THE EVOLUTION OF THE WORLD BANK’S PROCUREMENT POLICY

Dr. Sope Williams-Elegbe Senior Lecturer in Law, Faculty of Law, University

of Lagos, Nigeria.

Research Fellow, Faculty of Law, University of Stellenbosch, South Africa.

Outline of presentation

• Introduction: what is happening with WB procurement policy and regulation?

• Importance: Why is Bank procurement important?

• History:

i. Bank procurement from 1964-2004

ii. Bank procurement from 2004 to 2011

iii. Bank procurement from 2012 to 2014

• Aims of reform agenda

• Highlights of the proposed reforms

• Conclusion

Introduction

• First written procurement rules for Bank financed contracts were introduced in 1961.

• The rules were not prescriptive.

• These procedures have undergone significant revision which reflected changes in the Bank’s approach to corruption; changes in Bank membership; changes in Bank lending products and changes in the wider field of procurement.

• In 2012, the Bank commenced the most wide ranging reform to its procurement policy, aimed at taking into account the changing global operating context; the diverse and evolving needs of Bank clients and borrowers; and the diverse instruments the Bank now offers to promote development.

• Some of the salient changes in the procurement landscape which were not considered by the Bank’s previous procurement policy include

i. public-private partnerships (PPPs);

ii. outsourcing;

iii. commitments to rely more on domestic country procurement systems in Bank financed contracts

iv. efforts to harmonize the procurement practices of the Bank with the other multilateral development banks.

Importance of WB procurement

Bank procurement 1964 to 2004

• First written directions to Bank staff issued in 1961.

• These were formalized and made mandatory in 1964.

• These contained instructions and procedures for ICB in Bank contracts.

Bank early policy premised on

Economy and efficiency of the

process

Local industry

Transparency

Competition

By the 1980s, two policy shifts were evident

• Clarification of Bank’s role in contracts- financier, NOT a party to the contract. Bank began to exercise its fiduciary duty

• Increased flexibility:

a) new rules for common items

b) and an informal move towards the use of country systems

Significant policy shift

• In 1995, the Bank introduced new measures against fraud and corruption.

• The significant changes were detailed prohibitions and the intention to debar.

The shift was premised on

Economy

Efficiency

Effect of corruption

By the millennium, the Bank’s policy was based on these considerations:

Competition Encouraging local

industry

Transparency Integrity (anti-corruption)

Economy and efficiency

Bank procurement 2004 to 2011

• This decade dominated by anti-corruption and good governance reforms:

1. Expansion of the definition of corruption to include bid-rigging etc and new debarment sanctions;

2. Paris Declaration (2005) and Accra Agenda (2008) provided impetus for reliance on country systems;

3. Governance and anti-corruption strategy (2007) detailed multi-pronged approach to improve governance in Borrowers;

4. Pilot on the use of country systems (2008);

5. Increasing public participation in Bank projects;

6. Harmonization within the development Banks (cross-debarment) (2011).

Bank procurement 2012 to 2014

• In 2012 Bank commenced a holistic reform of its procurement policies, practices and procedures, which were aimed at ensuring that the Bank’s procurement policies are in alignment both with the Bank’s changing role and with the challenges and innovations that have dominated Bank operations since its procurement policy was first adopted.

• Reform is aimed at ensuring that the Bank’s procurement policy is fit for its purpose and aligns with the Bank’s broader modernization agenda.

Broad aims of reform agenda

Improve development effectiveness

through UCS and harmonization

Build competitive

local industries

Strengthen public sector management

Improve governance and anti-corruption

Promote sustainability

Stages of reform

• Review of bank procurement (Completed)

Development of Framework

(Nov 2013)

• Inclusion of Bank Value-Proposition and

• Bank vision

Articulation of fuller strategy

(July 2014) • Approval (Dec 2015)

Implementation

Bank’s procurement policy will be based on:

Value for money

Economy

Integrity

Fit for purpose

Efficiency

Transparency

Highlights of the proposed policy

1. Procurement should be “fit-for-purpose”. This is a paradigm shift from Bank approach which valued standardization. There is an emphasis on knowledge sharing and dialogue.

2. Value for money: with an emphasis on life-cycle costs. Traditionally, Borrowers pursue the least cost option. This will require a shift for Borrowers as well.

3. Supporting Bank clients in pursuing sustainable procurement goals: What is the nature and scope of this support?

4. Providing leadership in public procurement- Bank has decided to stop considering procurement through the narrow prism of Bank operations.

5. There will NOT be any changes to Bank remedies in the area of procurement and in the area of fraud and corruption.

Conclusion

• Bank is proposing very extensive reforms which require a step-change to its procedures, practices and policies in relation to procurement.

• Hopefully, the Bank has the political will to follow through and will not settle for less than holistic reforms as a result of difficulties it may encounter in the process.

• It remains to be seen whether the Bank will succeed. The 2nd phase of consultations commenced in Aug 2014.