E-Government Procurement – tool to reduce corruption in public procurement

1. E-Government Procurement – tool to reduce corruption in public procurement FIDUCIARY FORUM 2008 - PROCUREMENT SESSION World Bank 25-28 March 2008 S. JanakiramWorld Bank The views and opinions expressed in this presentation are the author’s own and should not be attributed to the World Bank, its management, its Board of Directors or the countries they represent.

2. Corruption in Government • Government is corrupted whenever it is diverted from its avowed purpose and directed toward some other goal, especially goals that conflict with its purpose.

3. COSTS OF CORRUPTION • where corruption is systemic, it probably adds at least 20 to 25 percent to the costs of government procurement. • corruption scandal in Milan several years ago - led to many criminal indictments and closer scrutiny of public contracting practices, • unit costs of major works projects fell by more than 50 percent, • With annual purchasing budgets running in the billions or hundreds of millions of dollars, this begins to involve "real money." • Source: Tanzi, Vito and Davoodi, Hamid. IMF working paper, "Corruption, Public Investment and Growth,"

4. One solution … • Introduce E-Government Procurement

5. What is E-Government Procurement? • E-Government Procurement is the use of Information Technology – especially the Internet – by Governments in conducting their procurement relationships with suppliers for the procurement of goods, works and consulting services required for the public sector • Is the application of a high quality management framework to public sector procurement, facilitated through online information and processes

6. Why Develop E-Government Procurement? • Current procedures of procurement in most of our client countries : • do not provide potential suppliers with full information concerning total public-sector demand; • do not provide government purchasing units with information on all potential suppliers for all types of goods, works and services needed by the Government institutions, and • do not provide adequate means for the general public to provide feedback and oversee procurement processes; • Low to High incidence of Corruption in Public Procurement • Greater transparency in procurement is a current priority of many of the Bank’s client countries and commitment to reform exist at the highest levels of Government leadership is beginning • High transaction costs in procurement processes

7. Why Develop E-Government Procurement?...contd.. • Many countries are initiating major reforms in public procurement mostly led by the Ministry of Finance and Economy; • Level of investments in both information technology hardware and institutional development areas is on the increase and provides opportunities for investment opportunities – ICT costs are declining and becoming user friendly- • E-commerce legislation, such as provision for buying and selling on-line Electronic signatures, digital certificates etc, exists and/or is under development • Varying degrees of trained manpower in ICT skills in all our client countries

8. E-Procurement Lifecycle Source: Office of Government Commerce. Spring 2005. procurement in Action – A guide to e-Procurement for the public sector. United Kingdom. http://www.ogc.gov.uk, page 19-

9. Road Map of E-Government Procurement Source:ADB, IADB, WB. 2004.Electronic Government Roadmap. Washington DC. http://idbdocs.iadb.org/wsdocs/getdocument.aspx?docnum=645469

10. PROCUREMENT PROCESS 1 2 3 4 5 NEEDS AND DEMAND ASSESSMENT PREPARATION PHASE – PROCESS DESIGN AND BID DOCUMENTS SELECTION OF CONSULTANTS CONTRACT IMPLEMENTATION FINAL ACCOUNTING AND AUDIT

11. E-GP is part of E-Government

12. Development Stage Integration Level 5 E-Commerce • Converged and Integrated Services • (Single Access Services) Level 4 Interoperation • On-Line Processing Civil Service • E-payment of Taxes and Fees Level 3 Development Level2 Initiation • 부처 및 기관간 • 경계없는 온라인 • 서비스 제공 • E-Mail • E-Forms Level1 • Peridoc Updates • Providing Limited Information Thailand, Senegal Malaysia, Peru China, India U.S., Singapore, Korea None Stages of E-Government Source : UN, Benchmarking e-Government, 2002

13. International Trend of E-Gov’t Expectation Govt Portals Level of Services not matched with Public’s demand Creating Values of Gov’t Services On-Line by Services Reengineering of Internal Processes Simple Info. Provider Stable Services Initiation Reorganizing Moderate High Expect. 1993 2000 2003 2005 2010 World Trend of e-Government Source: Gartner

14. ALLOWS TRACKING DOWN EACH SINGLE INFORMATION AND TRANSACTIONS DETAIL OF THE PROCUREMENT PROCESS INCREASES TRANSPARENCY AND HOLDS GOVERNMENT MORE ACCOUNTABLE IN SPENDING TAXPAYER’S MONEY PRICES CAN BE REDUCED BY 10 TO 20 PERCENT – DUE TO INCREASED COMPETITION TRANSACTION COSTS CAN BE REDUCED BY 20 TO 80 PERCENT HOW E-GP HELPS REDUCE CORRUPTION?

