Indonesia: Strengthening National Public Procurement Processes

Sovereign Project | 43219-012


The TA aims at improving the transparency and efficiency in public procurement processes through the following key activities: institutional development, procurement personnel capacity and professionalism development, public awareness, and improvement of e-procurement system.

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Project Name Strengthening National Public Procurement Processes
Project Number 43219-012
Country Indonesia
Project Status Closed
Project Type / Modality of Assistance Technical Assistance
Source of Funding / Amount
TA 7653-INO: Strengthening National Public Procurement Processes
Japan Fund for Poverty Reduction US$ 1.00 million
TA 7653-INO: Strengthening National Public Procurement Processes (Supplementary)
Technical Assistance Special Fund US$ 225,000.00
Strategic Agendas Inclusive economic growth
Drivers of Change Governance and capacity development
Sector / Subsector

Public sector management - Public administration

Gender Equity and Mainstreaming No gender elements
Description The TA aims at improving the transparency and efficiency in public procurement processes through the following key activities: institutional development, procurement personnel capacity and professionalism development, public awareness, and improvement of e-procurement system.
Project Rationale and Linkage to Country/Regional Strategy

Procurement is one of key aspects in the Government's efforts to improve service delivery and governance. It encompasses every aspect of the service delivery processes from determining the need for goods, works or services to timely procure and delivery.

Procurement reform in Indonesia, which has been initiated since 1999, is one of the critical agenda in reducing state budget leakage. It is intended to enhance public procurement system to achieve openness and transparency. The reform is also intended to improve integrity and accountability through a more efficient and effective procurement process. The TA will support the Country Strategy and Program of good governance, which is a central pillar of ADB?s assistance to the country. This is in line with one of the policy actions proposed under the ADB program Loan in 2009, the Fifth Development Policy Support Program (DPSP-5). In addition, the TA will support the Government's efforts to comply with the Paris Declaration on Aid Effectiveness, in which one of the core improvements is strengthening country procurement system, as a safeguard for the use of country system (USC).

Initially, the significant achievement of the reform efforts was the issuance of Presidential Regulation (PerPres) No. 106 in late December 2007 to establish the National Public Procurement Agency (NPPA). The PerPres mandates NPPA as the only government institution responsible for:

(i) development of a national procurement policy and strategy;

(ii) development of systems to support the delivery of procurement services;

(iii) monitoring and evaluation of the performance and delivery of procurement services;

(iv) development of an adequate supply of qualified human resources and certification of procurement staff;

(v) development of the agency as the principal source of legal, professional and technical advice and support to practitioners on all procurement-related matters, and

(vi) establishment of an independent Procurement Complaints and Disputes Resolution Body.

The NPPA is still in infancy, and the Perpres is not yet mandatory for all government ministries and agencies, and state-owned enterprises. A number of basic policy and procedures for enforceable procurement system are not clearly defined in procurement decrees or regulations. The various applicable laws, decrees and regulations create confusion due to overlapping jurisdictions. There is, thus, a dire need to standardize the procurement system specifying clear basic principles and policies, and enforceable role of NPPA to apply it to all levels of government.

The TA's ultimate goal is development of policies and reforms. The main goal can be achieved if the institution is able to develop an accountable procurement system. An accountable system could be developed if procurement staff are well-equipped with procurement knowledge and best practices.

To respond to the above challenges in meeting the main goal, ADB recommends that the NPPA build its institution, through an effective system with adequate capacity. The intention to build the NPPA as an effective and sound institution, with adequate capacity, is to strengthen the NPPA's role as the only institution responsible to develop and formulate all government procurement policy for a nation-wide implementation. In strengthening its role, the current PerPres for the NPPA needs to be supported by a higher legal framework than the current Perpres itself. This will be achieved through the development of Government Regulation (PP-Peraturan Pemerintah) that will enforce all government administrations nation-wide to use a standardized procurement system established by the NPPA. In enforcing all government administrations nation-wide to use a standardized system, the NPAA needs to establish a procurement system that is accountable and transparent. The enforcement of a standardized procurement system to all government administrations nation-wide aims to improve the fiduciary risk management, which would reduce the opportunities for corruption or collusion between public officials and vendors.

