AFGHANISTAN COUNTRY PROCUREMENT ASSESSMENT: CONSULTING SERVICES June 2007 Procurement Services Unit South Asia Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not be otherwise disclosed without World Bank authorization. 68156 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized
47
Embed
AFGHANISTAN COUNTRY PROCUREMENT ASSESSMENT: … · 2016. 7. 15. · AFGHANISTAN COUNTRY PROCUREMENT ASSESSMENT: CONSULTING SERVICES June 2007 Procurement Services Unit South Asia
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
Transcript
AFGHANISTAN
COUNTRY PROCUREMENT ASSESSMENT:
CONSULTING SERVICES
June 2007
Procurement Services Unit
South Asia Region
This document has a restricted distribution and may be used by recipients only in the
performance of their official duties. Its contents may not be otherwise disclosed
EXECUTIVE SUMMARY ...................................................................................................................................... III
COUNTRY ECONOMIC BACKGROUND ........................................................................................................................ 1 PUBLIC AND PRIVATE SECTOR DEVELOPMENT .......................................................................................................... 1 SECURITY SITUATION ................................................................................................................................................ 1 CONSULTING SERVICES IN AFGHANISTAN ................................................................................................................. 2 PAST DEVELOPMENTS AND TA IN THE AREA OF PUBLIC PROCUREMENT .................................................................. 2 OBJECTIVES AND EXECUTION OF ASSESSMENT ......................................................................................................... 3
BANK POLICY ON SELECTION OF CONSULTANTS ....................................................................................................... 4 The Bank’s Response to Crises, Emergencies and Fragile States ....................................................................... 4 Weighing QBS against QCBS .............................................................................................................................. 5
GOA POLICY ON CONSULTANTS ................................................................................................................................ 5 LEGAL AND REGULATORY PROCUREMENT FRAMEWORK .......................................................................................... 6
The New Public Procurement Law ...................................................................................................................... 6 Rules of Procedure for Public Procurement ........................................................................................................ 6 Recommendations to Improve the Legal and Regulatory Framework ................................................................. 8
AFGHAN INSTITUTIONAL FRAMEWORK & ORGANIZATION OF PROCUREMENT .......................................................... 8 ARDS Procurement Unit ...................................................................................................................................... 8 Line Ministries ..................................................................................................................................................... 9 Procurement Policy Unit ................................................................................................................................... 10 Special Procurement Commission ..................................................................................................................... 10 Contract Management Office ............................................................................................................................. 10 Appeal and Complaint Mechanisms ................................................................................................................... 11 Professional Consulting Associations ................................................................................................................ 11 Recommendations to Improve the Institutional Framework .............................................................................. 11
AFGHAN PROCUREMENT PROCEDURES AND PRACTICES .......................................................................................... 11 Available Procurement Manuals or Guidelines ................................................................................................. 11 Availability of Standard Request for Proposals ................................................................................................. 11 Recommendations to Improve Procedures & Practices ..................................................................................... 11
BANK PROCUREMENT CAPACITY ............................................................................................................................. 11 PA PROCUREMENT CAPACITY ................................................................................................................................. 12
Procurement Capacity of PC within ARDS ........................................................................................................ 12 Previous and Ongoing Capacity Building and Training .................................................................................... 12 Capacity within Line Ministries - Key Constraints and Challenges .................................................................. 13 Procurement Capacity in Provinces and Districts ............................................................................................. 13
CAPACITY-BUILDING APPROACH BY PACBP AND PRP .......................................................................................... 13 RISKS WITHIN CAPACITY-BUILDING APPROACH BY PACBP AND PRP .................................................................... 14
Efficient Selection of Consultants ...................................................................................................................... 14 Development of National Consultants................................................................................................................ 14 Capacity Building of the PA ............................................................................................................................... 15 Recommendations .............................................................................................................................................. 15
CORRUPTION AND INTEGRITY IN PROCUREMENT OF CONSULTANTS ........................................................................ 16 Steps to be taken by Government ....................................................................................................................... 17 Steps to be taken by the Donor Community ....................................................................................................... 17
PUBLIC SECTOR DEMAND FOR CONSULTING SERVICES ........................................................................................... 17
Domestically Funded Demand ........................................................................................................................... 17 Consulting Services Funded by the Bank ........................................................................................................... 18
INTERNATIONAL SUPPLY OF CONSULTING SERVICES .............................................................................................. 19 International Participation ................................................................................................................................ 19 Performance on Consulting Service Contracts .................................................................................................. 20 Remuneration Levels .......................................................................................................................................... 20 Recommendations .............................................................................................................................................. 20
DOMESTIC SUPPLY OF CONSULTING SERVICES ........................................................................................................ 21 The Local Consulting Sector .............................................................................................................................. 21 Main Areas of Expertise ..................................................................................................................................... 21 Performance on Public Contracts and Remuneration Levels ............................................................................ 22 Capacity Assessment of Afghan Consultancies .................................................................................................. 22 Developing Capacity of the Domestic Consulting Sector .................................................................................. 23 Overcoming the Information Gap on Consultants ............................................................................................. 24 Recommendations .............................................................................................................................................. 24
(ECSPS), Joel A. Turkewitz (SARPS), and Nagaraju Duthaluri (SARPS) reviewed the report and
provided insightful comments.
1 “Afghanistan – Managing Public Finances for Development”, Volume II: Improving Public Financial Management
and Procurement, December 22, 2005, World Bank Report No. 34582-AF.
AFGHANISTAN COUNTRY PROCUREMENT ASSESSMENT:
CONSULTING SERVICES
EXECUTIVE SUMMARY
1. Afghanistan is striving to emerge from a prolonged period of military occupation, wars
and the Taliban rule. The country’s security situation remains critical, especially outside of
Kabul, yet the economy is stable and continues to grow. In the reconstruction process the country
is receiving extensive donor support.
2. Taking into consideration the World Bank’s country assistance strategy, this report
examines whether Afghanistan’s Public Administration (PA) has access to the services it needs
from international and national consultants under Bank and Afghan procurement rules. Both, the
Bank’s selection procedures and the Government’s (GoA) policy, laws, rules of procedure, and
practices are examined to determine whether they (1) lead to efficient consulting contract awards
and (2) support the development of local consulting firms. The demand and supply of
international and domestic consulting services are assessed. In addition, this assessment
identifies the key constraints that hamper the evolution of the domestic consulting sector.
3. Suggestions are provided on what the GoA and the Bank could do to create an
environment suitable for (1) qualified international consultants; and (2) the development of
sustainable local consulting capacity necessary to help Afghanistan to implement its reform
programs.
SUMMARY OF MAIN FINDINGS
4. Apart from the security situation, the capacity to enforce legislative reforms and the
effectiveness of the PA remain critical at all levels of government and also affect the selection
and use of consulting services. The key challenges to an efficient selection of consultants are:
5. Limited access to qualified consultants: Based on an assessment of Bank-funded
assignments from the years 2005 – 2007 the average number of proposals submitted per
assignment by international consultants is only about 2.5, of which just 2.1 are awarded a score
above the Minimum Qualifying Score (MQS). According to interviews conducted by the
mission, international consultants do not have sufficient incentives for seeking assignments in
the country. Many firms refrain from participating due to security concerns for their personnel.
Lack of trust in the capacity of the PA also discourages their participation. The entry costs
required to set up and conduct business in Afghanistan are very high. At present, those firms
willing to work in Afghanistan are reluctant to send qualified and experienced staff to
Afghanistan. As a consequence, the quality of the services obtained is often questionable.
6. A local consulting sector barely exists yet. Only a few local firms have evolved over the
past five years. Their main constraints are lack of qualifications and experience and limited
familiarity with procurement processes. As a result domestic firms, if they participate at all,
frequently fail to meet qualification criteria set by the Bank or the GoA. Lack of trust in the
fairness and the transparency of procurement handled by the PA also discourages their
participation.
Afghanistan CPA: Consulting Services Executive Summary page iv
7. Weak procurement capacity: Procurement staff has limited familiarity with basic
principles of procurement and with the stages of the procurement process. In particular, the
executing agencies have difficulty in (1) drafting ToR; (2) organizing and conducting
evaluations; and (3) evaluating the quality of Expressions of Interest (EoIs) and proposals. Once
the consulting firms are selected, supervision and management of the consultants are weak.
8. Weak English and IT skills: The low level or absence of English and IT skills is
hindering capacity-building efforts. International and national procurement personnel are facing
serious problems in interacting with local staff. The work of local translators sometimes creates
confusion instead of facilitating communication.
