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Reforming Public Procurement -- Syquia List of Acronyms APPI BIS CPI DAC DBM ERA GPPB IBRD IDA OECD PDR PhilGEPRS PrMO UNCITRAL WTO WTO GPA Agency Procurement Performance Indicators Baseline Indicators System Compliance/Performance Indicators Development Assistance Committee of the OECD Department of Budget Management (Philippines) Electronic Reverse Auction Government Procurement Policy Board (Philippines) International Bank for Reconstruction and Development (World Bank) International Development Agency (World Bank) Organization of Economic Cooperation and Development People’s Democratic Republic (Laos) Philippine Government’s E-Procurement System Procurement Monitoring Office (Lao PDR) United Nations Commission on International Trade Law World Trade Organization WTO’s Agreement on Government Procurement Fiscal Reform and Economic Governance Project iv
Reforming Public Procurement -- Syquia Executive Summary Corruption in public procurement is just one of the many forms of corrupt practices that may occur in the public sector. However, it is one of the most critical barriers to development, because it creates leakages in a government’s financial and budgetary systems that directly lessen the impact of much needed health, education, infrastructure and other investment programs and projects. In addition to reducing the effectiveness of public services and diluting the benefits of growth, the natural uncertainty that is fostered by a state’s perceived lack of moral fiber can also negatively impact the investment climate. This study looks at the procurement reform process as comprising five basic steps: Step 1: Assessing the national public procurement system and practices, developing the strategy and planning the approach; Step 2: Developing or improving the legal framework; Step 3: Developing the oversight and institutional framework; Step 4: Building capacity; and Step 5: Assessing the impact of reforms at both the central and local levels. These steps are roughly sequential but not strictly consecutive, and they are designed to ensure a proper fit between international best practices and the developing country context. This entire process may take from four to six years to complete, and should be viewed not so much as a one-time event, but rather as a continuous cycle: Each step feeds into the next, and as each cycle ends with an impact assessment, the results of that assessment similarly feed into the next national public procurement assessment, identifying gaps that have not been addressed, and informing a new strategy and approach to guide the next round of reforms. Step 1 involves a macro-level assessment of the quality of a country’s procurement policies and institutional capacity through the Baseline Indicators System (BIS), a framework that was introduced by the Procurement Roundtable, a joint initiative of the World Bank and the Organization for Economic Co-operation and Development’s Development Assistance Committee (OECD-DAC). The BIS evaluates a country’s legislative and regulatory framework, its institutional framework and management capacity, procurement operations and market practices, and the integrity of its public procurement system. In this way, 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’s procurement framework integrates these elements, or how close it comes to established international principles and practices. It should be noted that the overall objective of the assessment is formative in that it aims to improve the procurement policies, systems and practices of the government. Furthermore, the BIS should be regarded more as a self-assessment tool through which a government is able to rate itself in light of international standards and “good practices” and then determine the appropriate strategy to improve its procurement system and outcomes. The assessment is not a fiduciary tool through which external stakeholders—such as multilateral institutions or donors—can assess and draw conclusions about a country’s procurement system. This self-assessment approach increases the likelihood that government will take ownership of the procurement reform and increases the responsiveness of the reform agenda to the country’s social, political, cultural and economic context. After identifying the gaps and weaknesses in a country’s public procurement system in Step 1, the next logical step (Step 2) is to draft 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 Fiscal Reform and Economic Governance Project v
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