Jorge Claro, President and CEO of the International Procurement Institute, describes the three main factors to consider when developing a public procurement reform project.
Showing posts with label public procurement. Show all posts
Showing posts with label public procurement. Show all posts
Friday, May 22, 2009
Procurement Assessment Case Study - Chile
Jorge Claro of the International Procurement Institute presented a case study of a procurement assessment of Chile at the 23rd Annual ICGFM Conference. The Country Procurement Assessment Report (CPAR) process began in 2007, but a comedy of errors resulted in bureaucratic delays of a year. Mr. Claro discussed the best time, within the election cycles, to assess procurements.
Mr. Claro described the complicated political setting in Chile. He cautioned that an effective assessment needs to go beyond the procurement personnel to senior members of the government.
Étude de Cas de Passation de Marchés – Le Chili
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The OECD/DAC benchmarking tool is not a perfect methodology, but it has a common vocabulary. Mr. Claro found that country personnel focused on the grading. Donors tell them not to worry about the grading, yet they worry about the grading.
The OECD/DAC methodology is highly participatory, according to Mr. Claro. A good practice is to identity stakeholders, including engaging the press and Transparency International The tool represents a serious investment of time and resources, and the participation of many public officials requires political will. It is not cheap to assess the procurement process.
No one thinks of investments in procurement as investments. They look at it in terms of expenses, even though the investment can have good results.
Mr. Claro is concerned about the message of the procurement assessments to governments.
When systems are perceived as poor, Governments are more amenable to finding problems and identifying solutions Yet, when systems are perceived as adequate, governments prefer not to identify issues and leave the system as-is, as priorities lay elsewhere. Yet, procurement processes can be very much improved to gain efficiencies and value for money. He found that Paraguay was much more interested than Chile to change processing.
The methodology is hard in that items are rated 1, 2 or 3. Consultants found that the real rating should be 1.5 or 2.5, yet there was no facility to articulate this. The political nature has caused frequent drafts of the final report.
Mr. Claro suggests that, although the exercise was successful, opportunities for a more in-depth discussion on present and future issues and further refinement of the system could, perhaps, have been exploited further
Mr. Claro explained that procurement reform in any country is 1)political, 2)political, 3)political
OECD / DAC Benchmarking Tool for Public Procurement
Pamela Bigart of the World Bank introduced the OECD/DAC benchmaking tool for public procurement at the 23rd Annual ICGFM Conference. This tools is based on broadly accepted international tool. It was attended to achieve good practices in many countries across a spectrum of capacity.
The benchmarking tool has been used in over 50 countries and enables self-assessments. The tool analyzes elements of public financial management such as budgets and controls because of the impact on the procurement process. It also integrates with PEFA assessments. It is a qualitative assessment rather than a performance assessment.
The OECD/DAC tool covers four pillars:
Overview of the application of the OECD/DAC Procurement Assessment Tool
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La reforma de la adquisición pública y su importancia en el clima económico actual
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Visión global de la aplicación de la herramienta de evaluación de adquisición OECD/DAC
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The benchmarking tool has been used in over 50 countries and enables self-assessments. The tool analyzes elements of public financial management such as budgets and controls because of the impact on the procurement process. It also integrates with PEFA assessments. It is a qualitative assessment rather than a performance assessment.
The OECD/DAC tool covers four pillars:
- I – Legislative and Regulatory Framework
- II – Institutional Framework/Management
- III – Operations and Market Practices
- IV – Integrity and Transparency
Ms. Bigart described the 12 indicators and 54 sub-indicators.
She cautioned about poor procurement practices including not paying vendors on time. This increases the cost because vendors recognize the long payment cycles. Some governments start projects without sufficient budgets. This causes projects to be abandoned. Budget and procurement systems should be integrated.
Ms. Bigart pointed out some other poor practices including lax contract administration and no delegation of procurement responsibility. The private sector and civil society should be enabled to question government procurements.
