EBRD 2010 Regional Assessment of Public Procurement Legal Frameworks

Assessment Scope, Focus and Methodology

Eliza Niewiadomska Eliza Niewiadomska EBRD Legal Transition ProgrammeEBRD Legal Transition Programme

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Assessment Concept

• First assessment of the public procurement sector covering all 29 EBRD countries of operation • Specially designed benchmark reflecting critical elements of the public procurement process (the EBRD Core Principles)• Public procurement ‘law on the books’ as well as ‘law in practice’ reviewed• Research analysis structured around the Legal Efficiency Approach – a tool developed by the EBRD team for evaluating effectiveness of commercial laws

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Country and sub-region groupings

Eastern European Countries, including Georgia and Russia

Belarus, Georgia, Moldova, Russia and Ukraine

Central Asian Republics, the Caucasus and Mongolia

Armenia, Azerbaijan, Kazakhstan, Kyrgyz Republic, Mongolia, Tajikistan, Turkmenistan and Uzbekistan

EU Member States in the EBRD

Region Bulgaria, Estonia, Hungary, Latvia,

Lithuania, Poland, Romania, Slovakia

and Slovenia

The Balkan Countries and Turkey Albania, Bosnia & Herzegovina, Croatia, FYR Macedonia, Montenegro, Serbia and Turkey

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• Selected from recognised international public procurement standards

• The primary role of a public procurement law

is to facilitate the business process of contracting in a public governance context

• EBRD Core Principles apply to the public procurement process

as a whole: pre-tendering tendering post-tendering phase

Assessment benchmark: EBRD Core Principles

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Benchmark, indicators and evaluation categories (1)

Integrity Safeguards

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.

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Benchmarks & indicators (2)

EfficiencyInstruments

• 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.

• Economy. The law should enable public procurement to be accomplished professionally in a reasonable time.

• Efficiency of the public contract. The legal framework should ensure value for money is achieved.

• 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.

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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.

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The Legal Efficiency Approach in the public procurement regulation

“The extent to which a law and the way it isused provide the economic benefits that it wasintended to achieve”

Basic legal function

Maximising economic

benefit

Simplicity

Speed

Cost

Certainty

• Sound financial management in the public sector

• Value for money

• Transparency

• Economic, social and environmental objectives

Fit-to-context

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Functional Approach: Basic Legal Function

enable sound financial management in the public sector as a whole

deliver ‘value for money’

protect integrity of the process

regulate all stages of the procurement process

respond to economic, social and environmental objectives, if included in the government’s regulatory agenda

provide clear and consistent eligibility rules that cannot be modified by the prejudiced decision of the particular contracting entity

enable the efficient selection of tender type or method based on the specifics of the purchase and contract profile

Public procurement legislation should:

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Legal predictability as a critical element of any sound legal regulation.

Three key components of this indicator for the public procurement system are:

consistency, or predictability

impartiality

resistance to corruption.

There are costs on both sides: a public client conducting the process and a private contractor participating in this process.

Inevitably, higher costs have an adverse impact on the economic benefit of a transaction.

The Legal Efficiency Approach indicators

Reasonable balance between the user-friendly approach and the sophistication required by the local legal and business culture.

Simplicity

For most aspects of the legal process, the less time it takes the more efficient it is.

Speed

• Is the process well adapted to the economic, social and legal context of the market?

• achieve particular policy objectives of the law;

• reach an appropriate balance between fulfilling the contract economic purpose and integrity requirements of the public client;

• respond to contract characteristics (business case);

• respond to the local market situation.

Fit-to-context

CertaintyCost

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Assessment Research Core Areas

• Public Procurement Legislation - a review of the extensiveness of national public procurement legislation, based on a questionnaire, answered in cooperation with national public procurement regulatory bodies

• Local Public Procurement Practice - a survey of local public procurement practice, based on an online questionnaire answered by local contracting entities in the government and utilities sectors in the EBRD region

• National Public Procurement Remedies Systems - a case study a legal analysis of a typical event of prohibited procurement behaviour of the contracting authority, answered by local law firms with a demonstrated expertise in public procurement

• Recognition for Public Procurement Sustainability Policies in Practice- based on an online questionnaire answered by local contracting entities in the government and utilities sectors in the EBRD region

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Evaluation and Rating

FOUR MAIN STAGES

Data collectionMethodical assessment of laws and practiceRating and scoringDegree of compliance

– Each research area carried same maximum scoring potential– No weighting between indicators and questions raised in

each core area– Avoid subjective judgments– Country groupings based on public procurement policies

adopted by governments to enable fair basis for comparison

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Scoring

• Each question in the 4 surveys comprising the assessment was scored from 0 to 4 points depending on the respondent’s answer.

• ‘Positive approach’ – what does 1 point mean?

Yes. Substantial compliance. The legal framework provides for recommended features.

Yes with reservation. Compliance with reservations. The legal framework provides for

some features which are not compliant with the benchmark.

No with reservation. Doubtful compliance. The legal framework provides for features

which may be non compliant with the benchmark.

No compliance. The legal framework provides for features which are not

compliant with the benchmark.

Not applicable. The legal framework does not provide for any recommended

feature

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Compliance Rating

Very High Compliance

High compliance

Medium compliance

Low compliance

Very Low Compliance

above 90%

76% - 90%

60% - 75%

50% - 59%

below 50%

Medium or Satisfactory Compliance

means that public procurement legal framework provides for basic recommended features.

Legal frameworkprovides formost of therecommendedfeatures.

Legal frameworkprovides for somerecommendedfeatures.

Legal frameworkprovides forfeatures which maybe non complaintwith the benchmark.

Legal frameworkdoes not providefor basicrecommendedfeatures.

‘law on the books’

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Rating examples (1)

‘law on the books’ - total compliance ranking in the EBRD region

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Rating examples (2)

Spider graph presents results of legislation review, based on a legislation questionnaire, structured in accordance with the EBRD Core Principles benchmark indicators.

‘law on the books’ - country compliance rating in detail

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Rating examples (3)

‘law on the books’ ‘law in practice’

The case of Albania: country and its region extensiveness vs. effectiveness comparison

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Thank you for your attention.

Eliza NiewiadomskaLegal Transition Programme Office of the General CounselEuropean Bank for Reconstruction and Development+44 207 338 7190Niewiade@ebrd.com