Procurement in SWAps

1. Procurement in SWAps Seminar on Procurement of Goods, Works and Consultancy Contracts financed from World Bank Loans and IDA Credits, February 27 - March 3, 2006, Zagreb, Croatia.

2. OUTLINE • Policy • Experience and Lessons Learned • Issues and Challenges

3. ‘Sector-wide Approach’Concept • “A way of engaging in development cooperation based on the principles of coordinated support for a locally owned program of development” OECD/DAC (2005) Footnote 1: • SWAp  Lending instrument; Pooled financing; Full use of country systems; a Bank-financed project/loan Footnote 2: • Other terminology: sector approach; sector support; sector program (SP); sector investment program (SIP); program-based approach (PBA)

4. Key Elements of SWApsIntent & Directions, Not ‘Prerequisites’ Gradual and phased process Harmonized Implementation Mechanisms & Use of Local Systems/Procedures Coordination/alignment of (all) resources Common Sector Program/Expenditure Framework Agreed Sector Policy Framework/Strategies based on Shared Vision & Priorities Partnerships with Development Partners Government Ownership & Leadership Each element evolves & matures over time

5. Policy – • The WB Board of Directors has not yet approved the use of the country systems in procurement. • Implication  all contracts under ICB and consulting contracts subject to international competition shall follow WB Guidelines

6. Fiduciary Capacity Assessment – a building block of SWAp • Upfront assessment of fiduciary systems • Early identification of risks related to country procurement process/country proc. capacity, including oversight • Assessment tailored to sector and SWAp design and go beyond procurement to issues related to sector management and sector capacity • If systems are not acceptable, agree on risk mitigation measures and capacity development plan instead of creating parallel systems

7. SWAp fits into existing structure • SWAp respects Government ownership and decentralized approach • Funds are pooled to support the program • Common reporting format for procurement, expenditure, audited accounts, progress reports • Common procurement and procurement review procedures • Joint Review missions

8. Procurement Arrangements • Design arrangements based on Fiduciary Capacity Assessment • Align them with SWAp design and flow of funds • Setting Thresholds for ICB and Selection of International Consultants • Separate arrangements for pooled and non-pooled funds • Common procurement procedures acceptable to all financiers shall apply to all contracts financed from the pool. • Such procedures are detailed in Program Operational Manual

9. Pooling Arrangement

10. Pooling Arrangement

11. Pooling Arrangement

12. Pooling Arrangement

13. (1) Procurement Methods • ICB to follow the Bank procurement guidelines • Increased or full use of national procedures for NCB/local consultants when good national procurement systems/capacity exist • Use of harmonized procurement documents (standard or model bidding docs) for national procedures for NCB

14. Procurement Methods (cont’d) In Romania, Bulgaria, Croatia, the following conditions apply to the NCB which is done under national procedures: • Minimum advertisement period in the official gazette – 30 days and public bid opening • Use of standard bidding documents acceptable to the Bank using explicit monetary quantifiable bid evaluation criteria without use of a point system of evaluation • Contract award is made to the qualified bidder offering the lowest evaluated bid price without application of any preference • Participation of Government-owned Enterprises only if determined eligible according to Bank Procurement Guidelines • Publication of contract awards information required

15. Selection of Consultants (International TA) • Romania, Croatia and Bulgaria have a choice of one of the two options: • Use of the Bank guidelines for Selection of Consultants (May 2004); • Use of procedures agreed between the Bank and the EC (methods compatible both to the Bank Guidelines and EU Directives)

16. Selection of Consultants (Local TA – firms and individuals) May be possible if the national public procurement law regulates intellectual services differently from procurement of goods and works

17. (2) Procurement Plan • Always advisable • Not always possible • As a minimum an agreed list of Goods, Works and Services are spelled out in the Program Operational Manual containing procurement procedures • if activities to be financed are identified: annual plan updated on a rolling basis covering all contracts in the Program financed with pooled and non-pooled funds should be prepared

18. (3) Procurement review • Determine appropriate review arrangements based on capacity and risk assessment of implementing agency, extent of use of country systems, size, nature and methods of procurement, pooling arrangements and financiers requirements • Post review for procurement mainly relying on country systems (below ICB thresholds) • Prior review ICBs/QCBS and other large contracts that are subject to procedures under Bank Guidelines • Independent procurement audits may also be advisable • Government and all financiers should agree on common monitoring, reporting and procurement review requirements and sharing of information under audits and other technical reports. Avoid duplication and maintenance of parallel systems unless unavoidable • Appropriate record keeping procedures should be in place

19. Procurement Arrangements: Issues • Eligibility-Rules under Bank Procurement Guidelines will apply • Remedies • i) in case of Bank declaring misprocurement in any contract funded by the whole pool of funds Bank would have option to cancel from its loan an amount equivalent to the contract amount multiplied by Bank’s percentage participation in the pool of funds. If misprocurement of a Bank financed contract occurred outside of the pool the amount canceled would be equivalent to the contract amount multiplied by the percentage of the contract financed by the the loan and not necessarily the full contract value) • ii) Bank remedies under the loan agreement and Bank Procurement Guidelines will be applied at all times if any fraud or corruption occurred under the project and will not be waived • Evaluation system (merit point system should not be used)

20. Lessons Learned • SWAps NOT a ‘one-size-fits-all’ • Custom-made design & process • Need to evolve and grow w/ some ‘growing pains’-if weaknesses exist then provide approaches to strengthen systems over implementation period with transitional procurement arrangements • Issues (especially on eligibility and applicable procurement procedures) shall be identified and dealt with at preparation stage • Adapt flexible approach using full range of possible solutions • Procurement may be a challenge but solutions exist and should be pursued

21. Lessons Learned Be careful not to “ring fence” a Program instead of ring fencing a Project

22. ECA experience • Poland (design and initial experience with implementation) • Croatia, Kyrgyz (design only, no implementation experience yet)