9. GoA legal and regulatory framework: While the new Public Procurement Law (PPL)
adopted in October 2005 has considerably improved the legal basis of public procurement, it
lacks (1) the necessary foundation of a clearly stated policy on consultants; and (2) a chapter
devoted solely to consultants’ selection. In addition, the Procurement Policy Unit drafted Rules
of Procedure for Public Procurement in Afghanistan which became effective on April 12, 2007.
While these procurement rules provide sound guidance through the process of consultants’
selection and contain appropriate provisions on enforcing transparency, fair competition and the
administrative review of procurement proceedings, they still have several shortcomings
concerning the procurement of consultants. For example, the rules lack (1) simplified procedures
such as the use of Simplified Technical Proposals (STP); (2) provisions on the continuation of
assignments subject to satisfactory performance of the incumbent; and (3) necessary details on
the selection process such as the weight allocated to price under Quality- And Cost-Based
Selection (QCBS) or indicative weights for evaluation criteria. In addition, their complex
structure will make it difficult for PA staff to understand and apply the rules of procedure on
procurement. Supporting documents such as the Standard RFP and procurement manuals are not
yet available.
THE BANK’S CURRENT STRATEGY
10. The ongoing four-year Bank-funded Public Administration Capacity Building Project
(PACBP) that started in 2005 is addressing these key challenges through three main procurement
subcomponents:
Subcomponent 1: Technical Assistance on procurement facilitation;
Subcomponent 2: Capacity building of Borrower’s procurement staff; and
Subcomponent 3: Legal and institutional framework development.
Under subcomponent 1 the Afghan PA currently draws on advisory services of an international
Procurement Consultant (PC) to facilitate and assist international and domestic procurement
processes. Further support for capacity building (subcomponent 2) and for the completion of the
legal and regulatory framework for procurement (subcomponent 3) is included in the Bank-
funded Procurement Reform Program: Procurement Capacity Building and Legal & Institutional
Framework Development (PRP) that started on 17 March 2007.
KEY RISKS
11. This report finds three risks that might affect the strategy defined by PACBP and its
related PRP, in the areas of consultant selection, development of national consultants, and
capacity building for the PA.
Afghanistan CPA: Consulting Services Executive Summary page v
Efficient Selection of Consultants
12. Since it is a priority for reconstruction that the Afghan PA be reestablished, the Bank
projects focus on building basic procurement capacity. The PACBP provides training to a limited
number of key staff while the PRP includes a broad program for hundreds of trainees from all
levels of government. However, due to PACBP’s limited outreach and PRP’s broad focus,
training will only concentrate on basic subjects. In particular, PA staff will not receive training
on consultant selection tasks, such as preparing ToR and assessing the quality of proposals.
While specialized capacity building may be too much to expect at this stage, many parties
interviewed expressed concerns about the credibility of the selection process given current
deficiencies in the performance of these tasks. The same PA officials who have trouble drafting
ToR then later are responsible for evaluating the proposals. Given this critical gap and the
reluctance of consultants to seek assignments in Afghanistan, it is reasonable to conclude that the
PA needs further support in evaluating proposals.
Development of National Consultants
13. The PRP includes basic training courses for local firms which will focus on (1) creating
awareness about the new Public Procurement Law; and (2) procurement procedures for goods,
works and consulting services. However, the following issues also need to be addressed:
(1) The GoA and Bank’s procurement procedures do not sufficiently take into account the
technical and administrative weakness of the PA and the local consulting firms and apply
complex standard procurement methods where simplified ones are needed.
(2) Neither PA nor donors have adequate information on locally available expertise and are
facing difficulty identifying the few available local resources.
Capacity Building of the PA
14. While the PRP provides for a comprehensive capacity-building approach, its
effectiveness may face serious challenges since interaction between international and national
procurement staff is hindered by language barriers, unfamiliarity of nationals with IT systems
and the lack of qualified translators. In addition, the training program could be compromised by
the small number of local staff trainable in the complex procurement processes required by Bank
or GoA regulations. Experienced PA staff is often poached by donor agencies and NGOs and the
lack of qualified counterpart personnel in the Afghan PA often renders on the job training
impossible. When counterpart staff is available low motivation due to low pay and limited
opportunity for merit based promotion undermine the knowledge transfer.
SUMMARY OF MAIN RECOMMENDATIONS
Key Recommendations to the Government of Afghanistan
R1: The GoA may consider developing a comprehensive policy paper on professional and
expert consultants to meet the specific needs of the PA and to encourage the creation of local
consulting firms. The 2005 Public Procurement Law only reflects basic policy principles for
selection of consultants while the new ‘Rules of Procedures’ provide the principles and
procedures of consulting services in details. The GoA should explore the possibility of
improving the pertinent rules of procedures depending on the changes in the country
circumstances. Once ministries have clearly defined their mandates and their respective
functions, a review of the range of services that local consulting firms could provide to the PA
Afghanistan CPA: Consulting Services Executive Summary page vi
should be performed to decide which functions could be outsourced to local consultants.
Drawing on experience with present Bank-funded public administration reform programs and its
recommendations on HR planning and management, the policy should also address capacity
building of PA staff through training and incentives.
R2: The GoA should consider reviewing the procurement rules of procedure’s provisions on
consultants’ selection in light of the special situation in Afghanistan. Since both the PA and local
consulting sector are weak, the use of Simplified Technical Proposals (STP) should be
considered for routine assignments designed to attract local attention. The regulation should also
provide for the continuation of assignments subject to satisfactory performance and necessary
details on the selection process such as the weight allocated to price under Quality- And Cost-
Based Selection (QCBS) or indicative weights for evaluation criteria. The consultants
implementing the PRP could provide advice on the revision of the procurement rules of
procedure.
R3: The PA is still a long way away from being able to efficiently select consultants. The
GoA (with support from the Bank) should therefore consider assigning reputable consulting
firms with strong procurement expertise in the field of the specific projects to the task of
conducting proposal evaluations under major Bank-funded projects in close cooperation with the
PA. The same consultants could also be entrusted with the quality and administrative control of
the contracts and with building capacity. In particular, Bank-funded projects that cannot rely on
the support of internationally staffed Project Management Units (PMUs) or Technical Support
Units (TSUs) should benefit from this approach. For smaller Bank-funded projects, specialized
individual consultants should be assigned to Evaluation Committees.
R4: Since Afghan consultancies can best develop their capacity through associations with
international firms, the Requests for Proposals (RFP) and the Terms of Reference (ToR) for
internationally competed assignments funded by the GoA should clearly identify, whenever
possible and feasible, those components that can be executed by local consultants. In case no
competent Afghan consultancies exist, the tender documents should clearly require from
international firms to transfer skills and know-how to local individual advisors. Once these
individual consultants were involved in internationally executed projects and developed their
capacity under the supervision of experienced international consultants, they would be in a
position to establish their own consulting companies.
R5: Since international consultants and PA staff are having difficulty interacting effectively,
the GoA (with Bank support) may consider conducting a study on local translator training
centers and implementing a training program for translators. It is also recommended to raise the
level of English and IT skills of national procurement staff. Therefore, the GoA may consider
developing and implementing training modules for procurement staff in the area of English, IT
and computer skills.
Key Recommendations to the Bank
R6: For Bank-funded projects that are too small to justify the use of international consulting
firms as under Recommendation 3 (R3), the Bank should encourage Bank staff to more actively
support the weakest counterpart agencies. Bank specialists in the required areas should
extensively review and also provide input to draft ToR regarding objectives, components,
activities, milestones, and evaluation indicators. Common weaknesses in TA projects such as the
fragmentation into small assignments of short duration, inadequate monitoring or the disregard
Afghanistan CPA: Consulting Services Executive Summary page vii
of local circumstances should be avoided by better procurement planning, and effective
supervision.
R7: Since continuity is essential for successful capacity building, but international
participation is low and entry costs for international firms are very high in Afghanistan, the Bank
should consider including a provision for continuation of work by the same consultant under
Single-Source Selection (SSS) in the initial RFPs whenever justified by the characteristics and
the circumstances of the projects.
R8: Mirroring Recommendation 4 to the GoA (R4), the Bank should (1) provide incentives
for local participation by encouraging international and local firms to form partnerships and
associations whenever feasible; and (2) require from international firms to transfer skills and
know-how to local individual advisors.
R9: When drafting ToR, the security situation should be taken into account. Especially when
the services are not related to capacity-building activities that need to take place locally, the ToR
should provide for international consultants to perform services from outside the country to the
greatest extent possible.
