Technical Assistance Report

The views expressed herein are those of the consultant and do not necessarily represent those of ADB’s members, Board of Directors, Management, or staff, and may be preliminary in nature.

Project Number: 52109-001 Knowledge and Support Technical Assistance (KSTA) December 2018

Strengthening the Asia Pacific Public Electronic Procurement Network This document is being disclosed to the public in accordance with ADB's Public Communications Policy 2011.

ABBREVIATIONS

ADB – Asian Development Bank e-GP – electronic government procurement DMC – developing member country MDB – multilateral development bank TA – technical assistance

NOTE

In this report, “$” refers to United States dollars.

Vice-President Deborah Stokes, Administration and Corporate Management Director General Risa Zhijia Teng, Procurement, Portfolio and Financial

Management Department (PPFD) Director Jeffrey William Taylor, Procurement Division 1 and Officer-in-

Charge, Procurement Division 2, PPFD Team leader Galiya Ismakova, Principal Procurement Specialist, PPFD Team members Vanessa O. Chua, Senior Procurement Assistant, PPFD

Mart Khaltarpurev, Principal Procurement Specialist, PPFD Bonnie Andrew M. Mendoza, Associate Procurement Analyst, PPFD Kevin Moore, Senior Procurement Specialist, PPFD Michelle C. Sevilla-Ylo, Senior Procurement Assistant, PPFD

In preparing any country program or strategy, financing any project, or by making any designation of or reference to a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.

CONTENTS

Page KNOWLEDGE AND SUPPORT TECHNICAL ASSISTANCE AT A GLANCE I. INTRODUCTION 1

II. ISSUES 1

III. THE TECHNICAL ASSISTANCE 2 A. Impact and Outcome 2

B. Outputs, Methods, and Activities 2

C. Cost and Financing 3

D. Implementation Arrangements 3

IV. THE PRESIDENT'S DECISION 4 APPENDIXES 1. Design and Monitoring Framework 5 2. Cost Estimates and Financing Plan 7 3. List of Linked Documents 8

I. INTRODUCTION 1. The regional knowledge and support technical assistance (TA) will support the strengthening of electronic government procurement (e-GP) systems across developing member countries (DMCs) of the Asian Development Bank (ADB). 1 Strengthening governance and institutional capacity is an operational priority under ADB’s Strategy 2030.2 Aligned to the strategy, ADB will continue to adhere to standards for procurement and contribute to maintaining and raising standards in the international development community. ADB will assist DMCs in undertaking reforms and building country systems, including the use of e-GP, a central pillar of governance in public spending. This will help improve the efficiency of public procurement and increase the use of e-GP. ADB will also continue to assist executing and implementing agencies in strengthening their capacity to plan, design, finance, and implement ADB projects, and to use advanced technology for robust e-GP systems. 2. The TA will fulfill ADB’s role as a promoter, facilitator, and enabler of e-GP in its DMCs. It will build on past and ongoing e-GP initiatives in Asia and the Pacific, and also is a follow-up to ADB’s TA for the Asia Pacific Public Electronic Procurement Network,3 building on its outputs, lessons, and identified trends. Besides continuing regional cooperation between ADB’s DMCs and with other regional procurement networks (Inter-American Network on Government Procurement), the TA will expand e-GP implementation support, including but not limited to assessments of e-GP systems, security audits, procurement, contract management, and budget execution and monitoring. 3. The TA is included in the Technical Assistance Fund corporate priority list for ADB’s Procurement, Portfolio and Financial Management Department in 2018.

II. ISSUES 4. Electronic procurement is gaining traction across ADB’s DMCs, as evidenced by ADB surveys conducted in 2011, 2014, and 2017.4 In 2011, only a third of ADB’s DMCs had started implementing e-GP and, by 2017, more than two-thirds had made the shift, albeit following different approaches and business implementation models. These systems are in different stages of development, with a substantial number still in the pilot phase for several key e-GP functions. Initial e-GP installations started with the publication of bid opportunities and contract awards, then progressed to new functional modules such as e-tendering, use of e-reverse auctions, and e-catalogues. External information technology systems—covering budgets, business registration, customs, and taxation—began to be integrated with e-GP in 2014, and the results of openness, transparency, efficiency, and cost savings are emerging. Some countries that did not possess the range of in-house skills required to develop and run a system turned to commercial applications through public–private partnerships5 and Software as a Service (SaaS), a facility where a third-party provider hosts applications and makes them available to customers. 1 The TA first appeared in the business opportunities section of ADB’s website on 29 October 2018. 2 ADB. 2018. Strategy 2030: Achieving a Prosperous, Inclusive, Resilient, and Sustainable Asia and the Pacific.