Lessons learned from the use of the OECD/DAC benchmarking tool includes:
- The tool is useful and relatively easy to use
- Standardization through the tool creates need to use flexibly in a given country – may require some customization and interpretation
- Some indicators will require adjustment after experience from over 40 countries
- Use of the tool is an input to a process so scoring is not as important as the information learned
- Results of any benchmarking exercise needs to be more clearly linked to other tools like PEFA
- Reform strategy must be integrated and prioritized on the basis of overall public sector management and public financial management strategy
Public Procurement during Financial Crisis
Pamela Bigart from the World Bank is passionate about public procurement. Ms. Bigart described the trends of public procurement during the financial crisis at the 23rd Annual ICGFM Conference.
Ms. Bigart stated that public procurement represents 10% to 15% of GDP in many countries. Procurement can range as high as 70% of government budgets. She indicated that governments are trying to invest more in infrastructure and to stretch budgets to do more with the current financial crisis. Making procurement more efficient translates to obtaining more value for money.
Friday 915 Public Procurement Reforms Bigart
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La reforma de la adquisición pública y su importancia en el clima económico actual
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Réforme de la Passation de Marchés Publique et importance dans le Climat Économique Actuel
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Ms. Bigart indicated that most public procurement systems focus on rule compliance. She noted that the purpose of procurement is to achieve a net service delivery.
Ms. Bigat described how public procurement increases business confidence and acts as a vehicle for foreign investment. These companies often partner with local companies to help build capacity. However, many countries are developing trade restrictions. She noted that the United States has been using a "buy American" program. Some countries are not following trade agreements. Although trade preferences sounds like a good idea, it is not sustainable in the long term. Companies that have an advantage within a country are often unable to compete globally.
Ms. Bigart described the difficulties in calculating value for money. The World Bank has had difficulty finding appropriate measurements. Most public procurement tends to focus on the initial cost and whether the cost is competitive.
Procurement officers are often viewed as clerical staff who insist on running to the rules. This can often result in delays to important and critical services. Emergency situations mean that organizations like the World Bank needs to lend more quickly and be much more flexible in rules in order to achieve service results.
Many systems are focusing less on the input side such paying for goods, works or services, to a focus on the service delivery side, according to Ms. Bigart. Focusing on results often brings in the community to determine the quality of service delivery.
Ms. Bigart says that the private sector capacity needs to be built in order to support public procurement. Many countries have transitioned from a command to a market economy. In these economies there was no notion of procurement, only public investment. Governments can help the private sector to develop. She emphasized that competition creates efficiencies and enables companies to complete globally.
Ms. Bigart described how Public Private Partnerships (PPPs) can enable building private sector capacity. She believes that this reduces the burden on the government to raise money. Many countries do not have an appropriate legal structure to handle PPPs.
A fair, open, and transparent public procurement environment is required to achieve competitive proposals, according to Ms. Bigart. Good governance encourages more companies to bid on public tenders. She advocates publishing procurement information and procurement rules as a quick win. This information should be user friendly.
Many countries are opening up their budget information that helps the private sector to understand future procurement opportunities, according to Ms. Bigart. It is a good and early source of information for the private sector.
Ms. Bigart says that investments in procurement technology such as publishing tenders has resulted in better service delivery, even in countries under stress. Data collected with procurement technology can provide analytical insight to improve procurement processes. Management and automated controls assist in providing sound and efficient systems. She advocates the integration of procurement and government financial management technology. Controls enable governments to manage to the budget and be able to pay vendors on a timely basis.
Lessons learned from public procurement include:
- Procurement is linked as part of Public Financial Management reform
- Procurement reform costs money and takes time
- Some reforms can deliver results in the short term
Reform cannot be effective if isolated from broader public sector management and financial management reform - Reforms require long term commitment to achieve sustainable results
Ms. Bigart described "pork barrel politics", earmarks and "road to nowhere" as examples of politicians resisting procurement reform in the United States. She completed her discussion about how procurement has improved in countries under stress like Liberia and Sierra Leone. Public procurement systems can contribute to recovering faster from the global economic crisis.
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