China, People's Republic of : Enhancing Competition in Public Service Delivery

Project Name

Enhancing Competition in Public Service Delivery

Project Number

50147-001

Country / Economy

• China, People's Republic of

Project Status

Closed

Project Type / Modality of Assistance

• Technical Assistance

Source of Funding / Amount

TA 9196-PRC: Enhancing Competition in Public Service Delivery

Source	Amount
Technical Assistance Special Fund	US$ 600,000.00

Strategic Agendas

• Inclusive economic growth

Drivers of Change

• Governance and capacity development

Sector / Subsector

• Public sector management / Public administration

Gender

No gender elements

Description

The impact of the technical assistance (TA) is to promote competition in public service delivery in the People's Republic of China (PRC). The outcome is to enhance market-based rules and transparency in public service delivery. The TA will produce four outputs under two components: (i) Component A will assist the Ministry of Finance (MOF) to enhance the public procurement system with output 1 on developing a government procurement system assessment tool and output 2 on drafting policy recommendations for improvement to the existing public procurement system. (ii) Component B will help the China Public Private Partnership Center (CPPPC) under MOF to further develop the PPP information disclosure system with output 3 on drafting policy recommendations for PPP disclosure and output 4 on PPP disclosure guidelines drafted. The TA amounting to $660,000 with $600,000 financed by TASF-other sources was approved on 5 October 2016 with a closing date of 30 September 2018. The Executing Agency is the MOF with MOF's Treasury Department, the Implementing Agency for component A and CPPPC the Implementing Agency for component B.

In 2017, Component B was restructured as follows: It is proposed to redirect output 3 to 'Recommending additional policies actions to improve information disclosure of PPP projects and output 4 to 'Disseminating information disclosure guidelines for PPP Projects and PRC's PPP knowledge . The proposed changes are considered as minor changes, since they do not change the TA's impact and outcome and do not substantially affect the TA's components, benefits, or implementation arrangements. The updated DMF with the new activities of component B is included in Appendix 1.

Under output 3, CPPPC will pilot the use of Source (formerly International Infrastructure Support System), a cloud based digital collaborative platform designed to speed up the delivery of infrastructure projects. Source was initially established by ADB through technical assistance in support of an infrastructure system in Asia. The Sustainable Infrastructure Foundation (SIF), a not-for-profit Swiss Foundation headquartered in Geneva, operates and coordinates the provision of Source in conjunction with multilateral development banks (MDBs), including ADB, European Bank of Reconstruction and Development, Inter-American Development Bank, World Bank etc. as members of the Supervisory Committee of SIF. Source is expected to improve information disclosure between the various stakeholders, including central government agencies, local governments, private sector and the public. Source is provided free of charge to national government agencies and the development and support costs funded by the MDBs.

Under output 4, CPPPC will disseminate the approved new information disclosure guidelines through a series of workshops to the local governments and the private sector. CPPPC will strengthen its international collaboration with ADB and UN-ESCAP on PPP knowledge and dissemination within the frame of a South-South cooperation. CPPPC will also work on the first Annual PPP Transparency Report to be published in the PRC on the model of the Annual Public Finance Report.

Project Rationale and Linkage to Country/Regional Strategy

The PRC still lacks a national government procurement assessment system that can measure procurement efficiency centrally and locally, identify systematic issues affecting performance, and provide guidance on potential enhancements. It also needs tools that can examine actual procurement practices and provide the information required to establish a program of continuous improvement. The general public raised some concerns on public procurement efficiency and effectiveness in media reports that suggest the government procurement system's operational procedures and fiduciary oversight could be improved. Furthermore, the GPL needs to be aligned with international good practices. During the negotiations that led to the accession of the country to the World Trade Organization, the PRC agreed the GPL would comply with the basic spirit of the World Trade Organization Agreement on Government Procurement.

Providing information to buyers, sellers, and other market participants is also essential for effective competition in public service delivery. Lack of information causes inefficiency that unnecessarily adds to the cost of transactions or prevents them altogether, and deters private investors from taking risks. Information shortages can also erode confidence among the broader community about the quality of local governments, which carry most of the responsibility for service delivery in the PRC. Opening access to information about how governments work would help open public services to competition.

