Use of Country Systems Consultations on the Draft Methodology for Use of Country Procurement Systems.

Use of Country Systems

Consultations on the Draft Consultations on the Draft Methodology for Use of Methodology for Use of Country Procurement SystemsCountry Procurement Systems

Presentation OutlinePresentation Outline

Part I - Why Use Country Systems Part I - Why Use Country Systems

Part II - Procurement MethodologyPart II - Procurement Methodology

Part III - Consultation ProcessPart III - Consultation Process

Part IV - Handling of Past IssuesPart IV - Handling of Past Issues

Why Is the Bank Interested in Use of Country Systems

Part I - BackgroundPart I - Background

Why Are We Interested in Why Are We Interested in Use of Country Systems?Use of Country Systems?

Scale up development impactScale up development impact Increase country ownershipIncrease country ownership Facilitate harmonizationFacilitate harmonization Simplify and reduce costsSimplify and reduce costs

Links to:Links to: Paris DeclarationParis Declaration MIC AgendaMIC Agenda GAC Agenda (principle #6)GAC Agenda (principle #6)

Where Do We Stand?Where Do We Stand?

Environment and social safeguards:Environment and social safeguards: pilot pilot projects approved 03/05, 12 ongoing pilotsprojects approved 03/05, 12 ongoing pilots

Financial management:Financial management: country systems are the country systems are the default choice under existing policy, but many default choice under existing policy, but many Project Implementation Units (PIUs) still created Project Implementation Units (PIUs) still created outside regular financial system. Country systems outside regular financial system. Country systems used 60% of time in eligible countriesused 60% of time in eligible countries

Procurement:Procurement: use of National Competitive Bidding use of National Competitive Bidding under country systems common. Earlier proposal to under country systems common. Earlier proposal to expand use of country procurement systems expand use of country procurement systems withdrawn to update and reflect comments from withdrawn to update and reflect comments from consultation process.consultation process.

Lessons from Safeguards Lessons from Safeguards Pilot and Financial Pilot and Financial ManagementManagement Limited take up Limited take up Costs of upfront preparation are Costs of upfront preparation are

prohibitiveprohibitive Need for clear management Need for clear management

signals, especially related to GACsignals, especially related to GAC Project-by-project approach very Project-by-project approach very

limited in impact (12 projects in limited in impact (12 projects in portfolio of 1600)portfolio of 1600)

New Proposal #1: Country New Proposal #1: Country PilotsPilots

To accelerate progress we propose to supplement To accelerate progress we propose to supplement project-by-project approach:project-by-project approach:

New Country Pilots with at least 8 countries in the New Country Pilots with at least 8 countries in the first year (candidates to be proposed by Regions;) first year (candidates to be proposed by Regions;)

Assessment in each case of procurement, Assessment in each case of procurement, safeguards, financial management that can meet safeguards, financial management that can meet the Bank standards the Bank standards

Identification of policy reforms and capacity Identification of policy reforms and capacity building measures to address any gapsbuilding measures to address any gaps

After approval via OPCS, reports on proposed After approval via OPCS, reports on proposed Pilots would be sent to Board for information plus Pilots would be sent to Board for information plus progress report after one yearprogress report after one year

New Proposal #2: New Proposal #2: Procurement Project PilotsProcurement Project Pilots

In addition to country pilots, propose pilots in In addition to country pilots, propose pilots in procurement at the sector/project level for ICB and procurement at the sector/project level for ICB and Selection of Consultants;Selection of Consultants;

Assessment based on policy framework and Assessment based on policy framework and performance equivalent to Bank policiesperformance equivalent to Bank policies

Use of Country Procurement Assessment Reviews Use of Country Procurement Assessment Reviews (CPARs) new OECD/DAC Assessment Methodology, and (CPARs) new OECD/DAC Assessment Methodology, and performance indicatorsperformance indicators

Provision for re-imposition of Bank procedures if new Provision for re-imposition of Bank procedures if new system abusedsystem abused

Emphasis that this is not a reduction of Bank standards, Emphasis that this is not a reduction of Bank standards, but recognition that many countries have achieved but recognition that many countries have achieved equivalenceequivalence

Part II - A Multi-Part II - A Multi-Phased Process Phased Process

Key Elements of Draft Key Elements of Draft ““Detailed Methodology for Detailed Methodology for

Procurement Country Systems Procurement Country Systems Piloting ProgramPiloting Program””

