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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 government activity most vulnerable to corruption.

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World bank detailed methodology for procurement country systems piloting program 2007 l.jpg
World Bank “Detailed Methodology for Procurement Country Systems Piloting Program” (2007)

Evaluation and Comments

10 December 2007

Development Finance International, Inc.


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Public procurement is the government Systems Piloting Program” (2007)activity 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)


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Industry – WB Shared Objective Systems Piloting Program” (2007): 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.


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Recommendation Systems Piloting Program” (2007):

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.


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Basis for Detailed Comments Systems Piloting Program” (2007):

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


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The 2007 Proposal for Country Systems Pilot Program Systems Piloting Program” (2007)

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


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Start country-level Systems Piloting Program” (2007)

Qualitative

Assessment

Process

Flowchart 1: Country Level Qualitative Assessment Process (partial only – see Annex 1)

Mandatory score

On

Critical

sub-indicators?

CPAR action plan

implemented?

OECD/DAC

Completed &

Validated

Review NCB

side letter

YES

NO

YES

Complete

OECD/DAC

Acceptable

score on

other

sub-indicators

YES

Country is cleared

for

equivalency


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Fails to articulate and encourage Systems Piloting Program” (2007)international best practices

Under Country Systems Proposal

Currently

“…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

World Bank ICB Guidelines

International Procurement

Best Practices

ICB Guidelines largely omitted

“suggested minimum content of bidding documents” (OECD)

– undefined

Standard Bidding Documents (SBDs)

Standard Bidding Documents waived and replaced by “suggested minimum content”

UNCITRAL Model Law

UNCITRAL Model Law not reflected

WTO

Agreement on Government Procurement

New York Convention on Foreign Arbitration

WTO work on transparency and multilateral guidelines is not considered


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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)


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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)


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Decreases protections for bidders procurement informationin 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)


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OECD/DAC Tool vis-à-vis 2005 WB Proposal procurement information

Requires 2 + Capacity Development Plan*

Requires 3

Requires 2

* Set forth in Loan Agreement only; no methodology for monitoring; consequences for non-compliance unclear

Public Procurement Legislative and Regulatory Framework

1a

1c

1d

1e

1f

1g

1h

1b

Existence of Implementing Regulations / Documentation

2f

2c

2d

2a

2b

2e

Public Procurement System Integrated with Governance System

3b

3c

3d

3a

Country has a Functioning

Regulatory Body

4b

4a

4c

4d

Existence of Institutional Development Capacity

5a

5b

5c

5d

Country Procurement Operations and Practices are Efficient

6c

6a

6b

6d

Functionality of the

Public Procurement Market

7c

7a

7b

7d/9e

Existence of Contract Admin. and Dispute Resolution

8a

8b

8c

Country has Effective

Control and Audit Systems

9a

9b

9c

9d

Efficiency of

Appeals Mechanism

10a

10b

10c

10d

10e

Degree of

Access to Information

11a

Country has in place Ethics and

Anticorruption Measures

12a

12b

12d

12f

12c

12e

12g


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Check OECD/DAC Tool Against WB Rated Indicators procurement information

Requires 2 + Capacity Development Plan

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.

Requires 3

Requires 2

1a

1c

1d

1e

1f

1g

1h

1b

2f

2c

2d

2a

2b

2e

3b

3c

3d

3a

4b

4a

4c

4d

5a

5b

5c

5d

40%

6c

6a

6b

6d

7c

7a

7b

7d/

9e

8a

8b

8c

9a

9b

9c

9d

60%

OR

10a

10b

10c

10d

10e

11a

12a

12b

12d

12f

12c

12e

12g


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Equivalence procurement information

Methodology Comments


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“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”


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“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


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Summary: ICB Guidelines Acceptably Covered by Required Sub-Indicators

GL 1.10: Joint Ventures

GL 2.7-2.8: Notification and Advertising*

GL 1.12: Misprocurement

GL 2.43: Dispute Settlement*

GL 1.15: Fraud Provisions / Bid Documents of Large Contracts**

GL 2.19-2.20: Standards and Brand Names


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ICB Guidelines Sub-IndicatorsNOT Acceptably Covered

GL 2.59: Award of Contract

GL 2.38: Conditions of Contract

GL 1.6-1.8: Eligibility

GL 2.42: Force Majeure

GL 2.47: Confidentiality

GL 2.49-2.54: Evaluation and Comparison of Bids

GL 2.58: Postqualification

GL 1.3-1.4: Appropriate International Procurement

GL 2.6: Two-Stage Bidding

GL 2.39-2.40: Performance Security

GL 2.37: Alternative Bids

GL 1.16: Procurement Plan

GL 2.45: Bid Opening Procedures

GL 2.15: Language

Summary: ICB Guidelines Acceptably Covered by Required Sub-Indicators

GL 2.13-2.14: Bid Validity and Security

GL 2.55-2.56: Domestic Preferences

GL 1.10: Joint Ventures

GL 2.46: Clarifications or Alterations of Bids

GL 2.7-2.8: Notification and Advertising*

GL 2.57: Extension and Validity of Bids

GL 1.12: Misprocurement

GL 2.2-2.5: Type and Size of Contracts

GL 2.43: Dispute Settlement*

GL 1.15: Fraud Provisions / Bid Documents of Large Contracts**

GL 1.9: Advance Contracting

GL 2.19-2.20: Standards and Brand Names

GL 2.34-2.36: Terms of Payment

GL 2.16-2.18: Clarity of Bidding Documents

GL 2.21-2.23: Pricing

GL 2.65: Debriefing

GL 2.28-2.33: Currency Provisions

GL 2.26-2.27: Transportation and Insurance

GL 2.44: Time for Preparation of Bids

GL 1.14: Fraud and Corruption

GL 2.41: Liquidated Damages and Bonus Clauses

GL Appendix 3: Complaints

GL 2.24-2.25: Price Adjustment

GL 2.11-2.12: General Principles of Bidding Documents

GL 2.61-2.64: Rejection of All Bids

GL 2.9-2.10: Prequalification of Bidders


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ICB guidelines Sub-Indicatorsacceptably covered

12%

ICB guidelinesNOT acceptably covered88%

  • 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)


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The 2007 Proposal for Country Systems Pilot Program Sub-Indicators

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

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