Support for Implementation –Bank’s IDF and TA for Governance and PFM: Over $4 million in IDF between $300 to $500,000 to support procurement reforms in over 12 countries in Africa, including WAEMU and COMESA Over $34 million to 16 countries provided through Investment Lending Operations, such as Governance and Transparency, Public Sector Reforms, PFM Reforms etc., specifically as a component for procurement reforms –Other Financial Support $10,5 million provided by the AfDB to support regional procurement reform in Africa (WAEMU, COMESA); About $25 million from bilateral donors (EU, OECD and US) provided through Grants. 6

7. 7 Bank’s UCS Piloting Program –WB’s UCS Paper approved by the Board of Directors on April 2008. –Wide and substantive consultation process with stakeholders in 78 member countries (including several AFR countries). –Recommendation of a Piloting Program for UCS in procurement in 8-10 countries, at least one in each region. –Great opportunity to identify specific gaps and take corrective actions

8. 8 Bank’s UCS Piloting Program (Cont’d) 1. Proposed 3-stage methodology for selecting candidate countries through the following process: Stage 1: Assessment of quality of procurement system using Bank’s knowledge and applying the OECD/DAC Procurement Benchmarking Tool Stage 2: Detailed evaluation of equivalence and consistency of national procedures with Bank’s procurement policy and guidelines. Stage 3: (i) Compliance review with the country’s policies and procedures, and past performance/capacity of Project’s Agencies designated; (ii) Assessment of the fiduciary risks of pilot projects; and (iii) Incorporation of a strong program of gap- filling analysis and capacity building in procurement.

9. 9 Implementation Status in Africa Seven (7) countries have been nominated as potential candidates for UCS (5 in AFR and 2 in MENA regions): Senegal and Rwanda: Stages 1 and 2 completed with a one-year capacity development strategy to address gaps. Possibility of Rwanda being selected as a pilot in one project Ghana and Burkina Faso: Stage 1 completed and countries needs to agree on mitigation measures to fill gaps identified. Mauritius: Stage 1 to commence in early December 2009 Morocco: Stage 1 completed and stage 2 is under way. The country needs to agree on mitigation measures to fill gaps. Jordan: This country has recently indicated its interest in the piloting program and the stage 1 is scheduled by end of 2009.

10. 10 Major Gaps identified in the Selected Countries More than 50% of potential countries did not achieve the following sub-indicators (mandatory 3) The procurement law does not cover all of the public funds users or type of procurement (concessions). Rules of participation restrict competition. General conditions of contracts do not officially exist. Dispute resolution procedures and mechanisms (including handling complaints) are not independent and transparent. Weak enforcement of outcome of dispute resolution process, complaints, audits, sanctions….etc. Absence of special measures to detect and prevent fraud and corruption (F&C), and weak secure mechanism for reporting F&C and unethical behavior. Refer to the three (3) page summary from a real case – an example

11. 11 The Way Forward Countries:  Strong political commitment to fill identified gaps, specially to fight F&C, and enforce audits recommendations and sanctions.  Build strong institutions to ensure sustainability of reform outcomes.  Modernize the system taking account of cross-cutting issues (civil service reform, PFM reform, Judicial sector reform, etc.).  Focus on Capacity development, Sanctions, Upholding the integrity of the systems by enforcing the laws and regulations, incentives for good performance etc. Other Stakeholders:  Do not act in isolation but integrate your support and actions.  Mobilize funds to support the implementation of Action Plan.  WB awaiting Board approval on status report and specific recommendations. WHAT IS THE COST OF NOT INVESTING IN CREDIBLE AND EFFICIENT COUNTRY SYSTEMS?