Phase I - Country Selection Phase I - Country Selection Process for Pilots in Process for Pilots in Safeguards, Financial Safeguards, Financial Management and ProcurementManagement and Procurement

Suggested Procurement Related Suggested Procurement Related CriteriaCriteria– CPAR and other relevant diagnosticsCPAR and other relevant diagnostics– PFM System Information (e.g. PEFA or PFM System Information (e.g. PEFA or

CFAA, Integrated Fiduciary and/or PER)CFAA, Integrated Fiduciary and/or PER)– Existing/planned OECD/DAC assessmentExisting/planned OECD/DAC assessment– Expressed interest of countryExpressed interest of country– Country Director and country team Country Director and country team

supportsupport

Phase II – Procurement Phase II – Procurement Assessment, Analysis and Assessment, Analysis and Capacity Development at Capacity Development at Country LevelCountry Level CPAR provides information on the system including action CPAR provides information on the system including action

plan for any on-going reforms and indication of country plan for any on-going reforms and indication of country commitmentcommitment

OECD/DAC benchmarking tool provides for scoring of 54 OECD/DAC benchmarking tool provides for scoring of 54 sub-indicators on 0-3 scale with a score of 3 representing sub-indicators on 0-3 scale with a score of 3 representing best practicebest practice

30 of the 54 sub-indicators in the OECD/DAC tool have 30 of the 54 sub-indicators in the OECD/DAC tool have been identified as critical and require achieving the been identified as critical and require achieving the highest score of 3 for 22 of the sub-indicators or a score of highest score of 3 for 22 of the sub-indicators or a score of 2 with an agreed action plan for 8 of the sub-indicators.2 with an agreed action plan for 8 of the sub-indicators.

Remaining 24 sub-indicators require achieving a score of Remaining 24 sub-indicators require achieving a score of 22

Phase II - Capacity Phase II - Capacity DevelopmentDevelopment

If country assessments indicate failure to If country assessments indicate failure to achieve stated standards, focus will be achieve stated standards, focus will be on addressing issues through increased on addressing issues through increased capacity development, country will not capacity development, country will not be a pilot for procurement.be a pilot for procurement.

If issues in system can be addressed in If issues in system can be addressed in the short term, country will remain a the short term, country will remain a candidate country while capacity develop candidate country while capacity develop undertaken. Country will move to next undertaken. Country will move to next level once noted issues have be level once noted issues have be corrected.corrected.

Phase II - Equivalence Phase II - Equivalence Assessment Assessment

Ensures that “equivalence” to the principles and Ensures that “equivalence” to the principles and policies defined by the Bank is achieved and policies defined by the Bank is achieved and maintainedmaintained

Each key policy of the Bank’s Guidelines Each key policy of the Bank’s Guidelines addressed through the assessment process addressed through the assessment process which verifies the country’s policies, procedures which verifies the country’s policies, procedures and practicesand practices

A special agreement with the country to address A special agreement with the country to address any outstanding issues will be made part of the any outstanding issues will be made part of the Loan Agreement for the pilot projects.Loan Agreement for the pilot projects.

Phase II - Selection of Phase II - Selection of ConsultantsConsultants

All consulting requirements above All consulting requirements above thresholdthreshold11 to follow Bank Guidelines to follow Bank Guidelines

All consulting requirements below All consulting requirements below threshold to use country methods threshold to use country methods agreed with the Bankagreed with the Bank

Country may request an equivalence Country may request an equivalence assessment for increased reliance on assessment for increased reliance on use of country system for consultancy use of country system for consultancy assignments above the stated assignments above the stated thresholds.thresholds.

1.1. Threshold set on basis of country by country thresholds established for Threshold set on basis of country by country thresholds established for shortlists comprised of national firms onlyshortlists comprised of national firms only

Phase III – Sector/Project Phase III – Sector/Project Selection, Assessment and Selection, Assessment and ImplementationImplementation

General criteria:General criteria:1.1. Based on projected lending program in CAS Based on projected lending program in CAS

2.2. Focused projects, preferably not multiple programs in a Focused projects, preferably not multiple programs in a sector, but including SWApssector, but including SWAps

3.3. Not complex, preferably with a single implementing Not complex, preferably with a single implementing agencyagency

4.4. No projects with a PIU to be considered.No projects with a PIU to be considered.

Procurement policy requires a capacity assessment of the Procurement policy requires a capacity assessment of the responsible implementing agency for the sector/project.responsible implementing agency for the sector/project.