R10: For consultants’ selections under Bank rules and conducted by the PA, the following
precautions are recommended: (1) Quality-Based Selection (QBS) and Fixed Budget Selection
(FBS) should be applied to standard assignments; (2) QCBS should only apply when clearly
justified by the nature of the ToR; and (3) Simplified Technical Proposals (STPs) should be used
as much as possible. Information on local consulting firms already made available by other
stakeholders such as the NGO Peace Dividend Trust should be disseminated to the Bank’s staff
and TTLs. Whenever possible and feasible local firms should be considered for small
assignments generally procured under SSS.
R11: To facilitate the preparation of projects and procurement plans, the Bank should consider
requesting the Procurement Consultant to improve the quality of its monthly progress report by
including data on the participation of international and national consulting firms such as (1)
average number of EoI, size of shortlists, proposals submitted; (2) countries of origin of short-
listed, responsive and winning firms and their categories (NGOs, consultancies, government
agencies, etc.); (3) average billing rates; (4) number and nature of assignments for which the
ToR require the participation of national firms; (5) nature of assignments limited to national
participation; and (6) number and nature of assignments in which local firms are associated with
international firms. Alternatively, the Procurement Consultant could be requested to prepare an
annual report focusing on the points described above and complementing the monthly progress
reports.
R12: Finally, the Bank could also consider cooperating with two stakeholders already
providing support and training to local consulting firms. The Bank’s PRP could (1) draw on the
experience of the NGO Peace Dividend Trust on training courses in procurement for local
companies; and (2) collaborate with the Engineering Capacity Building Project for local
consulting engineering companies implemented by the American Society of Civil Engineers
(ASCE).
AFGHANISTAN COUNTRY PROCUREMENT ASSESSMENT:
CONSULTING SERVICES
Introduction
Country Economic Background
1. Afghanistan is striving to emerge from a prolonged period of military occupation, wars
and the Taliban rule and remains one of the world’s poorest countries with an estimated per
capita GDP of only US$355 in 2006/07.2 The country’s security situation remains critical,
especially outside of Kabul, yet in recent years the economy has continued to grow in this
volatile political, economic and security environment. Real GDP for 2006/07 is estimated at
US$8.88 billion and projected to grow by 11% in 2007/08 (excluding opium production). The
macroeconomic environment has been stable and inflation returned to a moderate level in
2005/06 (approx. 5%).
Public and Private Sector Development
2. Starting in 2002, the GoA has introduced a number of structural reforms. A new Income
Tax Law, a revised Customs Code, a modern Public Finance and Expenditure Management Law,
a strengthened Procurement Law, Rules of Procedure for Public Procurement, a new Civil
Service Law, and a revised Law on Foreign and Domestic Investment are in place. Fiduciary
standards have been strengthened and administrative reforms have been undertaken. The GoA is
committed to fiscal discipline but fiscal sustainability remains a challenge. In 2004/05, total
public expenditures amounted to US$3.4 billion, of which only US$0.9 billion was implemented
by the GoA. Revenue mobilization remains low at 5.5 percent of GDP in 2005/06, one of the
lowest ratios in the world, and domestic revenues cover only half of total operating expenditures
in the Government’s core budget. Almost all public sector consulting services contracts are
externally funded. Continued progress in reform of Afghanistan’s Public Administration (PA)
and the rule of law are critical for progress, but PA capacity is still very limited.
3. Achievements in private sector development include the establishment of the Afghanistan
Investment Support Agency (AISA) as a one-stop shop to register firms,3 approval of a Banking
law, licensing of more than a dozen commercial banks, and creation of an Industrial Park
Authority.
Security Situation
4. Apart from challenges of education, health, and infrastructure, the lack of security is the
main obstacle to Afghanistan's reconstruction program. The country has not yet fully emerged
from its state of conflict and the security situation in the country has deteriorated since April
2004. Even major NGOs are reluctant to send their national staff to the provinces where conflict
is ongoing. International experts avoid travel within the country, and when they do, they either
keep a low profile or hire extensive and costly security support. As a result, studies and reports
2 See Bank document “Interim Strategy Note Islamic Republic of Afghanistan for the Period FY07-FY08” (February
2007), p. 6, Table 1: Macroeconomic Indicators. 3 Afghanistan is ranked 17 out of 175 countries for ease in starting a business according to the Bank’s Doing
Business Report 2007.
Afghanistan CPA: Consulting Services Main Report page 2 of 37
are frequently based on old data since visiting missions in dangerous provinces are rarely
feasible. Compared to the provinces where the conflict is ongoing the security situation in Kabul
is relatively stable. However, attacks on international staff, threat warnings, and seizure of
explosives are common. Risks related to security lead to a low level of interest from potential
bidders, higher costs and/or delays in assignment execution. The security situation is not likely to
change in the medium term and will limit operational activities while requiring substantial
security expenses.
Consulting Services in Afghanistan
5. Traditionally, most technical departments of the PA covered in-house their limited needs
for planning, research, studies, designs, and supervision services. However, nearly 30 years of
unrest reduced Afghanistan to political and economic ruin. The process of political
reconstruction following the end of the Taliban regime in 2001 has had barely any significant
impact on the creation of a domestic consulting service sector as yet.
6. One of the most dramatic consequences of decades of turmoil was the loss of knowledge
capital as the majority of skilled labor left the country. Young and qualified professionals,
mainly educated in Pakistan, prefer to pursue careers outside Afghanistan. The risky operating
environment in Afghanistan is also reducing the incentive for qualified foreign consultants to
undertake assignments in the country.
7. While extensive donor support could encourage local consultancies to emerge, the
exodus of local capacity is still seriously hampering their development. The lack of basic
professional management, English language and IT skills prevents domestic firms from emerging
and participating in development projects. At present the local consultancy market is very small.
The domestic supply of consulting services is discussed in detail below (paras. 69 ff).
Past Developments and TA in the Area of Public Procurement
8. Steps to improve the Afghan procurement environment were initiated under the First and
Second Emergency Public Administration Projects (EPAP I and II) funded by the Bank starting
in 2002. Under the Procurement Strengthening Component of the EPAP I, the Government
appointed a consulting firm as the PA’s central Procurement Consultant (PC) responsible for
handling procurement operations under IDA and other donor-funded aid within the Procurement
Unit (PU) of the Afghanistan Reconstruction and Development Services (ARDS).4 The purpose
was to put in place emergency procurement capacity and to facilitate rapid and transparent
utilization of donor resources for reconstruction.
9. A progress review conducted in January 2004 identified key constraints in achieving
EPAP I and EPAP II’s objectives and recommended further actions to be addressed by the Bank-
funded Public Administration Capacity Building Project (PACBP), being implemented May
2005 – June 2009. Additional consulting services to be provided under the procurement
component of PACBP were approved in 2004 and can be grouped into three main categories:
Procurement services (subcomponent 1);
Technical assistance on capacity building (subcomponent 2); and
Legal and regulatory framework development (subcomponent 3).
4 The PC provided procurement services to the Afghan Assistance Coordination Authority (AACA) until the AACA
was dissolved in September 2003 and the AACA unit responsible for procurement was renamed ARDS.
Afghanistan CPA: Consulting Services Main Report page 3 of 37
The procurement support services (subcomponent 1) are provided by the PC (currently RITES
Ltd. from India) within ARDS.5 This assignment includes capacity building of local procurement
counterpart staff to be trained as Procurement Liaison Officers (PLOs).
10. Based on recommendations of the 2005 Bank assessment, Public Procurement for
Development Effectiveness,6 the following tasks were accomplished:
A Procurement Policy Unit (PPU) within the Ministry of Finance (MoF) was
established in August 2006; and
Rules of Procedure for Public Procurement to implement the new Public
Procurement Law (PPL) were prepared by the PPU and became effective on April
12, 2007.
11. The international consulting firm responsible for implementing the most recent relevant
assignment, the Procurement Reform Program: Procurement Capacity Building and Legal &
Institutional Framework Development (PRP), commenced work on March 17, 2007.7 The
objectives of this assignment cover the subcomponents 2 (capacity building) and 3 (legal and
regulatory framework development) of PACBP and are:
To develop local procurement capacity within Line Ministries (LMs) and to
enable them to progressively carry out procurement;
To train the PA and as far as practicable the private sector in procurement
procedures and practices under the new Public Procurement Law (PPL); and
To develop procedures under the national law and to provide further support to
the PPU.
Objectives and Execution of Assessment
12. Taking into consideration the Bank’s country assistance strategy, this report examines
whether Afghanistan’s PA has access to the services it needs from international and national
consultants under Bank and Afghan procurement regulations. It is based on a mission that visited
Afghanistan from November 21 to December 3, 2006; due to the security situation in
Afghanistan and travel restrictions, the mission was limited to Kabul. The mission met with
government agencies’ staff, international consultancies currently implementing donor-financed
projects in Afghanistan, academic institutions, the private sector firms (in particular Afghan
consultancies), non-governmental organizations (NGOs), associations, and with the resident
missions of the European Commission, GTZ, ADB, and DFID (the list of persons met is attached
to the report as Annex 1).
