procurement - world bank

ProcurementProcurement

Workshop on Public Sector Workshop on Public Sector GovernanceGovernance

New Delhi, IndiaNew Delhi, India31 October 200731 October 2007

outlineoutlineThe nature of procurement The nature of procurement –– set of transactions set of transactions vs. systemvs. systemImplications of a system approach to Implications of a system approach to procurementprocurement

The questions askedThe questions askedThe reforms attemptedThe reforms attempted

Procurement systemProcurement systemCharacteristicsCharacteristicsDrivers of changeDrivers of changeOne systems or multiple systemsOne systems or multiple systems

Outline continuedOutline continued

Procurement reform as a component of Procurement reform as a component of work on improving effectiveness of public work on improving effectiveness of public spending, decentralization, and economic spending, decentralization, and economic growthgrowthExample of transaction vs. system Example of transaction vs. system approach to procurement reform: eapproach to procurement reform: e--procurementprocurement

Procurement can mean different Procurement can mean different things to different peoplethings to different people

Fundamental PrinciplesFundamental Principles

EconomyEconomyEfficiencyEfficiencyOpennessOpennessTransparencyTransparencyAccountabilityAccountability

Effectiveness

Development

Governance

Transactions versus SystemsTransactions versus Systems

Transactions:Transactions:Buying booksBuying booksEngaging contractors Engaging contractors to build roadsto build roadsEngaging consultants Engaging consultants to supervise projectsto supervise projects

Systems:Systems:Laws and regulations Laws and regulations Procurement manuals, Procurement manuals, instructionsinstructionsAudit/post reviewAudit/post reviewCapacity of Capacity of procurement staffprocurement staffRecords, filingRecords, filingComplaint systemsComplaint systems

TWO MODELS OF TWO MODELS OF MONITORING PUBLIC MONITORING PUBLIC

PROCUREMENTPROCUREMENTCONTROL CONTROL TRANSACTIONSTRANSACTIONS

IDENTIFY IDENTIFY DEFFICIENCIESDEFFICIENCIES

IMPROVE IMPROVE TRANSACTIONSTRANSACTIONS

EVALUATING EVALUATING SYSTEMSSYSTEMS

TEST SYSTEMS TEST SYSTEMS (with transactions)(with transactions)

IMPROVE SYSTEMSIMPROVE SYSTEMS

The Component Systems in The Component Systems in ProcurementProcurement

Legislative and Regulatory SystemLegislative and Regulatory System

Organization and Management SystemsOrganization and Management Systems

System of Interaction with Potential ContractorsSystem of Interaction with Potential Contractors

Integrity SystemIntegrity System

Core IssuesCore Issues

• Is money directed to the areas of highest priority?

• Do line departments use money effectively?

• Does the government get good value for money in its purchasing and contracting with the private sector?

• Do we learn from past successes and mistakes?

ChallengesChallenges

Establishing systems that ensure that Establishing systems that ensure that public money is used to purchase needed public money is used to purchase needed thingsthingsUsing sound commercial practicesUsing sound commercial practicesAttracting the best firmsAttracting the best firmsManaging performance of contracts Managing performance of contracts towards timely and successful completiontowards timely and successful completion

International experienceInternational experience

Brazil, UKBrazil, UKImprove commercial practices of government, Improve commercial practices of government, develop methods to use purchasing power of the develop methods to use purchasing power of the government to best effectgovernment to best effectSavings of 10Savings of 10--17%17%


Mexico, Chile, KoreaMexico, Chile, KoreaUse technology to enhance standardization of Use technology to enhance standardization of practicespracticesReduce costs to both the public and private Reduce costs to both the public and private sectorssectors

Characteristics of High Performing Characteristics of High Performing Procurement SystemsProcurement Systems

Rigorous process to select what is going Rigorous process to select what is going to be procuredto be procuredDetermine capital investments that will Determine capital investments that will generate the greatest value and where/ generate the greatest value and where/ how private sector involvement will be how private sector involvement will be most usefulmost usefulUse detailed mechanisms for arriving at Use detailed mechanisms for arriving at cost estimations that reflect market cost estimations that reflect market dynamics and realitiesdynamics and realities


Robust procurement planning process Robust procurement planning process connects to the budget process in order to connects to the budget process in order to ensure that sufficient time is provided to ensure that sufficient time is provided to carry out all procurements in an orderly carry out all procurements in an orderly and effective mannerand effective mannerProcurement plans are published so that Procurement plans are published so that the private sector and civil society is aware the private sector and civil society is aware of the requirements for the yearof the requirements for the year


Ensuring technical specifications are Ensuring technical specifications are accurate and precise, often with the accurate and precise, often with the support of wellsupport of well--qualified independent qualified independent consultantsconsultantsProcurement process itself is conducted in Procurement process itself is conducted in a fair and efficient process that is directed a fair and efficient process that is directed by skilled professionalsby skilled professionals


Foundation of a formal set of rules that apply to Foundation of a formal set of rules that apply to all purchasing using public money that:all purchasing using public money that:

Encourage competitionEncourage competitionRequire proper advertisingRequire proper advertisingEnsure disclosure of criteria for evaluating bidsEnsure disclosure of criteria for evaluating bidsSpecify sufficient time to prepare bidSpecify sufficient time to prepare bidProvide for equality in information to all prospective biddersProvide for equality in information to all prospective biddersRequire public opening of bidsRequire public opening of bidsEstablish skilled evaluation committee free of political pressurEstablish skilled evaluation committee free of political pressureeEvaluate bids on a timely mannerEvaluate bids on a timely mannerSwift awarding contractsSwift awarding contractsPublishing contract award informationPublishing contract award information


Independent appeals mechanismIndependent appeals mechanismTransparency in contract award Transparency in contract award information with contract management information with contract management clearly defined and directed towards clearly defined and directed towards ensuring that projects are completed on ensuring that projects are completed on time, to specifications, and the right pricetime, to specifications, and the right price


Resolution of most disputes on siteResolution of most disputes on siteEffective dispute resolution mechanisms, Effective dispute resolution mechanisms, resolve problems in a fair and timely resolve problems in a fair and timely fashionfashionRigorous internal control mechanisms and Rigorous internal control mechanisms and external oversightsexternal oversights

Procurement ReformProcurement Reform

How to establish more effective How to establish more effective procurement systems in India?procurement systems in India?

Procurement reform as a standProcurement reform as a stand--alone alone activity vs. reform as part of a broader activity vs. reform as part of a broader effort to improve the effectiveness of effort to improve the effectiveness of public spending.public spending.

Drivers of PerformanceDrivers of Performance

Clear & consistent rules and regulationsClear & consistent rules and regulationsImproving management of procurementImproving management of procurementStandardizing procurement practicesStandardizing procurement practicesEnhancing commercial imageEnhancing commercial imageEstablishing effective oversightEstablishing effective oversightCapacity BuildingCapacity Building


Efforts to improve public financial Efforts to improve public financial management performance have existed management performance have existed for over 25 years in developed countriesfor over 25 years in developed countriesIncreasing spending was achieving Increasing spending was achieving expected results.expected results.Appreciation of the connections across the Appreciation of the connections across the public financial management systempublic financial management system

Core PFM LinkagesCore PFM Linkages

A bad budget cannot be implemented A bad budget cannot be implemented effectivelyeffectivelyPoor systems for budget execution will Poor systems for budget execution will disrupt even the best prepared budgetdisrupt even the best prepared budgetAccounting systems are most valuable Accounting systems are most valuable when they provide accurate information on when they provide accurate information on how much things cost.how much things cost.Auditing systems add value when they are Auditing systems add value when they are connected to budget allocations.connected to budget allocations.

PFM Reform Efforts in IndiaPFM Reform Efforts in India

Efforts to improve the comprehensiveness of Efforts to improve the comprehensiveness of budgetsbudgetsEfforts to improve timing and final accounts and Efforts to improve timing and final accounts and responsiveness of auditsresponsiveness of auditsEfforts to track spending and link spending to Efforts to track spending and link spending to physical progressphysical progressEfforts to develop integrated financial Efforts to develop integrated financial management information systemsmanagement information systemsEfforts to establish decentralized financial Efforts to establish decentralized financial management systems.management systems.

A Platform Approach to PFM A Platform Approach to PFM Reform Reform

4 Platforms4 Platforms1. Establishing a credible budget delivering 1. Establishing a credible budget delivering reliable resources to line agenciesreliable resources to line agencies2. Improving internal control to hold managers 2. Improving internal control to hold managers accountableaccountable3. Improving linkages of priorities to budget 3. Improving linkages of priorities to budget planning and implementationplanning and implementation4. Establishing processes to review financial 4. Establishing processes to review financial and performance management and hold and performance management and hold officials accountable for resultsofficials accountable for results

Procurement ReformProcurement Reform

Systems vs. transaction approach Systems vs. transaction approach –– the the example of eexample of e--ProcurementProcurement

What eWhat e--Procurement is NOTProcurement is NOT

• e-Procurement is not a software program

• e-Procurement is not centralization of procurement

What is eWhat is e--ProcurementProcurement

• e-Procurement is the application of technology to public procurement

• An e-Procurement implementation strategy is a management and reform program

• It applies to the acquisition of works, goods and services

• Objectives include to improve efficiency and management

Elements of eElements of e--GP strategyGP strategy

Information & Comm

Technology

Business Process

Re-engineering

Change Management

Policy

Platform

Process

What works (and what doesnWhat works (and what doesn’’t)t)Su

ccess MarkersFa

il M

arke

rs

• Multiple sites

• Devolved strategy

• Technology driven

• IT implementation

• Closed standards / closed access

• Vendor driven

• Multiple sites

• Devolved strategy

• Technology driven

• IT implementation

• Closed standards / closed access

• Vendor driven

• Central site

• Leadership strategy

• Objectives driven

• Procurement reforms implementation

• International standards / open access

• Needs driven

• Central site

• Leadership strategy

• Objectives driven

• Procurement reforms implementation

• International standards / open access

• Needs driven

procurement - world bank

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