Phase III –Project/Sector Phase III –Project/Sector AssessmentAssessment

Procurement performance data collected Procurement performance data collected from Implementing Agency to be assessed from Implementing Agency to be assessed and will set baseline for monitoring: and will set baseline for monitoring: – Advertisement of opportunitiesAdvertisement of opportunities– Time allowed for bid preparationTime allowed for bid preparation– Time for bid evaluation and awardTime for bid evaluation and award– Use of less competitive methodsUse of less competitive methods– Time to resolve complaintsTime to resolve complaints– Award based on stated criteriaAward based on stated criteria– Payment processPayment process

Phase III – Project/Sector Phase III – Project/Sector AssessmentAssessment

Capacity Assessment of Capacity Assessment of Implementing Agency will use Implementing Agency will use enhanced risk assessment tools enhanced risk assessment tools to identify risk related factorsto identify risk related factors

Risk mitigation measures agreed Risk mitigation measures agreed and made part of project and made part of project requirementsrequirements

Phase III – Sector/Project Phase III – Sector/Project ImplementationImplementation

Loan Agreement will be specially constructed to Loan Agreement will be specially constructed to cover key Bank requirements and provide Bank cover key Bank requirements and provide Bank with normal remedies (misprocurement) and with normal remedies (misprocurement) and ability to rescind pilot statusability to rescind pilot status

Procurement plans to be published, updated and Procurement plans to be published, updated and carefully monitoredcarefully monitored

Complex and high value procurement to be Complex and high value procurement to be identified and procurement notices published identified and procurement notices published using UNDB in addition to other publication sites using UNDB in addition to other publication sites which will be identified for each pilot countrywhich will be identified for each pilot country

Annual independent third party procurement Annual independent third party procurement audits to be requiredaudits to be required

Performance data to be monitored throughout Performance data to be monitored throughout implementationimplementation

Bank Role and Bank Role and ResponsibilitiesResponsibilities

Procurement Sector Board to be involved in the Procurement Sector Board to be involved in the piloting process by providing oversight, staff piloting process by providing oversight, staff development, support for resolution of issues and development, support for resolution of issues and reporting on resultsreporting on results

Operations Procurement Review Committee (OPRC) Operations Procurement Review Committee (OPRC) will review and vet the phases of the assessment will review and vet the phases of the assessment processprocess

Regional procurement staff – will retain normal Regional procurement staff – will retain normal supervision responsibilities focused on post review, supervision responsibilities focused on post review, performance monitoring, and capacity development performance monitoring, and capacity development

Some Additional Key Bank Some Additional Key Bank ResponsibilitiesResponsibilities

Monitoring of Performance IndicatorsMonitoring of Performance Indicators Monitoring of Complaints reported to Monitoring of Complaints reported to

BankBank Monitoring of PaymentsMonitoring of Payments Management of remedies and key Management of remedies and key

additional provisions in Loan Agreementadditional provisions in Loan Agreement Reporting on ProgressReporting on Progress Monitoring of Disclosure Monitoring of Disclosure

Country SystemsCountry Systems

Part IIIPart III

Overview of the Consultation Overview of the Consultation StrategyStrategy

Consultation Consultation ObjectivesObjectives Improve the quality of the new Improve the quality of the new

methodology for piloting the use of methodology for piloting the use of country systems in procurementcountry systems in procurement

Tap the knowledge of a diverse range of Tap the knowledge of a diverse range of stakeholdersstakeholders

Listen to issues raised and address them Listen to issues raised and address them to the maximum extent in new to the maximum extent in new methodologymethodology

Focus on future actionsFocus on future actions

Types of ConsultationTypes of Consultation

I.I. A global electronic consultation with A global electronic consultation with the document posted on the web and the document posted on the web and comments collected from emailcomments collected from email

WEB package will contain:WEB package will contain:1.1. The processThe process2.2. Explanation of the processExplanation of the process3.3. Basic Q&ABasic Q&A4.4. Issues raised in the past and how new Issues raised in the past and how new

methodology addresses themmethodology addresses them5.5. Summary of comments received and Bank’s Summary of comments received and Bank’s

response will be posted and regularly updatedresponse will be posted and regularly updated

Types of ConsultationTypes of Consultation

II.II. A multi country consultation with A multi country consultation with meetings held in both Part I and meetings held in both Part I and Part II CountriesPart II Countries

– Private SectorPrivate Sector– GovernmentGovernment– Other StakeholdersOther Stakeholders

Scheduled Scheduled ConsultationsConsultations September2007 September2007

Copenhagen, DenmarkCopenhagen, Denmark

Rome & Milan, ItalyRome & Milan, Italy

Paris, FranceParis, France

Berlin, GermanyBerlin, Germany

Amsterdam, Amsterdam, NetherlandsNetherlands

London, UKLondon, UK

JV for Procurement Mtg.JV for Procurement Mtg.

