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Linkages with Public Financial ManagementBackground informationLinking the public procurement process with public financial management is pivotal to the efficientplanning and execution of procurement activities. Given the many direct interactions between thesetwo public sector functions, it should be easy to create a “win-win story”.Procurement plays an important role in implementing a country‟s development strategy and inproviding public services in general. In Ghana for example, the expenditures for public procurement in2007 are estimated at over 17% of GDP and around 80% of tax revenue. 28 Consequently, effectivebudget preparation depends on the reliable forecast of expenses for public procurement. On the otherhand, procurement can only be efficient if budget funds are allocated at the beginning of the fiscalyear, if there are clear regulations on processing invoices and releasing payments to contractors in duetime, to mention a few. Clearly defined and published procedures linking procurement and financialmanagement also help to increase credibility, while clear responsibilities, internal checks and balancesand transparency are useful to combat corruption.Country experiencesThe following obstacles that impede the integration of procurement in public financial managementwere summarised by pilot countries at the JV for Procurement meeting in Copenhagen. They arefollowed by possible entry points from which to deal with obstacles including a list of key drivers ofchange (Box 12).Audits, Transparency and IntegrityBackground informationThe Methodology covers the efficiency of internal and external audits for procurement, bidders‟ rights(publication of bidding opportunities, award decisions, complaints mechanisms, etc.) as well asprocurement-specific aspects of integrity and anti-corruption in procurement. These are core issues tobe addressed in a capacity development strategy in case of any gaps. A well-functioning nationalprocurement system will depend on putting internationally recognised standards into daily practice.In this context, two OECD initiatives, the OECD Working Group on Bribery and the OECD PublicGovernance Committee: Integrity and Transparency are referred to. 29 The OECD Working Group onBribery has, inter alia, developed a typology on bribery in public procurement, which is recommendedfor use in strengthening anti-corruption and procurement laws and in awareness-raising and trainingprogrammes. Effective enforcement of a transparent regulatory framework is considered a key factorin combating bribery.28292007 External Review of Public Financial Management, Volume II: Public Procurement AssessmentReport.OECD (2007), Integrity in Public Procurement: Good Practice from A to Z.COMPENDIUM OF COUNTRY EXAMPLES AND LESSONS LEARNED […] - OECD 2008 55
Box 12. Procurement and Public Financial Management 301. Obstacles to integration of procurement in public financial management systemsa. The problem of “voice”: Many procurement systems are characterized by staff working in the area nothaving a “voice”. Few dedicated procurement officers exist. Public officials and civil servants working inprocurement are often not well placed to take part in policy dialogues due to their position withinorganisational frameworks at country level. At the same time, the field of procurement is strugglingagainst misconceptions and lack of awareness, which often cause procurement functions to beoverlooked or assigned a low priority. The Round Table Session considers the problem of voice a mainobstacle to integration of procurement in public financial management.b. Dissonance in reform efforts: Public administration reform efforts are in many cases characterized bydissonance due to the fact that different reform areas have different stakeholders and agendas, andmove at different speeds. A co-ordinated reform agenda and synchronized reform efforts in the field ofprocurement and public financial management is required to integrate systems.2. Entry points from which to deal with obstaclesa. The budget planning/procurement planning processb. The budget preparation/procurement planning process (revision)c. The budget execution/procurement implementation processd. The budget execution review/procurement review process (control and audit)3. Key drivers for changeThe Round Table session identified a number of factors, which may serve as useful drivers for change whenseeking to integrate procurement in the broader public financial management framework. The identified driversinclude:a. Technology: Increase the use of technology such as Integrated Financial Management InformationSystem (IFMIS), which offers opportunities for electronic interface of procurement and public financialmanagement systems, may serve as key drivers towards ensuring communication between the twosystems, while at the same time solving the potential issue of delegation. At the same time, suchsystems should not overlook the fact that technological solutions must be based on institutional systemsand sound practices in order not to risk embedding bad practices in new systems. E-procurement offersanother technological solution, which may assist integration, e.g. through e-contract management,electronic payment functions, etc.b. Training of senior staff: Upgrade procurement skills and competencies, particularly among senior-levelstaff, is necessary in order to obtain the support for change. Training needs to be continuous andsustainable.c. High-level stakeholder involvement: Involve high-level decision makers in the change process would leadto another key driver, as high-level involvement will provide the process with a “voice” that is likely totrickle down and generate lower lever support for integration processes.d. Use of available assessment tools: The tools available in the field of procurement and public financialmanagement, including the PEFA tool and the OECD-DAC procurement assessment Methodology, alsoserve as important drivers as they motivate key stakeholders in both procurement and public financialmanagement structures to further improve their systems in accordance with the best practices/indicatorsprovided by the tools. Further integration of the two tools is needed, however, if they are to fully act asdrivers towards integration.e. Marketing/communication of the value created by sound and well integrated procurement systems, e.g.through focus on successes.The OECD Public Governance Committee: Integrity and Transparency has developed a Methodologyfollowed by the OECD in mapping good practices for integrity in public procurement including nonmembercountries such as Brazil, Chile and South Africa. The study has produced severalrecommendations:30JV on Procurement, Copenhagen, Round Table discussion on Procurement and PFM.56 COMPENDIUM OF COUNTRYEXAMPLES AND LESSONS LEARNED […] - © OECD 2008
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Compendium of Country Examplesand L
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ORGANISATION FOR ECONOMIC CO-OPERAT
Page 8 and 9: ForewordIn 2002, the OECD-DAC and t
Page 10 and 11: Background and Purpose of this Pape
Page 12 and 13: The Procurement Assessment Methodol
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Page 22 and 23: willing to participate in the asses
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Page 26 and 27: 1 = areas where substantive work is
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Page 38 and 39: Country experiencesThe usefulness o
Page 40 and 41: They identify and correct mistakes
Page 42 and 43: Box 8. Validation process in Zambia
Page 44 and 45: Making Use of the Assessment Result
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Page 48: StakeholdersThe GPP argues that as
Page 51 and 52: Table 4. Compliance and Performance
Page 53 and 54: Engage banks in a dialogue to secur
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Page 83 and 84: Procurementprocess (30%)10. Method
Page 85 and 86: 4. Member countries should ensure t
Page 88 and 89: Annex DList of Referenced Resources
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