13. The report investigates both the capacity and competence of the purchaser (PA) and also
the ability of suppliers (consulting firms) to provide the required services. The Bank’s selection
procedures and the Government’s (GoA) policy, laws, rules of procedure, and practices are
5 Crown Agents from UK performed the role of the Procurement Consultant (PC) from August 2002 until August
2004. The consulting service contract with their successor RITES from India was signed in September 2004. 6 Part II (p. 52 – 79, prepared by Quamrul Hasan, SARPS, and Peter Trepte, Consultant) of Volume II: “Improving
Public Financial Management and Procurement”, World Bank Report No. 34582-AF: “Afghanistan – Managing
Public Finances for Development (In Five Volumes)”, December 22, 2005. 7 Charles Kendell & Partners Ltd./UK in association with the International Development Law Organization/Italy
(IDLO) and the Chartered Institute of Purchasing and Supply/UK (CIPS).
Afghanistan CPA: Consulting Services Main Report page 4 of 37
examined to determine whether they (1) lead to efficient consulting contract awards8 and (2)
support the development of local consulting firms. The demand and the supply of international
and domestic consulting services are assessed. In addition, this assessment identifies the risks
concerning the current Bank capacity-building strategy and the key constraints that hamper the
evolution of the domestic consulting sector.
14. Suggestions are provided on what the GoA and the Bank could do to create an
environment suitable for (1) qualified international consultants and (2) the development of
sustainable local consulting capacity necessary to help Afghanistan to implement its reform
programs.
Findings & Recommendations
Bank Policy on Selection of Consultants
The Bank’s Response to Crises, Emergencies and Fragile States
15. Bank Task Team Leaders (TTLs) interviewed for this report stressed the need to flexibly
apply the 2004 Bank Guidelines on Selection and Employment of Consultants in Afghanistan due
to the weak national institutions and the high risk of conflict. However, neither the Bank’s
approach to Low-Income Countries Under Stress (LICUS), of which Afghanistan is a severe
case, nor its response to crises or emergencies allow for disregarding the Guidelines. The Bank’s
approach to LICUS only suggests outsourcing procurement functions in post-conflict
environments.9 The Bank’s rapid response to crises and emergencies is designed to facilitate the
Bank’s rapid response to emergencies and is limited to the immediate aftermath until regular
procurement procedures can be used without comprising the timely delivery of assistance.10
16. Nonetheless, the Bank’s procurement tools to cope with crises and post-conflict countries
have been useful in assessing the main obstacles to efficient consultants’ selection in
Afghanistan and providing recommendations for this report. The Bank’s response to crises and
emergencies suggests the following procurement-related activities: (1) increased flexibility in the
use of simplified procurement methods; (2) outsourcing of procurement and the ability to draw
on pre-qualified procurement and project management agents through sole-source (SSS) or
qualification-based (CQS) selection; (3) sole sourcing of consulting firms already working in the
area and which have a proven track record for the provision of technical assistance; (4) extension
8 “Efficient contract awards” result from the consideration of the Bank’s main policy principles defined in Art 1.4 of
the 2004 Bank Guidelines when selecting consultants: (1) high-quality services; (2) economy and efficiency; (3)
equal opportunities for all qualified consultants; (4) the development and use of national consultants; and (5)
transparency. 9 Low-Income Countries Under Stress (LICUS) cover a spectrum of fragility, including countries with deteriorating
governance, those in prolonged political crisis, post-conflict transition countries and those in gradual but still fragile
reform processes. See “Low-Income Countries Under Stress Update”, OPCS, World Bank, December 19, 2005.
LICUS are identified by weak Country Policy and Institutional Performance Assessment (CPIA) ratings. “Severe”
LICUS, as Afghanistan, score lowest within this grouping. 10
The Bank policy on rapid response to crises and emergencies policy is not intended to address economic or social
impacts associated with prolonged poor performance by a country. It replaced the policy on emergency recovery
assistance in March 2007. See Bank document R2007-0010 of January 17, 2007 (revised March 2007), “Toward a
New Framework for Rapid Response to Crises and Emergencies”, its Supplemental Note (R2007-0010/1), and its
Annex C (Draft OP/BP 8.00, “Rapid Response to Crisis and Emergencies” applicable to emergency operations
submitted for approval after March 1, 2007).
Afghanistan CPA: Consulting Services Main Report page 5 of 37
of contracts issued under existing projects for similar activities through increase in their
corresponding contract amounts; and (5) encouraging Bank teams working on emergency
operations to actively support counterpart agencies at various stages of the procurement process,
including preparation of ToR, RFP, and drafting of shortlists.
Weighing QBS against QCBS
17. The use of Quality- and Cost-Based Selection (QCBS) has recently been questioned by
many Bank TTLs in view of the high deviations in proposal prices observed in consultants’
selections. As a result, quality becomes less decisive since price turns out to be the overriding
selection factor in many cases. This may lead to poor proposals gaining the highest overall score
and thus to poor quality services. The prudent use of Quality-Based Selection (QBS) could
reduce this risk by placing the main focus on quality. The benefits of using QBS should
particularly be considered for major capacity-building or management/procurement agent
services, which generally have a strong impact on the development of the PA and the
implementation of projects.
GoA Policy on Consultants
18. The GoA has not yet developed a specific policy on consultants, which could form the
basis for a legal and regulatory framework that effectively addresses the needs of the PA and the
consulting firms. The 2005 Public Procurement Law only reflects basic policy principles for
selection of consultants while the new ‘Rules of Procedures’ (see paras. 22) provide the
procedures of consulting services in details. However, a review has not been conducted yet
covering
The range of services that domestic consulting firms could provide to the PA;
The domestic consulting sector, its characteristics, and its capacity to implement
assignments funded by the GoA; or
The quality of services that consultants have already provided to the public sector.
To date, no consultant association has been formed in Afghanistan that could participate in a
public sector dialogue on policy and contribute views on regulatory issues. Considering the
weakness of the few existing consulting companies, it is presently too early to establish a
consulting association in Afghanistan.
Recommendation:
19. Once ministries have clearly defined their mandates and their respective functions, a
review of the range of services that local consulting firms could provide to the PA should be
performed to decide which functions could be outsourced to local consultants. The GoA may
then wish to consider drafting a strategy/policy paper on professional and expert consultants in
the medium term to meet the specific needs of the PA and to encourage the creation of local
consulting firms. The policy on consultants could cover the following areas:
Outsourcing: Relying on present public sector reforms, the policy should
indicate areas and functions for which the GoA will require the support of
professional and expert consultants;
Management & Capacity Development: Drawing on experience with present
public administration reform programs and its recommendations on common
Afghanistan CPA: Consulting Services Main Report page 6 of 37
functions like HR planning and management, the policy should address capacity
building of the PA through training and incentives;
Enabling Environment & Policy Dialogue: The policy should foresee means for
an institutionalized public-private dialogue. This dialogue should explore
opportunities for developing a favorable fiscal and employment policy for
consulting firms.
Legal and Regulatory Procurement Framework
The New Public Procurement Law
20. The new Public Procurement Law (PPL) prepared by the Procurement Unit (PU) of
ARDS and enacted in October 2005 has considerably improved the legal basis for public
procurement. Considering the need for reforms, the new law is certainly to be considered a major
achievement. A proposed amendment to the PPL recently has been referred to Parliament after
approval by the Cabinet extending the timeframe where interim procurement arrangements shall
apply.11
21. However, it is recommended that the following shortcomings be addressed in future
amendments.
(1) The new PPL lacks the necessary foundation of a comprehensive policy on
consultants’ procurement (see previous section);
(2) The PPL lacks a well-defined and user-friendly chapter on consultants’ selection;
(3) The Dari language version PPL that was approved is reported to be inconsistent
with the original English version from which it was translated.