The government has actively promoted PPPs since late 2013. MOF established the China Public Private Partnership Center (CPPPC) in July 2014 to cover PPP policy advisory, consultations, capacity development, project financing, information disclosure, and international cooperation. Local governments have copied the central government's initiatives, including through the compilation of demonstrative projects and the establishment of PPP centers.

High-quality information disclosure on PPPs to the public would help the reforms of the 13th Five-Year Plan for National Economic and Social Development, 2016--2020 for the delivery of public services. The use of PPPs to deliver public services is rising rapidly across a broad range of sectors. CPPPC reported 9,285 PPPs as under development or implementation as of June 2016, most of which are with local governments.The total investment value of about $1.6 billion for these PPPs is comparable to the annual general budget expenditure by local governments of about $2.5 billion and annual local government infrastructure spending of almost $700.0 billion.

Impact

Competition in public service delivery promoted (PRC's 13th Five Year Plan (20162020)).

Project Outcome

Description of Outcome

Market-based rules and transparency in public service delivery enhanced

Progress Toward Outcome

The TA is under implementation.

The TA is likely to be extended to complete reporting requirement under Component A and to do additional work on SOURCE Digital Platform for improved disclosure of PPP projects.

Implementation Progress

Description of Project Outputs

Government Procurement System Assessment Tool developed

Policy recommendations on existing procurement system improvement drafted

Policy Recommendations on PPP disclosure drafted

PPP Disclosure Guideline drafted

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

Component A:

The consultants contracts were extended to finalize the final reports under the component.

Component B:

The consultants were fielded for conducting trainings on SOURCE (formerly International Infrastructure Support System) database and working on the PPP information disclosure. The Chinese translation was completed in May 2019. The system was introduced to ADB regional departments through internal learning/knowledge sharing sessions. The 2018 PPP Market Transparency Report in the PRC (bilingual) was completed in September 2019.

Geographical Location

Nation-wide

Summary of Environmental and Social Aspects

Environmental Aspects

Involuntary Resettlement

Indigenous Peoples

Stakeholder Communication, Participation, and Consultation

During Project Design

The TA is composed of two components. Component A will assist MOF's Treasury Department in enhancing the present procurement system. Component B will help China PPP Center (CPPPC) to further develop the PPP information disclosure system. ADB field missions and reached an understanding on the objectives, scope, implementation arrangements, costs and TORs for the TA.

During Project Implementation

Treasury Department and CPPPC will actively play the roles of IAs, guide the consultants to produce highly quality research reports and practical policy suggestions.

Business Opportunities

Consulting Services

The consultant will be hired as individual consultants, in accordance with ADB's Guidelines on the Use of Consultants (2013, as amended from time to time).

Procurement

The proposed TA will be implemented over an 18-month period from 15 September 2016 to 6 January 2019.

Under Component A, the TA will provide a total of 12 person-months inputs of individual consulting services, including one international consultant (Procurement Specialist) for 4 person-months and two national consultants (one Procurement Specialist and one Public Finance Management Specialist) for 8 person-months.

Component B was revised as follows: (i) Two international consultants increased from 1 to 3 person-month (PM); (ii) Two national consultants increased from 9 to 10 PM; and (iii) Training and workshops keep their initial allocation. The international consultants will be: (i) Senior PPP specialist / Team Leader (1 PM) to coordinate component B, including communicating and disseminating best practices policy and actions for information disclosure at the CPPPC; and, (ii) Project Coordinator (2 PM) to oversee the implementation and implementation of Source. The national consultants will be recruited as (i) PPP/Information Specialist (4 PM); and (ii) Transparency and Information Management Specialist (6 PM).

Contact

Responsible ADB Officer

An, Bo

Responsible ADB Department

East Asia Department

Responsible ADB Division

Public Mgt, Financial Sector and Regional Coop Division, EARD

Executing Agencies

Ministry of Finance

Timetable

Concept Clearance

19 Aug 2016

Fact Finding

30 Aug 2021 to 30 Aug 2021

MRM

-

Approval

05 Oct 2016

Last Review Mission

-

Last PDS Update

23 Sep 2019

Funding

TA 9196-PRC