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Reforming Public Procurement -- Syquia 12. An e-procurement system that complements the reform process by enhancing transparency, accountability, data management and efficiency of the public procurement process. Through the BIS, the core elements of a well-functioning public procurement system are identified and then utilized as the measuring stick to determine how well a country meets these elements. The BIS captures a snapshot of the current state of a country’s procurement system, serves as the basis for dialogue between the government and its development partners. The BIS should be conducted not only at the ministerial level, but also with the technical staff of key procuring agencies, local governments or offices, the private sector and, to the extent possible, with civil society. All of these actors will be critical stakeholders in Step 2 below. 3.2 Develop a Strategy Based on the BIS assessment, the government can then identify priorities and establish a strategy for improvement or broader procurement reform. The BIS is not, however, intended to be used as a fiduciary tool by external stakeholders—such as a donor institutions—to draw conclusions about a country’s procurement system, or to evaluate the impact of donor assistance programs. This distinction is important: The BIS assessment, whether done independently by the government or with assistance from aid institutions, should be driven by local stakeholders and should engage those involved in the actual implementation of the projects or programs being evaluated. Using the BIS as a self-assessment tool helps ensure ownership on the part of the government and other local stakeholders. If the BIS is being applied for the first time in a country, its implementers need to be aware of existing procurement reform strategies and activities. If the BIS has been used previously in the country, a subsequent application would evaluate how well the country has performed against the objectives set following the previous assessment, and then establish new targets or priorities to fill any gaps and advance the reforms. For example, if a government has been focusing on enacting an omnibus procurement reform law for the last three years, and has succeeded in doing so only recently, a BIS assessment would help shift the reform focus from advocacy and legislation to rollout of the reforms and capacity building. 4 Step Two: Develop or improve the legal framework After analyzing the gaps and weaknesses in a country’s public procurement system, the next step is to draft or improve the legal framework to address these problems. Depending on the political structure of the country and the state of the existing legal framework for public procurement, this activity may range from the issuance of executive orders or implementing rules and regulations to the actual legislation of an omnibus procurement reform law. For purposes of broader coverage, this paper will focus on the latter scenario. This is especially relevant when public procurement reform is introduced under the auspices of a broader anti-corruption program, given the fact that informal institutions are often strong when formal institutions are weak. However, it should be kept in mind that a full-blown effort to advocate and enact an omnibus procurement reform law is generally a long-term process and could take years. Therefore, there may be a need for short-term measures to address more pressing procurement challenges while the law is being developed. 4.1 Identify Champions and Build Support Even in countries with highly centralized government and decision-making processes, extensive efforts must go into legitimizing policy reforms and securing broad-based support for policy or systemic reform. Policy champions at the highest levels of government need to be identified—key decision makers with sufficient credibility, political resources and the willingness to risk political Fiscal Reform and Economic Governance Project 5
Reforming Public Procurement -- Syquia capital in support of the reforms. At the same time, garnering support from a wider array of constituents both within and outside the government is critical to ensuring that the reforms are truly embraced and implemented. Clearly, then, legislating an omnibus public procurement law requires advocacy efforts that reach out to various groups and individuals throughout government, the private sector and civil society. Furthermore, while politicians and external interest groups may play a lead role in initiating change, those most actively involved in the formulation of the policy changes tend to be technocrats who generally operate under a different decisional calculus than that of either the political or the administrative leadership. Identifying and working with these technocrats is critical to effective implementation of the reforms, because: they are usually not elected but are members of a civil service ; they tend to remain in their respective agencies long after politically appointed or elected leaders move on; and they may be more concerned with technical solutions and maximizing outputs than with political trade-offs. This means that policy advocates have to seek out champions horizontally by cutting across various sectors of society, and vertically by working with politicians and technocrats at both central and local levels of government. Brinkerhoff and Crosby (2002) provide ample guidance for consulting with stakeholders and building support for important policy and institutional reforms. ix Whichever participation mechanisms are used, the policy reformers should be guided by the findings, recommendations and strategy of the BIS assessment. While any gathering of various stakeholder and interest groups has the potential of galvanizing new ideas and approaches, it can easily turn into an amalgamation of fragmented and conflicting recommendations and initiatives if these are not limited to key discussion areas and guided by a common objective. This is the purpose of the BIS assessment exercise, as it provides hard evidence of the weaknesses and gaps that need to be addressed, and a set of recommendations based on these findings. 4.2 Drafting the Reform Measures The person or group tasked with drafting the reform measures has the difficult task of considering the ideas gathered from all the workshops, consultations and technical discussions and—guided by the original strategy, action plan and international best practices—developing the appropriate provisions that would serve as the legal framework for the reforms. In developing the legal framework, there is no “one-size-fits-all,” model law that can be applied to every situation. (This approach would run counter to the idea of consultative and ownership-building efforts discussed above.) In fact, reforming public procurement should not begin with drafting the law, but rather with an analysis of the problems in the current legal framework that give rise to corruption and inefficiency. In addressing these problems, there are both procedural issues and human capital issues. The human capital issues are discussed in depth under Step 4 (“Capacity Building”). Addressing the procedural issues requires changes in procurement laws, rules, regulations and processes that reduce operational inefficiencies and lessen opportunities for corruption. For example, East Asian countries such as the Philippines, Vietnam and Lao PDR have had common loopholes in procurement procedures that were subject to abuse and which are addressed through recent legislative enactments. These included: 1. Overlapping regulations and multiple laws governing public procurement and contract performance, resulting in confusion in the application of these laws; 2. Excessive discretion or lack of formalities either in the selection of the winning bidder or the choice of procurement method; 3. The allowance of unnecessary delays; Fiscal Reform and Economic Governance Project 6
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