Rules of Procedure for Public Procurement
22. The PPL’s complexity and its lack of a chapter devoted to consultants’ procurement will
make it difficult to apply under the present situation in Afghanistan. Therefore, regulations or
rules of procedure on procurement compliant with international best practice and addressing the
needs of both the GoA and the domestic consulting sector are fundamental for effectively
implementing the PPL. In accordance with Art. 106(1) PPL the Procurement Policy Unit (PPU)
developed Rules of Procedure for Public Procurement in Afghanistan which became effective on
April 12, 2007.12
These procurement rules (PR) provide sound guidance through the process of
consultants’ selection and contain appropriate provisions on enforcing transparency, fair
competition and the administrative review of procurement proceedings.13
However, since the
11
The amendment concerns Art 104 (a) and (b) PPL. The extended timeframe for interim procurement arrangements
are “three” and “five” years instead of “one“ and “two” years respectively. 12
The PPU had originally drafted regulations on public procurement. However, the Afghan Ministry of Justice
decided that this document was mostly procedural in nature and did not have to be submitted to the GoA for
approval. Therefore, the regulation was renamed rules of procedure, approved by the Ministry of Finance and issued
by the PPU in accordance to Article 106(1) PPL. 13
See for example Articles 157 PR (Records) and 81 PR (Publication of Notices) on transparency, Article 162 PR
on declarations on conflicts of interest, Article 164 PR on post-employment restrictions on public officials, Article
165 PR on avoidance of conflict of interests in consulting services, or Articles 170 ff PR on the administrative
review.
Afghanistan CPA: Consulting Services Main Report page 7 of 37
consulting firm responsible for implementing the PRP will no longer provide support to the PPU
in improving the PR,14
some of the remaining shortcomings of the PR are summarized here.
(1) User-friendly Chapter on Consultants’ Selection: The PR lack user-friendly
provisions on the selection of consultants that will allow the PA to apply the
national law on procurement correctly. While the PR distinguish between non-
consultancy services and consultants’ services they do not provide clear guidance
on these two procedures. Several provisions concerning the selection of
consultants can be found only when referring to other chapters of the procurement
rules.15
(2) Definition of Consultants and Mixed Shortlists: The PR neither define the term
consultants16
nor do they mandate that the shortlist shall only comprise
consultants of the same category, similar capacity, and business objectives. Thus,
a management consulting firm might find itself in the position that it has to
compete against a non-profit organization. If a mixed shortlist is unavoidable
under the circumstances, QBS instead of QCBS should be applicable. In addition,
the PR should define the terms professional and expert consultants.
(3) Simplified Technical Proposals (STP): The PR provide for Quality- and Cost-
Based Selection (QCBS), Quality-Based Selection (QBS), Fixed-Budget
Selection (FBS), Least-Cost Selection (LCS)17
and Single-Source Selection
(SSS)18
but lack specific rules for small assignments designed to attract the
attention of local consultancies. Presently even for small assignments standard
procedures apply while simplified procedures could be a major incentive for
increased participation of evolving Afghan consultancies. Considering the
widespread corruption stakeholders do not advocate the use of Selection Based on
the Consultants’ Qualification (CQS). However, an alternative solution would be
the use of Simplified Technical Proposals (STP) for routine assignments with
insignificant downstream impacts.19
Considering the limited capacity of domestic
procurement staff and the local consulting sector discussed below,20
the use of
STPs could help to (1) improve the selection of consultants; and (2) encourage
participation of local consulting firms.
14
Originally it was foreseen that the consulting firm implementing the PRP would have been responsible for
drafting (to the extent required) and modifying the existing rules on procurement and assisting the GoA towards its
finalization. However, amendments to the ToR for the PRP resulted in the deletion of this specific objective. 15
For example, Article 80(1) PR simply states that procuring entities shall ensure that they have complied with all
relevant requirements of Chapter II while this chapter also refers to the procurement of goods and (non-consultancy)
services. Furthermore, the provision listing all available methods for consultants’ selection (Article 84(2) PR) lacks
a clear reference to SSS regulated in Articles 27(1), 29 and 114ff PR. 16
Article 3(7) PR only defines consultants’ services as “activities of a professional, intellectual and advisory nature
that do not lead to a measurable physical output” but does not refer to different categories of consultants such as
consulting firms, NGOs, auditors, UN agencies, universities, or research institutions. 17
See Article 84(2) PR. 18
See Articles 27(1), 29 and 114ff PR. 19
For details see Section 2 (Instructions to Consultants) of the May 2004 edition of the Bank Standard RFP (SRFP).
According to best practice STP should be used when the following conditions are met: (a) the assignment is unlikely
to have significant downstream effects; (b) the assignment is of routine nature and the ToR already define in detail
the objectives, tasks, and required outputs; (c) the consultants’ previous work experience has been sufficiently
evaluated during shortlisting; and (d) capacity building is not a specific component of the assignment.
20 See PA Procurement Capacity, paras. 40 ff and The Local Consulting Sector, paras. 69 ff.
Afghanistan CPA: Consulting Services Main Report page 8 of 37
(4) Quality-Based Selection (QBS): QBS should be made mandatory for complex
and specialized assignments with high downstream effects, and assignments that
can be carried out in substantially different ways. Currently, Article 84 (4) PR
only states that QBS may be used for these types of assignments, thus leaving
room for the inappropriate use of QCBS.
(5) Continuation of Consulting Assignments: The PR lack a provision for awarding
a consultant an assignment that is a continuation of the initial contract subject to
its satisfactory performance in the previous assignment.
(6) Disclosure of Staff Months or Estimated Costs: According to best practice the
RFP should disclose either the estimated staff months or the cost estimate (not
both) whenever available to allow for comparable proposals.
(7) Weight Allocated to Price under QCBS: The weight allocated to price under
QCBS should be addressed within the PR.
(8) Indicative Weights for Evaluation Criteria: The PR should provide for
indicative weights to be used for the evaluation criteria. It is recommended to add
them to the evaluation criteria defined in Article 96(3) PR.
Recommendations to Improve the Legal and Regulatory Framework
23. While a revision of the PPL would depend on the policy on consultants to be elaborated
in the medium-term, the GoA should consider adjusting the PR by addressing the eight
shortcomings just listed. As originally foreseen, the consultants implementing the PRP could
provide advice on the revision of the PR.
Afghan Institutional Framework & Organization of Procurement
ARDS Procurement Unit
24. The assignment of the Procurement Consultant (PC) within the PU of ARDS has two
major objectives:
(1) Procurement facilitation for all goods, works & services under operations
financed directly by IDA, by the IDA-administered Afghanistan Reconstruction
Trust Fund (ARTF), by budgetary expenditures from domestic resources21
as well
as, to the extent feasible, by EU, ADB and other donors; and
(2) Capacity Building and training for ARDS key staff on procurement-related
matters.
Under supervision of ARDS the PC is assisting the Line Ministries (LMs) in procuring
consultancy services starting with the issuing of Expressions of Interest (EoI) and shortlisting of
consulting firms, through preparation of RFPs, receipt and opening of proposals, assistance in
evaluation of proposals, obtaining World Bank’s clearance, and issue of notification of awards.
25. Procurement for contracts using donor funds are usually subject to the rules of the
respective donor organizations. However, the PC is increasingly conducting procurement for
21
Excluding any procurement related to police, military or paramilitary.
Afghanistan CPA: Consulting Services Main Report page 9 of 37
projects financed by the GoA22
(either own resources or budget-support proceedings) subject to
domestic procurement rules.
26. The table below presents the procurement of consulting services contracts assisted by the
PC from 15 August 2002 until 31 March 07:23
Selection Method No. of Contracts Value US$M % Contracts % Value
QCBS 49 109.50 40.5% 44.6%
QBS 8 13.21 6.6% 5.4%
CQS 12 9.54 9.9% 3.9%
SSS 52 113.19 43.0% 46.1%
Total 121 245.44 100% 100%
Due to the need for emergency responses a high number of consulting contracts has been
awarded under SSS. However, 43 contracts were sole-sourced from August 2002 to November
2004. Only 9 contracts have been awarded under SSS since December 2004.
The Bank’s Department of Institutional Integrity (INT) has reviewed all cases facilitated by the
PC, but its report has not been finalized yet.
Line Ministries
27. One of the key constraints identified in former reviews was that there is no consistency in
the organizational structures of the Line Ministries (LMs) with regard to the procurement
functions and processes. Despite the procurement structure foreseen by the new PPL, the various
LM seem to have adopted different models of organizing procurement. Some ministries have
procurement departments, while in others procurement is conducted through service or planning
departments. According to the interviews procurement officers in LMs are sometimes not
involved in procurement processes. The reasons for disregarding available procurement
personnel seem to be:
(1) Lack of trust in the capacity of the procurement personnel;
(2) Lack of management, English and IT skills of procurement personnel and a
history of frequent delays and non-performance of procurement personnel;
(3) Lack of communication between trained procurement staff and senior officials
and consequently no awareness that qualified procurement personnel might be
available; and
(4) Desire to retain control over the procurement process without interference of
procurement personnel.