Manila. 3 ADB. 2013. Technical Assistance for the Asia Pacific Public Electronic Procurement Network. Manila (TA 8520-REG)

https://www.adb.org/projects/47192-001/main 4 ADB. 2017. Consolidated View and Analysis of Survey Responses on e-Government Procurement System. Manila

(consultant’s report). https://www.adb.org/sites/default/files/project-documents/47192/47192-001-tacr-en.pdf. 5 In 2017, China Telecom Corp and Alibaba Group Holding Ltd. started a comprehensive strategic partnership that

included government procurement. http://www.chinadaily.com.cn/china/2017-05/14/content_29339794.htm,

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5. The new ADB Procurement Policy (2017, as amended from time to time) specifically refers to ADB leveraging the use of e-GP because it offers opportunities to innovate and streamline public procurement for greater efficiency and economy. e-GP can also contribute to improved governance, particularly when aligned with initiatives in budgeting, taxation, and audit. ADB has promoted e-GP as a key component of procurement reforms in DMCs, highlighting its potential to enhance procurement transparency and provide wider access to information and markets. 6. ADB and other multilateral development banks (MDBs) assessed multiple e-GP installations throughout the region 6 and endorsed their use for procurement funded by international financial institutions. The digitization era is helping accelerate e-GP deployment. ADB’s TA for the Asia Pacific Public Electronic Procurement Network funded four annual conferences: Manila (2015); Seoul (2016); Tbilisi (2017); and Washington, DC (2018). The fourth annual conference was a follow-up event to the Global Public Procurement Conference7 held jointly with the Inter-American Network on Government Procurement and the Inter-American Development Bank in Washington, DC along with eight other development partners, providing a unique opportunity for Asia Pacific Public Electronic Procurement Network members to learn from and build connections with public procurement professionals around the world. 7. While significant progress has been achieved, substantial scope for further development remains, especially in the areas of emerging technologies for digitized procurement, cross-border and global trade, and cooperation and seamless integration with other parts of e-government and banking applications. As a trusted regional development partner, ADB has a key role in leveraging its current digitization programs to benefit public procurement outcomes. The TA will foster regional cooperation and knowledge sharing of public procurement practices.

III. THE TECHNICAL ASSISTANCE A. Impact and Outcome 8. The TA is aligned with the following impact: enhanced transparency and efficiency in the procurement process by continuously modernizing the procurement systems, including e-procurement.8 The TA will have the following outcome: capacity of public procurement agencies to implement e-GP solutions based on international best practices strengthened.9 B. Outputs, Methods, and Activities 9. The TA will have the following outputs:

(i) Output 1: e-GP mainstreamed. This output will support preparation, rollout, and enhancement of e-GP in selected DMCs, prioritizing the use of e-GP systems for ADB-funded procurement. This will include e-GP country, sector, or agency assessments; funding of external security audits; recruitment and performance monitoring for ongoing Software as a Service support, and other interventions necessary for mainstreaming e-GP in DMCs effectively and efficiently and for implementing e-GP in ADB-supported projects.10

6 ADB assessed 26 e-GP systems in eight countries (1 e-GP system in India). 7 Global Public Procurement Conference 2018. http://gppc2018.com/web/home. 8 ADB. 2017. ADB Procurement Policy. Manila. https://www.adb.org/documents/adb-procurement-policy. 9 The design and monitoring framework is in Appendix 1. 10 In Azerbaijan, the draft public procurement law, which is being reviewed by the Parliament, envisages the introduction

of e-GP. In February 2018, the Ministry of Agriculture requested ADB’s support to pilot e-GP in its projects.