October 2007October 2007– JapanJapan– KoreaKorea– IndiaIndia

To Be Scheduled:To Be Scheduled:

SenegalSenegal

KenyaKenya

OthersOthers

Implementation Implementation TimelineTimeline Technical presentation to the Board in Technical presentation to the Board in

September 2007September 2007 Publish draft methodology on website in Publish draft methodology on website in

September 2007 following internal September 2007 following internal consultationsconsultations

Consultations with external stakeholders Consultations with external stakeholders September – November, 2007September – November, 2007

Finalization of the Methodology in November Finalization of the Methodology in November 20072007

Board approval in December 2007Board approval in December 2007 Selection of Pilot Countries early 2008Selection of Pilot Countries early 2008

The following are a few key issues for The following are a few key issues for discussion:discussion:

1. The World Bank has proposed a detailed methodology for a procurement country system piloting program in 8 -  10 countries.  What remaining questions need to be addressed or clarified about this program?

2. The OECD/DAC benchmarking index provides for scoring of 54 sub-indicators on a 0-3 scale with a score of 3 representing best practice.  30 of 54 sub-indicators in the OECD/DAC tool have been identified as critical and require achieving the highest score of 3 for 22 of the sub-indicators or a score of 2 with an agreed action plan for 8 of the sub-indicators.  Is this achievement level appropriate and if not, why?

Key Discussion Key Discussion IssuesIssues

Key Discussion Key Discussion IssuesIssues

3. Under this proposal, not all procurement would be included in these pilots. Should the Bank include complex, high value procurement such as those [e.g. highway construction, power generation equipment, information technology] now cleared by the Operations Procurement Review Committee (OPRC) in the use of pilot country procurement systems?

4. Is the proposed handling of the Selection of Consultants in the pilots satisfactory? If not, how can this be strengthened?

Key Discussion Key Discussion IssuesIssues

5.5. Are the proposed performance based measures Are the proposed performance based measures sufficient to address transparency, access to sufficient to address transparency, access to information and governance and anticorruption information and governance and anticorruption issues (GAC) that have been raised with regard issues (GAC) that have been raised with regard to the pilots of country systems in procurement?to the pilots of country systems in procurement?

6.6. Do you have other suggestions that will Do you have other suggestions that will strengthen the World Bank Group's efforts to strengthen the World Bank Group's efforts to help countries improve their procurement help countries improve their procurement systems and help us learn from these pilots? systems and help us learn from these pilots?

Handling of Past IssuesHandling of Past Issues

Part IVPart IVHow Current Methodology How Current Methodology Addresses Issues Raised with Addresses Issues Raised with regard to Previous Paper regard to Previous Paper

ISSUES RAISED IN PREVIOUS ISSUES RAISED IN PREVIOUS PAPERPAPER

HOW CURRENT HOW CURRENT METHODOLOGY ADDRESSES METHODOLOGY ADDRESSES

THESE ISSUESTHESE ISSUES

The 3 Tiered approach (Baseline The 3 Tiered approach (Baseline Indicators, Performance Indicators, Performance Indicators and Equivalence) is an Indicators and Equivalence) is an incomplete measurement incomplete measurement

OECD/DAC/WB BLI for measuring OECD/DAC/WB BLI for measuring quality and compliance of a quality and compliance of a system not fully developed and system not fully developed and tested at the timetested at the time

Performance and Equivalence Performance and Equivalence measurements have been measurements have been improvedimproved

Results of CPPR and other PFM Results of CPPR and other PFM diagnostics will be considereddiagnostics will be considered

Assessment will be carried out at Assessment will be carried out at three levels: three levels: Country/Sector/ProjectCountry/Sector/Project

The standards have been set too The standards have been set too low. There is a small number of low. There is a small number of mandatory requirements or mandatory requirements or critical sub-indicators (39%) critical sub-indicators (39%) which do not cover essential which do not cover essential elements such as conflict of elements such as conflict of interest, dispute resolution, etc.interest, dispute resolution, etc.