28. In some LMs (e.g. the Ministry of Rural Rehabilitation and Development) management
and procurement consultants are responsible for all matters regarding the procurement of
services and the implementation of Bank projects. Other LMs (e.g. the Ministry of Urban
Development), with Bank or donor support, have created Project Management Units (PMUs) and
Technical Support Units (TSUs) and are drawing on the services of international personnel
22
Procurement of goods, works or services of a value exceeding US$200,000 is to be handled exclusively by the PU
of ARDS. 23
Prior to appointment of the current PC (RITES Ltd.), Crown Agents from UK were providing similar services to
ARDS. The table presents all procured consultancy contracts facilitated by both RITES and Crown Agents.
Afghanistan CPA: Consulting Services Main Report page 10 of 37
specialized in budgeting, finance management and procurement. International procurement
advisors within PMUs are assigned to handle the procurement, to closely cooperate with local
staff and to build capacity within the respective LM by constant on-the-job training. Ministries
which currently have no PMU or TSU generally demand further support and expatriate staff
specialized in procurement for building capacity in their counterpart procurement teams.
29. The clarification and strengthening of procurement functions within the LM are to be
addressed by the PRP. The procurement processes will be reorganized to follow institutional
arrangements defined in the new PPL by
Identifying 9 key spending ministries to be integrated into the Priority Reform &
Restructuring (PRR) framework devised by the Civil Service Commission
(CSC);24
Assisting identified ministries to prepare applications for obtaining PRR status
that will result in increased equipment and higher salaries in those ministries and
will encourage adherence to the institutional structures foreseen by the new PPL;
Providing procurement training to staff in key ministries.
Procurement Policy Unit
30. The PRP will further support the Procurement Policy Unit (PPU) within the MoF by
drafting its rules of procedure, thus enabling the PPU to become a key player in the formulation
of future policies, legislation and procurement rules and to execute its functions according to
Article 94 of the PPL. These functions include monitoring procurement proceedings to ascertain
efficiency and compliance with the law, the collection of data or reports and the review of
procurement records and files, and proposing improvements in procurement practices. Currently,
one international advisor (since August 2006) and 4 national staff (since September 2006) are
running the PPU and consultancy support is expected to be phased out by PACBP credit closing
(June 30, 2009).
Special Procurement Commission
31. The Special Procurement Commission (SPC) within the Office of the President provided
for in Article 91 of the PPL grants approvals for all contract awards exceeding the levels of first
grade award authorities.25
Its rules for procedure (Transaction of Business Rules for SPC) were
drafted by the PPU and approved on March 31, 2007. The PRP will provide further assistance to
the SPC.
Contract Management Office
32. According to Article 69 of the PPL, a Contract Management Office (CMO) has been
established within the MoF. It serves as the Secretariat to the SPC. According to Article 183 PR
the CMO has the overall responsibility for planning and executing the work of SPC as well as
record keeping.
24
It was envisaged that the PRP would concentrate on the full capacity development of 6 Line Ministries and 6
Provincial Offices. However, required linkages with the provincial procurement entities are still missing. Therefore
the consultant implementing the PRP will undertake capacity development of 9 LMs. 25
See Annex A to the new PPL for details on thresholds for award authorities.
Afghanistan CPA: Consulting Services Main Report page 11 of 37
Appeal and Complaint Mechanisms
33. The PPU has finalized the design and implementation of an independent complaints
review mechanism and the respective rules of procedure in accordance to Article 86 of the PPL.
Articles 170 ff PR adequately provide for the administrative review of procurement proceedings
challenged by a bidding firm. The PRP consultants will be responsible for providing further
support and for conducting training for committee members.
Professional Consulting Associations
34. To date, there are no consulting associations in Afghanistan that could play a role in
monitoring professional standards, representing the sector in the public-policy dialogue with the
GoA, and in promoting the role of independent consultants in the Afghan economy. The capacity
of the few existing local firms is still too limited. Therefore, steps towards the establishment of a
consulting association in Afghanistan should be postponed until the local consulting sector has
developed more capacity.
Recommendations to Improve the Institutional Framework
35. It is recommended that results of the PRP and INT’s review of all procurement cases on
consulting services facilitated by the PC within ARDS be monitored.
Afghan Procurement Procedures and Practices
Available Procurement Manuals or Guidelines
36. There is an immediate need for an interpretative Manual on the Selection of Consultants.
While the rules of procedure on procurement cover the general steps of the selection process,
they lack clear guidance on specific points such as the definition of evaluation criteria, the
composition of the evaluation committee and the evaluation process. Currently, no
comprehensive manuals exist on the selection of consultants (such as a Good Procurement
Manual or Consultant Services Manual). While ARDS has prepared a Quality Manual, it focuses
only on Bank rules and lacks guidance on many specific issues such as shortlisting, defining
evaluation criteria, and the evaluation process. Comprehensive application manuals will be
developed under the PRP.
Availability of Standard Request for Proposals
37. The Standard Request for Proposals (RFP) will be developed under the PRP.
Recommendations to Improve Procedures & Practices
38. The consulting firm responsible for elaborating manuals and the Standard RFP should
rely to the extent possible on the recommendations and advice laid down in the Bank Consulting
Services Manual (2006). Since the PPL and the rules of procedure on procurement are inspired
by Bank rules, many practices suggested by the Consulting Services Manual will prove very
helpful in the Afghan context.
Bank Procurement Capacity
39. According to TTLs interviewed the procurement capacity of the Bank has considerably
improved since a senior procurement specialist joined the Bank office in Kabul in June 2006.26
26
The Bank’s organizational capacity in Afghanistan is considerably higher than in other fragile states (13 IRS and
59 LRS in Sept. 06 compared to an average of 3 IRS and 15 LRS in other fragile states). See Bank document
Afghanistan CPA: Consulting Services Main Report page 12 of 37
PA Procurement Capacity
40. There is a widespread recognition that lack of capacity is probably the greatest constraint
(apart from security concerns) to achieving results in Afghanistan.
Procurement Capacity of PC within ARDS
41. Many TTLs interviewed expressed concern about the capacity of the PC handling
procurement for the Bank and the GoA (see ARDS PU, paras. 24 ff). They concede that many
delays are caused by time-consuming Afghan decision-making processes. However, Bank TTLs
specifically feel that the PC lacks capacity to ensure the professional evaluation of proposals.
Therefore, TTLs stress the need to contract in additional capacity for major Bank-funded projects
and refer to successes gained by outsourcing the procurement services and the project oversight
to international consultants independent from the PC (as practiced, for example, under the Bank-
funded National Emergency Employment Program and the Emergency National Solidarity
Project).
Previous and Ongoing Capacity Building and Training
42. Under EPAP I and II the PC undertook training of between 110 and 150 procurement
staff from various LM. However, the training was based mostly on Bank procurement rules and
national legislation that was then superseded by the PPL. Not all stages of the training course
were completed as planned due to lack of resources and other pressing priorities. Training on the
provisions of the new PPL is foreseen under the PRP.
43. Ten Procurement Liaison Officers (PLO) were selected under EPAP II and PACBP for
intensive procurement training and attended a course at the Administrative Staff College of India
in Hyderabad. The training began in January 2004 and the PLOs were intended to provide core
procurement capacity and to assist the LMs in building their own capacity. The plan was to
retain the PLOs within ARDS first and to subsequently place them in the procurement units to be
set up in the LMs pursuant to the new PPL. However, according to the most recent information,
five of the ten PLOs left ARDS to pursue better paid careers. ARDS’s loss will have a negative
impact on the capacity-building programs within the LMs. Since the PLOs were intended to be
transferred into at least six to nine key spending LMs specifically supported under the upcoming
PRP, their loss might delay achievements under the new project.
44. Further training provided by the PC under PACBP included:
Staff of three LM (Ministry of Energy and Water, Ministry of Defense and
Ministry of Mines) received a one-month training program on the new PPL and
related procurement procedures;
Two procurement officers of Ministry of Agriculture and Irrigation are currently
receiving on-the-job training; and
Training for other LM (4 staff members per ministry) commenced at end of
November 2006.
In addition, the GoA decided to transfer responsibility for consultant selection and administration
to the LMs so that they can develop further capacity through increased involvement in the
procurement processes.
SecM2007-0018, “Strengthening the World Bank Rapid Response and Long-Term Engagement in Fragile States”,
for details on the three-tiered approach for strengthening the Bank’s staffing and organizational support.
