World Bank Approves Procurement Reform

Under the World Bank reform, a member of the GPA may be permitted to use its own procurement system for Bank-financed projects if it passes a robust assessment.

On July 21, the World Bank’s Board of Executive Directors approved a major reform of the Bank’s policy governing procurement in Bank-financed projects. This followed extensive consultations and opportunities for public review and comments on a myriad of draft documents. As described in a post, entitled “World Bank Procurement Reform Promotes GPA”, one of the significant features of the Bank’s new procurement framework is the potential for a signatory to the WTO Government Procurement Agreement (GPA) to use its own procurement system for a Bank-financed project — but only if it passes a very thorough examination.

The Bank initially proposed to let a country use its own procurement system provided that the GPA covered both the entity conducting the procurement and the project being funded, subject to certain Bank requirements. However, in order to address concerns raised in its consultations, the Bank has added a very robust assessment process that a GPA-covered procuring entity must undergo before it would be permitted to use its own procurement procedures as an “Alternative Procurement Arrangement” (APA), instead of the Bank’s regulations and procedures in Bank-financed projects.

The World Bank will conduct an assessment to determine whether the borrower’s procuring entity (implementing agency) has the necessary capacity and capability to undertake the project in accordance with Bank standards. To make this determination, the Bank has developed an assessment framework, entitled “Draft Guidance, Methodology to assess Alternative Procurement Arrangements in Borrower Implementing Agencies” (Annex J of New Procurement Framework). This assessment framework is based on the Organization for Economic Cooperation and Development’s (OECD) Methodology for Assessing Procurement Systems (MAPS) structure, with modifications to ensure the Bank that the borrower’s procuring entity will be able to meet its standards.

The aim of the assessment is to determine whether the agency meets the Bank’s minimum criteria and whether its procurement system is sufficiently robust for use in Bank-financed projects. The assessment is organized around five pillars with the elements of what is considered to b a good procurement system:

  • Legal, regulatory and policy framework: public procurement legislation, policy, regulations, general conditions of contract and sustainability;
  • Institutional framework and management capacity: procurement planning, payments, conflicts of interests, national procurement statistics, staff performance and training;
  • Procurement administration and market practices: procurement competence, safekeeping of records, procurement review and controls, and partnerships;
  • Integrity and transparency of public procurement system: internal and external controls, audit, complaints mechanism, access to information, fraud and corruptions, and record keeping;
  • Procurement operations: procurement methods, advertising, tender documentation and technical specifications, bidding process, model tender documents, pre-qualification, evaluation and award criteria, procurement performance, dispute resolution, and risk management.

The assessment of GPA parties will take into account the aspects that were examined during its accession to the GPA.

In the first stage of the APA assessment, the Bank will identify up to 100 high-performing agencies that are the most likely to be successful candidates for a full assessment. This initial feasibility study will consider the national environment in which an agency operates to determine if the agency has the potential capacity and capability to be delegated responsibilities for conducting the procurement with its own procurement rules.

Based on the results of its feasibility studies, the Bank will identify up to 10 implementing agencies for a full assessment. The assessment will involve a broad range of stakeholders, including government entities, private sector participants, such as Chambers of Commerce, contractors, suppliers and non-governmental organizations (NGOs) (for example, Transparency International), donors and Multilateral Development Banks.

Even when a country is permitted to use its own procurement rules, it will have to comply with certain Bank requirements, such as its eligibility criteria, sanctions procedures and Anti-Corruption Guidelines. Once an agency’s procurement system is approved, it can also be used for other future Bank-financed projects; and its approval will stand until revoked by the Bank.

Based on the experience gained from these assessments, the Bank will refine and finalize the methodology for ongoing application of APAs. The Bank plans to implement the procurement reforms in Fiscal Year 2016.

Jean Heilman Grier

August 3, 2015

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