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World Bank “Detailed Methodology for Procurement Country Systems Piloting Program” (2007)
Evaluation and Comments
10 December 2007
Development Finance International, Inc.
Public procurement is the governmentactivity 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)
Industry – WB Shared ObjectiveIndustry – 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.
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.
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)
- 2005 Country Systems proposal indicators
* Capacity Assessment, Risk Assessment tools/details are not available for review
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 biddersin bidding and tendering processes
The 2007 Proposal for Country Systems Pilot Program
Start country-levelQualitative
Assessment Process
CPAR action plan implemented?
OECD/DACCompleted &
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
YES
Country is cleared for
equivalency
Fails to articulate and encourage international best practices
Currently
International ProcurementBest 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
WTOAgreement on Government Procurement
Standard Bidding Documents waived
and replaced by “suggested
minimum content”
“suggested minimum content of bidding
documents” (OECD)– undefined
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)
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)
Decreases protections for biddersin 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)
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 EffectiveControl and Audit Systems
Efficiency of Appeals Mechanism
Degree of Access to Information
Country has in place Ethics andAnticorruption Measures
1a 1b1c 1d 1e 1f 1g 1h
2a 2b2c 2d 2e2f
3a 3b 3c 3d
4a4b 4c 4d
5a 5b 5c 5d
6a 6b6c 6d
7a 7b7c 7d/9e
8a 8b 8c
9a 9b 9c 9d
10a 10b 10c 10d 10e
11a
12a 12b 12d 12e12f 12g12c
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
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.
1a 1b1c 1d 1e 1f 1g 1h
2a 2b2c 2d 2e2f
3a 3b 3c 3d
4a4b 4c 4d
5a 5b 5c 5d
6a 6b6c 6d
7a 7b7c7d/9e
8a 8b 8c
9a 9b 9c 9d
10a 10b 10c 10d 10e
11a
12a 12b 12d 12e12f 12g12c
Requires 3
Requires 2 + Capacity
Development Plan Requires 2
40%
60% OR
Check OECD/DAC Tool Against WB Rated Indicators
Equivalence Methodology Comments
“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”
“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
Summary: ICB Guidelines Acceptably Covered by Required Sub-Indicators
GL 2.7-2.8: 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 2.19-2.20: Standards and Brand Names
Summary: ICB Guidelines Acceptably Covered by Required Sub-Indicators
GL 2.7-2.8: 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 2.19-2.20: Standards and Brand Names
GL 1.16: Procurement Plan
GL 2.13-2.14: Bid Validity and Security
GL 2.21-2.23: Pricing
ICB guidelinesacceptably covered
12%
ICB guidelinesNOT 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)
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 biddersin 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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