Afghanistan CPA: Consulting Services Main Report page 13 of 37
Capacity within Line Ministries - Key Constraints and Challenges
45. Three key issues were identified by the mission consultations and by the PC in its March
07 Progress Report:
(1) Weak PA capacity:
Lack of procurement capacity of LM officials;
Weak capacity of LM procurement consultants;
Inefficient internal procedures (for example, a requirement to obtain a No
Objection (NO) from domestic higher award authorities after having
obtained NO from donor agency);
Lack of capacity to conduct evaluations and assess the quality of EoI and
proposals (see Efficient Selection of Consultants, para. 49).
(2) Lack of understanding of procurement principles and rules, lack of compliance
and accountability at decision-making level.
(3) Lack of adequate IT infrastructure within LMs.
The level of capacity varies, with higher capacity in the few LM that can draw on the assistance
of PMUs or TSUs, and lower capacity in LMs that do not have access to international advice.
Concerns about the capacity of local staff dealing with procurement were expressed by all TTLs
interviewed. Almost constant assistance by expatriate staff is deemed necessary for delegating
parts of the procurement processes to local counterparts.
46. In addition, TTLs and international consultants interviewed referred to lack of capacity in
the PA for managing and supervising consulting assignments. The PA and consultants often
seem to disagree on payment terms and on the interpretation of tasks defined in the Service
Contracts.
Procurement Capacity in Provinces and Districts
47. No data on procurement in the provinces and districts was obtained by the mission.
However, according to interviews with NGOs implementing the NSP, regional procurement
entities are facing the same problems as the national authorities.
Capacity-Building Approach by PACBP and PRP
48. In addition to training of key procurement staff provided by PACBP mentioned in the
previous section, the PRP will build capacity by:
Developing a nationwide procurement capacity-building strategy for central,
provincial and municipal governments;
Identifying key ministries and provinces to be supported under the new project;
Planning the transfer of procurement capacity and responsibility to LM according
to a set of milestones;
Organizing workshops for the dissemination of the new PPL;
Assessing the procurement training needs of the procuring entities (LMs,
provinces, districts);
Developing appropriate selection criteria for trainees;
Afghanistan CPA: Consulting Services Main Report page 14 of 37
Developing methodologies for implementation of a broad training program to
train hundreds of trainees of all levels of government;
Conducting a survey to identify a future procurement training centre for the
country.
Risks within Capacity-building Approach by PACBP and PRP
Efficient Selection of Consultants
49. Since it is a priority for reconstruction that the Afghan PA be reestablished, the Bank
projects focus on building basic procurement capacity. The PACBP provides training to a limited
number of key staff while the PRP includes a broad program for hundreds of trainees from all
levels of government. However, due to PACBP’s limited outreach and PRP’s broad focus
training will only concentrate on basic subjects. In particular, PA staff will not receive training
on consultant selection tasks such as preparing ToR and assessing the quality of proposals. While
specialized capacity building may be too much to expect at this stage, many parties interviewed
expressed concerns about the credibility of the selection process given current deficiencies in the
performance of these tasks. These concerns relate to three stages of consultant selection in
particular:
(1) Preparing the ToR and the RFP: According to TTLs interviewed LM staff lack
experience in designing projects along with the capacity to deliver and define the
technical inputs necessary for the preparation of ToRs. Most ToRs are drafted by
technical advisors funded by donors.
(2) Compiling shortlists: According to the interviews many Evaluation Committees
(EC) lack the capacity to adequately examine EoIs, assess the experience and
capacities of candidates and compile shortlists.
(3) Evaluating submitted proposals: International consultants and donor
representatives specifically question the capacity of local evaluators to adequately
evaluate the quality of complex proposals. The stakeholders interviewed also raise
doubts about the outcome of the evaluations of standard assignments since many
EC seem to lack specialists in the disciplines of these assignments. The same PA
officials who have trouble drafting ToR are then later responsible for evaluating
the proposals.
50. These concerns are a key challenge to attracting qualified international firms and
achieving value for money in the selection of consultants. Combined with concerns about a poor
command of English and corruption, the lack of trust in the qualifications of evaluators
discourages qualified consultants from seeking assignments in Afghanistan (see para. 65 for
participation rates).
Development of National Consultants
51. The PRP includes only basic training courses for local firms that which will focus on (1)
creating awareness about the new Public Procurement Law; and (2) training on procurement
procedures for goods, works and consulting services. The Bank program does not provide
assistance on revising the rules of procedure on procurement although a tailor-made solution is
needed to address the weakness of the local consulting firms (see paras. 22 no 3 and 83 for
details and recommendations).
Afghanistan CPA: Consulting Services Main Report page 15 of 37
52. Moreover, neither PA nor donors have adequate information on the available local
expertise and are facing difficulty to identify the few available local resources (see paras 82 ff).
Capacity Building of the PA
53. According to the interviews the collaboration between expatriates and local procurement
personnel often fails and training turns out to be fruitless because of insurmountable
communication barriers. International consultants frequently reported that international and
national procurement personnel have serious problems interacting effectively. The work of local
translators, generally domestic PA staff members who are not fully qualified translators,
sometimes creates more confusion and misunderstanding instead of facilitating communication.
In addition, expatriates reported that the level of IT skills of their local counterparts is very low
and that they are forced to allocate extensive periods of time to simple on-the-job IT training.
54. Based on the numerous interviews conducted in the course of the mission, four
constraints could hamper the current capacity-building strategy and the shift of responsibilities to
the local counterpart procurement personnel:
(1) Lack of effective interaction between international and national procurement staff
due to language barriers;
(2) Lack of qualified translators to facilitate effective communication between
expatriates and local counterparts;
(3) Lack of correct translations of procurement documents originally prepared in
English; and
(4) Very weak IT capacity of national procurement staff.
In addition, the training program could be compromised by the limited availability of local staff
trainable in complex procurement processes as required by the Bank or the GoA. Experienced
PA staff is often poached by donor agencies and NGOs and the lack of qualified counterpart
personnel in the Afghan PA often renders on the job training impossible. When counterpart staff
is available low motivation due to low pay and limited opportunity for merit based promotion
undermine the knowledge transfer.
Recommendations
55. While most issues are already addressed by the upcoming PRP, the GoA and the Bank
may consider the following approaches to address remaining risks within the capacity-building
approach of the PACBP and PRP.
(1) Professional evaluations of proposals are fundamental for achieving value for
money and attracting qualified international consultants. The GoA (with support
from the Bank) should therefore consider assigning reputable consulting firms
with strong procurement expertise in the field of the specific projects to the task
of conducting proposal evaluations under major Bank-funded projects in close
cooperation with the PA. The same consultants could also be entrusted with the
quality and administrative control of the contracts and building capacity. In
particular, Bank-funded projects that cannot rely on the support of internationally
staffed Project Management Units (PMUs) or Technical Support Units (TSUs)
should benefit from this approach.
(2) For Bank-funded projects that are too small to justify the use of international
consulting firms to handle proposal evaluation and contract management, the
Afghanistan CPA: Consulting Services Main Report page 16 of 37
Bank should encourage Bank staff to actively support counterpart agencies at
defining the technical input for ToR. Bank specialists in the required areas of
expertise should extensively review and also provide input to draft ToR regarding
objectives, components, activities, milestones, and evaluation indicators.
Common weaknesses in TA projects such as the fragmentation into small
assignments of short duration, inadequate monitoring or the disregard of local
circumstances should be avoided by better procurement planning and effective
supervision. Furthermore, consultants with expertise in the required fields should
be assigned to Evaluation Committees.
(3) The GoA (with support from the Bank) may wish to consider addressing the lack
of qualified translators by designing and implementing a training program at a
selected training institute for future translators.
(4) In addition, the GoA may consider developing and implementing training
modules for the procurement staff in the area of English, IT and computer skills.
Recommendations for the development of the local consulting sector are provided in para. 83.
Corruption and Integrity in Procurement of Consultants
56. All persons interviewed at international and domestic consulting firms complained about
nepotism and corruption. Most of the local consultants interviewed consider it useless to apply
for GoA-funded projects without having a special relationship with the government officials and
decision-makers involved. Corruption is especially threatening to international firms or Afghans
returning from overseas who do not have powerful patrons or fully understand how the local
system works.
57. According to the interviewees negative public perceptions of widespread corruption at all
levels of GoA have increased,27
threatening to undermine or even reverse the GoA’s and
international community’s efforts to build functioning institutions able to attract qualified
consultants. Allegations mainly concern the selection of individual consultants:
High-level officials interfere with selection processes;
Shortlists are manipulated or limited to pre-selected candidates with good relations to
powerful patrons;
Evaluation criteria are changed or disregarded after submission of CVs (requiring
doctoral degrees when originally a master’s would have been sufficient);
Information is leaked to preferred candidates; and
Job vacancies are not correctly advertised.
