Regional: Developing Procurement Capacity for Improved Procurement Outcomes

Sovereign Project | 46227-001

Summary

Public procurement is increasingly being recognized as a tool to improve public service delivery and broader development outcomes. ADB and other development partners have supported DMCs (developing member countries) to improve their public procurement systems for the last 10-15 years. However, inefficient use of funds, continuing delays in project implementation and corruption remain a major concern to governments and development partners alike. Through the Paris Declaration, Accra Agenda for Action and Busan Declaration, ADB has committed to increasingly rely on country systems and support to procurement capacities in DMCs.

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Project Name Developing Procurement Capacity for Improved Procurement Outcomes
Project Number 46227-001
Country Regional
Project Status Approved
Project Type / Modality of Assistance Technical Assistance
Source of Funding / Amount
TA 8262-REG: Developing Procurement Capacity for Improved Procurement Outcomes
Technical Assistance Special Fund US$ 1.50 million
Strategic Agendas Inclusive economic growth
Drivers of Change Governance and capacity development
Sector / Subsector

Public sector management - Public administration - Public expenditure and fiscal management

Gender Equity and Mainstreaming
Description

Public procurement is increasingly being recognized as a tool to improve public service delivery and broader development outcomes. ADB and other development partners have supported DMCs (developing member countries) to improve their public procurement systems for the last 10-15 years. However, inefficient use of funds, continuing delays in project implementation and corruption remain a major concern to governments and development partners alike. Through the Paris Declaration, Accra Agenda for Action and Busan Declaration, ADB has committed to increasingly rely on country systems and support to procurement capacities in DMCs.

Efforts to reform DMCs public procurement have primarily focused on reforms at the national level (e.g. legal and regulatory framework) and individual staff skill enhancement (training government officials engaged in procurement). Although many projects supporting procurement reforms have met their intended targets, a huge task remains to translate these national level procurement reforms into actual changes in procurement practices and improvements in procurement outcomes .

The R-CDTA will promote a new approach focusing on selected ministries/local governments (procuring entities - PEs) and other key participants in the procurement process in key sectors. The PEs will be identified in cooperation with the national public procurement authorities and regional departments. A partnership approach with the PEs will be implemented to improve the procurement operations of the PE. If weaknesses prohibiting efficient procurement management are found outside the realm of PE, the R-CDTA may support initiatives addressing these weaknesses, whether they are institutional or organizational (e.g. national procurement regulatory agencies, supreme audit institutions (SAIs), private sector or other stakeholders). The approach recognizes that procurement capacity development is a long-term effort and must build on PE ownership and be tailored to the specific circumstances. The focus on individual PEs will allow innovative and focused interventions that can yield results without major legal or institutional reforms being necessary. The lessons learned and results achieved can be replicated in other PEs.

Project Rationale and Linkage to Country/Regional Strategy

As ADB is considering Result Based lending there is a need for ADB to further strengthen its efforts in improving institutional capacity in DMCs and address procurement and fiduciary risk within the framework of government owned programs instead of focusing on project specific and transactional risk mitigation. Presently, ADB does not have a solid framework for engaging with EAs and sectors that may be eligible for result-based financing and this R-CDTA provides a methodology for proactively addressing the institutional procurement capacity.

Experience from ADB financed projects across DMCs shows that procurement takes a considerable amount of time and is often a source of delay in project implementation . ADB carries out procurement capacity assessments (PCAs) of EAs and IAs during project processing to identify risk areas and appropriate risk mitigation measures during project implementation. Risk mitigation is essential to safeguard ADB's reputation and ensure that ADB financing is spent as intended. However, these risk mitigation measures do not aim at developing the long-term capacity of the EA/IA. The underlying causes of weak procurement and implementation capacity are not necessarily addressed whether they are internal to the EA or in the environment where the EA operates.