15. How E-GP helps reduce Corruption…contd..PROVIDE A LEVEL PLAYING FIELD STANDARDIZE DOCUMENTS, FORMS MINIMIZE PERSONAL CONTACTENFORCE RULESDISSEMINATE INFORMATION WIDELY PROVIDE ACCESS TO MANY POTENTIAL SUPPLIERS OF GOODS, WORKS AND SERVICES

16. Pre-Conditions for launching E-Government Procurement • Committed leadership and E-GP champions at the policy and operational levels • Enabling legislation in place to permit E-Government Procurement • Clear understanding and adoption of internationally accepted procurement policies, procedures, guidelines and processes • Development of adequate number of suppliers of goods, contractors for works and consultants for rendering services in the private sector to ensure competition • Reliable internet connectivity at affordable rates • Developing confidence and trust within the user community to carry out business with the Government using E-GP systems

17. Enabling environment for E-GP is evolving…. • Internationally accepted procurement policies, procedures, guidelines and processes are yet to take root in most of our client countries • Low to medium levels of understanding among procurement professionals • Adoption rates of internationally accepted policies are still low • E-Government Procurement Strategy and Action Plan • Is under development in most countries • Legislation • For enabling E-Government is evolving and is in an early stage in most countries • Information technology infrastructure • Low penetration rates of internet connectivity • Low levels of usage of internet by the private sector • Private sector • Rate of private sector development is slow • Inadequate number of bidders from the private sector competing for Government contracts • Change management and adoption of new ways of doing business • Paper driven processes in all stages of procurement • For enabling E-Government is evolving and is in an early stage in most countries

18. Main challenges in E-Government Procurement • I • C • T

19. Main challenges in E-Government Procurement • I: Institutions • Collaboration – Coordination - policy and operational levels • Information • Sharing and confidentiality • Intellectual Property Rights - Ownership and protection of - content – data, information - software – applications in different sectors

20. Main challenges in E-Government Procurement • C: Culture • Moving from manual to electronic ways of doing business by citizens • Human-computer interaction • Of sharing information • Corruption reducing mechanisms • Citizen’s Expectations • Has E-Government improved the delivery of Government services and efficiency • Necessity to have quick wins • Communications • In easy to understandContent by the common citizen • In local language • Using a variety of media – such as radio, TV, dramas, folklore,newspapers, internet, etc… • Centralization and Decentralization • Of Key functions and decentralizing sectoral services – management and delivery • Cross -sectoral • E-GP cuts across many sectors sectors: from Agriculture to Banking – to Commerce – to Debt management – to Economy to Finance – to Governance to Health to Industry to Jobs to Security to Trade, etc… • What aspects to integrate and what cannot and should not be integrated

21. Main challenges in E-Government Procurement • T: Technology is not the real challenge • Inspire Trust in Government Procurement Policies, Processes, Procedures • Training • At all levels for Providers and Users • Well established Technologies exist – and are declining in costs with improved capabilities, capacity and efficiency

22. Europe and Central Asia - Current status of E-GP

23. Use of E-GP by procurement activity in ECA countries

24. Use of E-GP by procurement activity in ECA countries

25. EUROPEKEY DEVELOPMENTS IN E-PROCUREMENT Source: Office of Government Commerce. Spring 2005. procurement in Action – A guide to e-Procurement for the public sector. United Kingdom. http://www.ogc.gov.uk, page 12

26. ACHIEVING A FAIR AND COMPETITIVE PRICE Example from an actual e-Auction Source: Office of Government Commerce. Spring 2005. procurement in Action – A guide to e-Procurement for the public sector. United Kingdom. http://www.ogc.gov.uk, page 23

27. Areas of Bank assistance – through IDF grants and Public Sector Reform Projects • Development of E-Government Procurement Strategy and Action Plans • Capacity Building in all aspects of E-GP • Sharing of knowledge and expertise of E-Government Procurement processes in different countries • Upgrading of the present systems in E-Government Procurement systems and building on systems developed by other donors • Collaboration with EU and other donors in developing common standards, procedures, framework, measurement indicators, training modules, IT infrastructure, etc • Strengthening administrative capacity and support for legislation for E-GP in compliance with EU requirements

28. What we hope to see in the years ahead?... • Reduction in Corruption in Public Procurement – through the creation of : • Enabling environment for private sector and citizen organizations to provide services in a fair and competitive manner • E-GP tendering • Customized search facilities • Bidding documents on internet • Electronic bid submission • E-Purchasing • On-line purchasing and E-Transactions • Customized services • E-Contract Management • Contract execution management • Contract capacity consolidation Linking E-GP systems with Financial Management Systems – to achieve an E-enabled “Procure to Pay” cycle

29. Many thanks for your attention • Comments, suggestions welcome.. • Please send to: • SJanakiram@worldbank.org