58. The new PPL addresses the need for transparency and accountability under a separate
special chapter (Chapter X). In addition, the rules of procedure for public procurement contain
appropriate provisions on enforcing transparency, fair competition and the administrative review
27
The 2005 Transparency International Corruption Index ranks Afghanistan 117th
placing it among the world’s most
corrupt countries.
Afghanistan CPA: Consulting Services Main Report page 17 of 37
of procurement proceedings.28
Article 108 of these recently enacted rules also effectively
regulates the selection of individual consultants.
59. The Bank’s Anti-Corruption Study (P101117) has recommended the following steps:
Steps to be taken by Government
Clarify administrative mandates and provide political support and resources
accordingly, with consideration of a small number of quick win or high profile
measures to demonstrate the GoA’s commitment to addressing the problem of
corruption in Afghanistan.
Accelerate efforts to reduce vulnerabilities to corruption in management of budget
funds and strengthen internal and external audit of public funds.
Improve transparency and effectiveness of merit-based recruitment processes and
monitor progress.
Initiate work toward developing and implementing an anti-corruption strategy, with
technical support from the international community.
Steps to be taken by the Donor Community
Provide technical assistance on anti-corruption policies and programs;
Renew the international community’s efforts on transparency (through regular public
disclosure of financial reports, audits, and contract awards).
In close collaboration with GoA, engage in rapid analysis of key Government sectors,
functions, processes and managerial responsibilities to identify points of vulnerability
to corruption and make recommendations for improvements.
Initiate analytical work on corruption to expand and strengthen the information base
for effective anti-corruption policies and programs.
Start incorporating an anti-corruption dimension into key development projects and
programs.
60. Considering the low level of capacity of PA officials and the lack of user-friendly rules
of procedure and manuals, it is not surprising that corruption remains a key issue. The GoA and
the Bank should ensure professional evaluations by outsourcing this task to international
consulting firms at least for major Bank-funded projects (see para. 55). In addition, the low
procurement capacity of the PA could be addressed by simplifying the tender process. The use of
Simplified Technical Proposals (STP) for routine assignments could help to increase
transparency in the evaluations of proposals (see para. 22 for details and recommendations).
Public Sector Demand for Consulting Services
Domestically Funded Demand
61. This section concentrates on the national budget available for procuring consulting
services. There are also local budgets available at the municipal level, and municipalities can
28
See for example Articles 157 PR (Records) and 81 PR (Publication of Notices) on transparency, Article 162 PR
on declarations on conflicts of interest, Article 164 PR on post-employment restrictions on public officials, Article
165 PR on avoidance of conflict of interests in consulting services, or Articles 170 ff PR on the administrative
review.
Afghanistan CPA: Consulting Services Main Report page 18 of 37
exercise some degree of fiscal autonomy. Revenues collected at the local level are mainly used to
fund municipal expenditures.
62. Since 2001 the focus has been on reconstruction, delivery of basic services and the
development of infrastructure. In addition, revenue mobilization in Afghanistan is still among the
lowest in the world and covers only 9% of total public expenditure. Therefore, only a small
percentage of national funds are spent on consulting services. The lack of trust in the capacity of
the domestic consulting sector further undermines efforts to successfully procure more
consulting services.
63. According to data provided by ARDS the GoA spent approx. US$130,900,000 for
contracts on goods, works and consulting services since 2004.29
Ten out of 49 contracts (8.6% of
total amount for goods, works and consulting services funded by GoA) concerned the provision
of consulting services. Seven consultancy contracts were awarded to international firms; 3 to
NGOs. No data is available on domestic consulting firms or subcontractors that may have been
associated with the implementation of the assignments. The data is summarized in the table
below, with details provided in Annex 2.
Consultancy Contracts Funded by GoA30
Selection Method Scope of Services Value US$ Winning Firm Origin
QBS Design of Building 500,000 Japan
QCBS Survey 450,000 Pakistan
QCBS Feasibility Study 751,239 Iran
QCBS Feasibility Study 2,321,560 India
QCBS Feasibility Study 2,132,010 India
QCBS Feasibility Study 2,210,000 India
QCBS National Skills Development 1,558,972 International NGO
QCBS National Skills Development 963,574 International NGO
QCBS National Skills Development 242,690 Local NGO
QCBS Design of Building 134,938 Pakistan
Total GoA Funding for Consulting Services: 11,264,983
Consulting Services Funded by the Bank
64. Since April 2002, the Bank has committed over US$1.28 billion for 25 development and
emergency reconstruction projects and two budget support operations in Afghanistan.31
This
support comprises US$849.8 million in grants and US$436.4 million in interest-free credits. Two
budget support operations, emergency public works, infrastructure reconstruction, and education
rehabilitation projects have so far been completed. Of the US$1.28 billion the World Bank has
29
The data provided by ARDS mainly concerns contracts above a value of US$200,000. 30
Awarded since December 2004 and facilitated through the PC within ARDS. 31
The Afghanistan Reconstruction Trust Fund (ARTF), administered by the World Bank on behalf of 25 donors and
managed in conjunction with ADB, Islamic Development Bank, United Nations Assistance Mission for
Afghanistan, and UNDP, remains the main mechanism for providing coordinated funding support to Afghanistan’s
recurrent budget and investments in line with agreed budget priorities of the GoA. As of October 22, 2006, 25
donors had pledged US$1.66 billion to ARTF, of which US$1.45 billion have been received.
Afghanistan CPA: Consulting Services Main Report page 19 of 37
committed to Afghanistan, approx. US$175.8 million (14%) were allocated to 63 consulting
service assignments which can be grouped by sector as shown in the table below, with details
provided in Annex 3.
World Bank Funded Consulting Assignments
(Signed Contracts from 29 May 2003 until 01 March 06)
Sector No of Contracts %
Agriculture 1 1.5 %
Education 3 4.8 %
Energy 3 4.8 %
Health 12 19.0 %
Public Administration and Law 8 12.7 %
SWAps (NSP) 27 42.9 %
Transport 4 6.3 %
Water & Sanitation 5 7.9 %
Total 63 100 %
The consulting contracts were awarded as follows:
World Bank Funded Consulting Assignments
(Signed Contracts from 29 May 2003 until 01 March 06)
Category of Consultant No of Contracts %
NGOs 38 60 %
International Consulting Firms 22 35 %
National Consulting Firms 1 2 %
Other 2 3 %
Total 63 100 %
International Supply of Consulting Services
International Participation
65. Participation rates of international consultants are low. Based on an assessment of 10
Bank-funded assignments from 2005 to 2007 the average number of international proposals
submitted per assignment was only 2.5. On average just 2.1 proposals scored above the
Minimum Qualifying Score (MQS). These outcomes are summarized in the table below, with
details in Annex 4.
Participation Rates EoI
Received
Size of
Shortlist
Proposals
Submitted
Proposals
Above MQS
Average 8.4 4.5 2.5 2.1
66. According to the international consultants interviewed the reasons for low participation
are:
(1) The security situation;
Afghanistan CPA: Consulting Services Main Report page 20 of 37
(2) Low PA capacity to evaluate consultants’ qualifications and lacking transparency
of selection processes; and
(3) Low PA capacity to adequately supervise and to pay international consultants
fairly and timely.
In addition, international consultants stressed the high costs required to set up and conduct
business in Afghanistan (security, electricity, safe housing for employees, identifying reliable
local partners or suppliers, etc.). The entry costs are considered to be extremely high. Once
established, firms tend to apply for other opportunities again. However, according to the
interviews the willingness of firms to operate in Afghanistan is mainly linked to the availability
of bilateral contracts and not to Bank-funded assignments which are merely seen as an addition
to the core business. International consultants interviewed point out that the incentives for
seeking Bank-funded assignments are missing. Excessive demands from the PA, its lacking
appreciation of consulting services, and delayed payments are among the many issues that
discourage qualified consultants.
Performance on Consulting Service Contracts
67. PA and donor officials generally consider the performance of international consulting
firms as merely satisfactory under the present circumstances and have observed that firms
generally refrain from sending experienced and qualified staff to Afghanistan. Assignments
focusing on capacity building implemented by international firms are generally rates as less than
satisfactory. However, officials admit that contract durations of 2 to 3 years make it difficult to
carry out comprehensive capacity-building contracts. In addition, the lack of trainable local staff
challenges any training program.
Remuneration Levels
68. Based on a sample of 12 Bank-funded contracts international firms from Part 1 countries
demand a median fee of $23,000 for key team members for operating in Afghanistan as outlined
in the following table, with details in Annex 5 on the 12 assessed contracts.