The causes of weak procurement and implementation capacity in DMCs are not uniform, but a number of common challenges can be identified. Procurement is mostly treated as an administrative function and therefore the organizational arrangements are designed to ensure adherence to rules and procedures more than achieving value for money and procurement outcomes. However, following rules and procedures are only the first step in improving procurement outcomes. Good organizational practice includes developing specific targets on the performance of the agency's procurement portfolio and continuously monitoring results to identify areas for improvement. This strategic approach to managing procurement requires the right organizational set-up, the right capabilities of and incentives for procurement staff, and appropriate systems and internal procedures, which to varying degrees are not present in many EAs. An EA functions within a given governance system and often the procurement governance structure is weak. Procurement audit capacity is often low in government audit institutions, competition authorities rarely have the capacity to investigate collusive practices in the private sector and independent complaint mechanisms are either non-existent or not functioning well .

The private sector is a key player in public procurement. However, in many DMCs competition in the private sector for public contracts is limited due to entry barriers, collusive practices, or the lack of capacity to meet all requirements in the bidding procedures. However, both the private sector and civil society can play an important role in improving public procurement by demanding a more level and transparent playing field, with civil society acting as a watchdog in all phases of the procurement process including actual contract implementation. However, the private sector and civil society are rarely mobilized in this manner.

The R-CDTA will be demand driven to ensure ownership and commitment from EAs. For each country and EA supported through the R-CDTA a performance and monitoring framework will be developed.

The R-CDTA is linked to another COSO R-CDTA being processed titled, "Enhancing Procurement Capacity Development for Project Implementation". Both aim at improving the procurement management of executing agencies of ADB-funded projects. However, they intervene at different levels and with different time frames: The CDTA Enhancing Procurement Capacity Development for Project Implementation aims at building the capacity of less experienced EAs implementing or about to implement ADB projects on how to procure goods, works, and services efficiently and in accordance with ADB's guidelines. It is therefore a more short term capacity development intervention at project level and continues past efforts, with a more demand-focused strategy. While this R-CDTA aims to catalyze reform efforts in a selection of progressive and relatively experienced EAs to transform the procurement function in government procurement to allow ADB to rely on their systems for procurement enabling us to move away from prior review. It is therefore a medium to longer term capacity development intervention at policy and EA level and is consistent with international moves to use country systems.

Impact Catalyzed reform across governmental procuring entities in the region that achieve sound country systems and better procurement outcomes.
Project Outcome
Description of Outcome Stronger strategic procurement management in participating procuring entities
Progress Toward Outcome
Implementation Progress
Description of Project Outputs

1. Comprehensive procurement strategy formulated and implemented

2. Key constraints and opportunities in the enabling environment defined

3. Lessons from implementing the approach disseminated

Status of Implementation Progress (Outputs, Activities, and Issues)
Geographical Location
Summary of Environmental and Social Aspects
Environmental Aspects
Involuntary Resettlement
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation
During Project Design
During Project Implementation
Business Opportunities
Consulting Services International and National Consultants
Responsible ADB Officer Jesper Pedersen
Responsible ADB Department Operations Services and Financial Management Department
Responsible ADB Division Procurement Division 2
Executing Agencies
Asian Development Bank6 ADB Avenue, Mandaluyong
Metro Manila, Philippines
P.O. Box 789, 1099 Manila,
Philippines
Timetable
Concept Clearance 12 Nov 2012
Fact Finding 29 Oct 2012 to 16 Nov 2012
MRM -
Approval 12 Dec 2012
Last Review Mission -
Last PDS Update 28 Nov 2012

TA 8262-REG

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
12 Dec 2012 - 12 Dec 2012 31 Jul 2016 - -
Financing Plan/TA Utilization Cumulative Disbursements
ADB Cofinancing Counterpart Total Date Amount
Gov Beneficiaries Project Sponsor Others
1,500,000.00 0.00 0.00 0.00 0.00 0.00 1,500,000.00 12 Dec 2012 308,639.68
Title Document Type Document Date
Developing Procurement Capacity for Improved Procurement Outcomes Technical Assistance Reports Dec 2012

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