No. of critical sub-indicators have No. of critical sub-indicators have been increased to 55% and all been increased to 55% and all have to reach the maximum have to reach the maximum score of 3 and others at least a 2 score of 3 and others at least a 2 using the OECD/DAC BLI (Version using the OECD/DAC BLI (Version 4)4)

Provisions for Special Agreement Provisions for Special Agreement as part of the Loan Agreement as part of the Loan Agreement subject to Application of Bank subject to Application of Bank RemediesRemedies

Handling of IssuesHandling of IssuesISSUES RAISED IN PREVIOUS ISSUES RAISED IN PREVIOUS

PAPERPAPERHOW CURRENT HOW CURRENT

METHODOLOGY ADDRESSES METHODOLOGY ADDRESSES THESE ISSUESTHESE ISSUES

Use of Bank’s Standard Bidding Use of Bank’s Standard Bidding documents should be a documents should be a requirement for ICBrequirement for ICB

Bidding documents for major, Bidding documents for major, complex and high value complex and high value procurement (as identified in procurement (as identified in procurement plans) subject to procurement plans) subject to OPRC prior reviews may use OPRC prior reviews may use Bank’s SBD and will be reviewed Bank’s SBD and will be reviewed against Bank’s Guidelines against Bank’s Guidelines

Performance of the system is not Performance of the system is not an eliminating criterion and its an eliminating criterion and its measurement too subjectivemeasurement too subjective

Procurement is a specialized area Procurement is a specialized area and judgment of qualified and judgment of qualified specialists is necessary specialists is necessary

Countries and/or projects with Countries and/or projects with poor performance track records poor performance track records will not be part of the pilot will not be part of the pilot programprogram

Handling of IssuesHandling of IssuesISSUES RAISED IN PREVIOUS ISSUES RAISED IN PREVIOUS

PAPERPAPERHOW CURRENT HOW CURRENT

METHODOLOGY ADDRESSES METHODOLOGY ADDRESSES THESE ISSUESTHESE ISSUES

Indices for measuring Indices for measuring equivalence related to the equivalence related to the selection of consultants are not selection of consultants are not sufficientsufficient

The new methodology The new methodology recommends the use of Bank’s recommends the use of Bank’s guidelines for contracts guidelines for contracts equivalent or greater than equivalent or greater than established threshold. established threshold.

For contracts of less value, For contracts of less value, agreed national procedures may agreed national procedures may be usedbe used

The Bank is relinquishing its The Bank is relinquishing its fiduciary responsibilityfiduciary responsibility

The Bank will continue The Bank will continue supervision missions and retain supervision missions and retain its right to review procurement its right to review procurement decisions, audit all processes and decisions, audit all processes and declare misprocurement when declare misprocurement when neededneeded

The fraud and corruption The fraud and corruption provisions in the Guidelines will provisions in the Guidelines will be maintainedbe maintained

The Bank will continue to follow The Bank will continue to follow up on handling of complaintsup on handling of complaints

The Bank will require 3The Bank will require 3rdrd Party Party AuditsAudits

Handling of IssuesHandling of IssuesISSUES RAISED IN PREVIOUS ISSUES RAISED IN PREVIOUS

PAPERPAPERHOW CURRENT HOW CURRENT

METHODOLOGY ADDRESSES METHODOLOGY ADDRESSES THESE ISSUESTHESE ISSUES

Once a country is chosen for the pilot Once a country is chosen for the pilot program, ongoing performance will no program, ongoing performance will no longer be a concern to the Bank longer be a concern to the Bank

The performance of the country will The performance of the country will be monitored during implementation be monitored during implementation to ensure that progress, quality and to ensure that progress, quality and standards are maintainedstandards are maintained

The Loan Agreement will define The Loan Agreement will define remedies in case of non performance remedies in case of non performance and obligations to be respectedand obligations to be respected

It is better to use one set of It is better to use one set of procurement guidelines instead of procurement guidelines instead of many country systemsmany country systems

Using Country Systems strengthen Using Country Systems strengthen borrowers’ capacity and increase borrowers’ capacity and increase transparency and contribute to the transparency and contribute to the achievement of the objectives of the achievement of the objectives of the Paris Declaration on Aid EffectivenessParis Declaration on Aid Effectiveness

Our objective is not to facilitate Our objective is not to facilitate bidding for a few international biddersbidding for a few international bidders