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Agenda and Presentations

CONTRACT. PROCUREMENT IN MPW ( Pekerjaan Umum ). Presentation September 2009. Agenda and Presentations. Stuart R. Andrews and Budihardjo Hardjowiyono. Institutional Framework and Capacity.

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Agenda and Presentations

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  1. CONTRACT PROCUREMENT IN MPW (PekerjaanUmum) Presentation September 2009 Agenda and Presentations Stuart R. Andrews and BudihardjoHardjowiyono

  2. Institutional Framework and Capacity Procurement is not regarded as a profession within GOI public service and there are currently no incentives or career path for it to become so. Likewise, there is no existing structure within GOI agencies such as MPW that could provide a career path for procurement professionals

  3. Procurement Committees Currently there are disincentives and risks for staff to serve on Procurement Committees because • They may experience pressure both from outside and from above; • They can be made personally liable; • Membership is part-time requiring their other work to be continued; and • Remuneration in terms of honoraria is a pittance As a consequence, it has been suggested that some may be deliberately failing the examination for basic-level certification, which is a mandatory requirement to serve

  4. Procurement Committees Liability – anyone can make genuine mistakes! • It is recommended that MPW , which delegates responsibility to the PC, accept liability for the actions of the PC, unless there is absolute proof that an individual member has been either grossly negligent or engaged in KKN, in which case that individual member should be held liable for his/her actions.

  5. Procurement Committees Incentives– The BRR NAD Nias was given the authority to offer members sitting on its centralized procurement committees IDR 2.5 million per month i.e. about sixteen times the normal honorarium of IDR 150,000. Procurement undertaken by the BRR appeared to be successful, achieving generally lower prices and less apparent fraud and corruption. • It is recommended that the honoraria paid to PC Members be increased to a similar level to that offered by the BRR to members of its PC. • It is recommended that bonuses in form of remuneration should be provided if the procurement is undertaken on schedule If GOI is unable to fund this, then, at least in the case of donor-assisted procurement, donors should consider approaching the Government to allow payment of increased honoraria and performance bonuses to PC members from donor funds. Although this is currently may not be allowed under MOF regulations, the ensuing benefits of timely delivery are likely to far outweigh the amount involved.

  6. Operations & Market Practices BIG DISPARITY BETWEEN THRESHOLD REQUIREMENTS IDR-Funded – PPK Commitment Officer authorized to execute contracts UP TO IDR 50 Billion (approx USD 5 million equiv.) Donor-Assisted - Ad hoc - may require ICB between USD 200 -500 thousand equiv. and PRIOR REVIEWS below that Issues: • Procurement requiring ENGLISH Language in remote provinces; • Prior Review Delays due to document flows Satker to Balai to HQ to Donor and back; • Consultant Overlays with (i) Supervisory, (ii) Procurement Advisory Services & (iii) Procurement Agents. Do they provide Donors with VALUE FOR MONEY spent?

  7. Operations & Market Practices FUNCTIONALITY OF THE MARKET Construction Company Associations GAPENSI, AKI & GAPEKSINDO & Consulting Company Association INKINDO delegated responsibility to issue COMPETENCY/ CAPABILITY Certificates (SBUs) with Grades CONFLICT OF INTEREST The administrators of this certification system, being the supplier/ provider associations, themselves, could have vested interests and apply protectionist policies creating cartels thereby creating a segmented market and affecting competition.

  8. Integrity and Transparency In the interests of: • Perceived independence; and • Creating an integrated “one-stop shop” with consistency in handling all types of complaints (both KKN & Process related); it is recommended that the second-tier Complaints Handling Unit currently within the Construction and Human Resources Agency be absorbed into the Office of the Inspectorate General. The failing of the current mechanism is that complaints can only be routed to the procuring entity (MPW). There are potential conflicts of interest with the entity handling the complaint also being the procuring entity.......

  9. Integrity and Transparency ......as a consequence, with third-tier complaints being directed to LKPP, in consultation with all stakeholders, LKPP is considering creating “ADJUDICATION TRIBUNALS” in the appropriate regions from which complaints are sourced. The TRIBUNALS would comprise procurement experts from: • (1) LKPP (as Chairman); • (2) GOI entity equivalent to, but NOT, the entity undertaking the procurement; and • (3) The Company Association representing the bidder.

  10. Proposed ULP Structure Within MPW

  11. ULP IN MPW HEADQUARTERS ULP in MPW Headquarters would consist of: • The Office of the Kepala(Director General?) with associated Secretarial support; • A Policy and Support Directorate; and • MPW Tender Review Boardwith an associated Secretariat

  12. MPW ULP Balai Offices Procurement is currently the responsibility of Satkersat provincial level and, in the case of DGH with approximately 200 Satkers, is widely dispersed and lacks capacity. It is recommended that procurement, which will become the responsibility of the ULP, be raised from Satker to Balai level where procurement support would be provided where it is needed by ULP Balai Policy and Support Offices meaning • Lesser number of PCs for consistency with more capable members • Standing PCs could be created for fixed periods • Members could be seconded for several months on existing remuneration plus honoraria, bonuses & guarantee of being able to return to old job at conclusion of tenure • A large un-tapped resource of expertise in the form of retirees could be used to serve on PCs, if GOI Regulations allow, or as a training and support resource in the ULP Balai Office

  13. FUTURE SUPPORT FOR MPW COMPONENT 1: SHORT-TERM INSTITUTIONAL SUPPORT to help MPW set up ULP • Strategy, Plan & Schedule for establishment and transfer of procurement responsibilities • Prepare Operations Manuals in Indonesian and English Languages for HQ Offices and ULP Balai Offices so as to ensure consistency of procurement operations across MPW COMPONENT 2: LONG-TERM OPERATIONAL SUPPORT (i) Provision of local expertise (retirees?)where it is most needed at ULP Balai level i.e. where procurement will be carried out (ii) Possible international procurement expert immersed in ULP Headquarters

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