Measuring Efficiency in International Public Procurement

Anjali Kumar, Arvind Nair and Juliane Piecha

International Public Procurement Conference Dublin, August 2014

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IEG WORLD BANK | IFC | MIGA

• Apply Best Practices through Procurement Guidelines

• Economy and Efficiency in Project Implementation

Fiduciary

Responsibility:

World Bank Procurement: Context

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• Reducing Transaction Costs

• Better Procurement Planning, clear and appropriate Evaluation criteria

• Effective public procurement in client countries enables better use of government budgets

Value

for

Money

World Bank policies and standard bidding documents provide many of the mechanism necessary to consider Value for Money factors.

World Bank Procurement Review Process

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Source: World Bank, IEG

• Clients’ concerns: Timeliness, delays in procurement • Analysis of process efficiency in procurement transactions needed

“No-Objection” Steps for Prior Review

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World Bank: Procurement Efficiency Data

• Centralized system: Focus on limited key fiduciary data • Regional systems: Information for specific monitoring needs Unable to provide data for analysis of procurement process steps

Bank-wide database for contract information

Procurement Plan Execution System SEPA:

Latin America and Caribbean Region

Procurement Cycle Tracking System PROCYS:

Africa Region

Procurement Portfolio Dashboard MNA-dash:

Middle East & North Africa Region

Efforts towards integrated system:

Electronic No-Objection

Data and Methodology

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• Analysis of Contract Data: Bank Databases + Sample of 500+ contracts

• Data on prior-reviewed contracts constructed from questionnaire

surveyed in eleven client countries

• Information on dates of each step where Bank is required to provide its “No-Objection”

• Dataset records other country and contract attributes that could potentially affect overall procurement efficiency

• Average Elapsed Times, Frequency Distributions and Regression Analysis of time taken in intermediate steps of procurement process

• Current Bank tracking systems not equipped to provide key information on individual procurement process steps

Basic Sample Characteristics

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Number of Observations by Country, Fiscal Year, Procurement Category and Sector

Average Elapsed Times

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Average Elapsed Time Between Steps in the Procurement Process all Contracts (days)

PROCUREMENT PROCESS

STEPS

Borrower

first Submission to Bank of draft Bid (preQ)

Documents

Bank final No Objection to draft

Bid (PreQ)

Documents

Borrower issue of Bid

(PreQ)

Documents

Borrower bid (PreQ)

opening

date/ Minutes

Borrower submission to

Bank of Bid Evaluation

Report

Bank No-Objection to

Bid Evaluation

Report

Date of Contract

Signature Issue of Specific Procurement Notice

171.9 169.0 135.1 126.7 226.4 253.0 269.5

Borrower first Submission to Bank of draft Bid (preQ) Documents

56.6 66.0 121.8 224.3 252.9 286.1

Bank final No Objection to draft Bid (PreQ) Documents

24.6 77.7 178.3 199.8 231.8

Borrower issue of Bid (PreQ) Documents

59.7 170.6 190.4 223.3

Borrower Bid (PreQ) Opening date/ Minutes

118.4 144.9 178.0

Borrower Submission to Bank of Bid Evaluation Report

37.4 73.7

Bank No-Objection to Bid

Evaluation Report

48.2

Source:IEGanalysisofasampleofcontractdata

On average, it takes 286 days to sign a contract – but long tail of outliers

Variations in Elapsed Times

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Distribution of Days from Issue of Specific Procurement Notice to Contract signature

Distribution of elapsed times shows existence of extreme values for all procurement methods, especially high values for ICB and QCBS contracts

02

04

06

0

Nu

mb

er

of

Co

ntr

acts

0 500 1000 1500 2000Number of Days

All Contracts

05

10

15

Nu

mb

er

of

Co

ntr

acts

0 500 1000 1500 2000Number of Days

QCBS

05

10

15

20

25

Nu

mb

er

of

Co

ntr

acts

0 500 1000 1500 2000Number of Days

NCB

01

02

03

0

Nu

mb

er

of

Co

ntr

acts

0 500 1000 1500 2000Number of Days

ICB

Source: IEG analysis of a sample of contract data

What explains Time Taken in the Procurement Process?

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Contract value emerges as important determinant of elapsed time

Contracts procured using NCB appear to take less time than ICB

Country capacity and governance matter

Diagnostic of delays requires better data availability, e.g. identification of resources used, number of iterations, complexity of contract, etc.

Fin

din

gs f

rom

Sta

tist

ical

An

alys

is

Determinants of Procurement Efficiency (cont’d)

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Processing Time Submission of Draft Bid Documents to Bank’s No-Objection to Final Bid Evaluation Report

Note: N=213; Specifications includes country and regional level controls. Robust standard errors in parentheses, *** p<0.01, ** p<0.05, * p<0.1 Source: IEG analysis of sample contract data

Generalizability to other Procurement Contexts

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Public Procurement deals with trade-off between Compliance and performance:

• Inefficiencies reduce Value for Money

• Need to measure and analyze procurement information

High level of variability in processing times due to country indicators or review process?

• Setting right incentives for use of existing flexibilities

• Contribute to better informed procurement strategies globally

Integrated data management as strategic tool to improve procurement performance:

• MDBs in unique position to collect contract data on transactions

THANK YOU

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