Impact The intended impact is to have transparency and efficiency in public procurement is improved to promote good governance
Project Outcome
Description of Outcome Role of the NPPA as the lead agency for the public procurement reform is strengthened
Progress Toward Outcome The tangible outcome was basically achieved with the issuance of several decrees supporting enforcement the NPPA's standardized public procurement regulations usage for all the government ministries, agencies, regional governments and institutions
Implementation Progress
Description of Project Outputs

Better-trained and more professional procurement personnel

Public awareness of NPPA roles and outputs is improved

Integrated national eprocurement system is operational

NPPA's institutional capacity is improved

Status of Implementation Progress (Outputs, Activities, and Issues)

Output 1. The output was achieved by the issuance of amendment of the Presidential Regulation (Perpres) 54/2010 into Perpres 70/2012, which recognize the procurement's value and potential in accelerating budget execution and public investments. The amended Perpres clarifies ambiguous provisions to avoid multi-interpretation. As a result, the procurement procedures are clearer and the number of complaints from the tender participants or bidders to the procurement processes was reduced by 54.94 % in 2012.

Output 2. There are two outputs and both were achieved. The first output was achieved by the increment of about 85% of certified procurement personnel in 2012, compared to the accumulatively 107,717 personnel in 2011. The second output was achieved by the increment of procurement budget savings due to efficiency of IDR16.75 trillion in 2012 (a 274 percent increase from 2011). The national average rate of efficiency is 10.34 percent of the procurement budget. Quality improvements are noted from the procurement budget execution of 71.6 percent successful bid completion in 2011 to 91.32 percent in 2012 using e-procurement.

Output 3. The two outputs under Output 3 were achieved by the significant increment of visitor accessed NPPA website. In 2011, NPPA recorded about 1.8 million visitors accessed the NPPA's website. It was significantly increased in 2012 and 2013 cumulatively about 4.5 million visitors. The increase was due to the posting of government procurement plans and tender packages in the NPPA (INAPROC) website. The other output was achieved by completing a series of campaign through radio talk show, TV advertisement, sticker and pin dissemination, magazine publication, booklet, public seminars, and dissemination workshops in 2012, and those have been sustained up to date using the state budget. The latest peak campaign was during a National Coordinating Meeting opened by the Vice President of the Republic of Indonesia in November 2013 rendering full support by the government for 100 percent e-procurement and the use of new innovations, such as e-catalogues.

Output 4. The output was fully achieved by participation of all 731 government administrative units nationwide in using e-procurement system. All were served by mid-2012.

Geographical Location Nation-wide
Summary of Environmental and Social Aspects
Environmental Aspects
Involuntary Resettlement
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation
During Project Design LKPP, WB, JICA, Japan Embassy.
During Project Implementation LKPP and other Development Partners such as JICA, WB, AusAid, USAID, MCC.
Business Opportunities
Consulting Services

The overall outcome of the consultants is to assist the NPPA in strengthening its role as the lead agency for public procurement reform resulting in an improved, standardized procurement process for all government administrations and their business community. The major outputs will be developed institutional capacity, professional procurement practitioners, increased public awareness of LKPP roles, and significant progress on e-procurement implementation and revised laws and regulations to support the major outputs.

The consultants will work closely with LKPP and relevant institutions to achieve the outputs and outcome. The consultants will be selected in accordance with ADB's Guidelines on the Use of Consultants (2007, amended time to time)

Responsible ADB Officer Renadi Budiman
Responsible ADB Department Southeast Asia Department
Responsible ADB Division Indonesia Resident Mission
Executing Agencies
National Public Procurement Agency
SMESCO Bld. 8th. Fl.
Jalan Jend. Gatot Subroto, Kav. 94
Jakarta 12780, Indonesia
Concept Clearance 29 Jan 2010
Fact Finding 27 Jan 2010 to 28 Jan 2010
Approval 19 Nov 2010
Last Review Mission -
PDS Creation Date 20 May 2010
Last PDS Update 24 Nov 2014

TA 7653-INO

Approval Signing Date Effectivity Date Closing
Original Revised Actual
19 Nov 2010 04 Jan 2011 04 Jan 2011 30 Nov 2012 30 Jun 2014 -
Financing Plan/TA Utilization Cumulative Disbursements
ADB Cofinancing Counterpart Total Date Amount
Gov Beneficiaries Project Sponsor Others
225,000.00 1,000,000.00 110,000.00 0.00 0.00 0.00 1,335,000.00 19 Nov 2010 1,188,368.02

Safeguard Documents

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Evaluation Documents

See also: Independent Evaluation

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