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(ii) Output 2: Skills sets on e-GP strengthened. The TA will organize targeted annual conferences on e-GP to help develop a solid understanding of international e-GP good practices and improve the skills of government staff in various sectors to implement e-GP successfully. Regional conferences, in collaboration with other MDBs, will further spur cross-regional dialogue and exchange of best practices. Knowledge products prepared in output 3 will be disseminated during the conferences. The events will employ innovative conferencing and delivery modalities, and may include workshops, seminars co-hosted with other development partners, and support to web-forum.

(iii) Output 3: Knowledge products on emerging issues of digitized procurement prepared. This output will expand the delivery of demand-based knowledge working papers on e-procurement, addressing emerging issues such as the use of artificial intelligence and blockchain technology for bid security and authentication purposes.

C. Cost and Financing 10. The TA is estimated to cost $750,000, which will be financed on a grant basis by ADB’s Technical Assistance Special Fund (TASF 6). Considering the demand-driven nature of the TA, the probability for additional financing during implementation is envisaged. The key expenditure items are listed in Appendix 2. D. Implementation Arrangements 11. ADB will administer the TA through its Procurement, Portfolio and Financial Management Department. The department will select, supervise, and evaluate consultants; organize workshops; and provide staff to act as resource persons at workshops and other capacity-building events. The participation of DMCs and selection of procurement agencies to be supported under the TA will be demand driven. 12. The implementation arrangements are summarized in the table.

Implementation Arrangements Aspects Arrangements Indicative implementation period

January 2019–December 2022

Executing agency ADB Implementing agency ADB Consultants To be selected and engaged by ADB

Firm: SSS (In-Tend Ltd., UKG) Software as a Service (4-year contract)

$70,000

Firm: QCBS (90:10)a External security audit of e-GP systems

$50,000

Individual: Framework agreement (e-GP experts for four positions)

International expertise (12 person-months)

$250,000

Individual: Individual selection (e-GP expert and coordinator)

National expertise (4 person-months)

$12,000

Individual: Individual selection (events management and logistics coordinator)

National expertise (8 person-months)

$27,000

Procurement To be procured by ADB RFQ 2 contracts $10,000

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Aspects Arrangements Disbursement The TA resources will be disbursed following ADB's Technical Assistance

Disbursement Handbook (2010, as amended from time to time). ADB = Asian Development Bank, e-GP = electronic government procurement, QCBS = quality- and cost-based selection, RFQ = request for quotation, SSS = single source selection, TA = technical assistance. a An external security audit of the e-GP system will be procured using QCBS (90:10). The audit is a complex assurance

process that requires a highly skilled, specialized information technology quality assurance team to conduct the assessment.

Source: Asian Development Bank. 13. Consulting services. ADB will engage consultants following the ADB Procurement Policy and its associated project administration instructions and/or staff instructions.11 Consultants will be required to have strong expertise in e-GP, knowledge about government procurement, and exposure to best international e-GP practices. Familiarity with procurement systems of MDBs and their operations is desirable. Consultants must have expertise and experience in using e-GP procurement assessment tools,12 and must demonstrate up-to-date knowledge and experience in high-level e-GP technology; or must have the relevant educational background and working experience in the development of e-GP modules. 14. Knowledge partnerships. ADB will pursue knowledge partnerships with other MDBs, starting first with the Inter-American Development Bank. 15. Transfer of funds. TA implementation envisages a potential collaboration with the Public Procurement Service of the Republic of Korea, the World Bank, the Inter-American Development Bank, the European Bank for Reconstruction and Development, the World Trade Organization, the Organisation for Economic Co-operation and Development, and the European Commission. The TA may elect to cofinance regional training and capacity-building events, directly benefiting ADB’s DMCs. Transfers of funds to other MDBs may be required to fund capacity development events jointly. 16. ADB’s procurement. Procurement will follow the ADB Procurement Policy and its associated project administration instructions and/or staff instructions. 17. Social media and websites. ADB will continue to maintain the e-GP website, Facebook, and LinkedIn pages.

IV. THE PRESIDENT'S DECISION 18. The President, acting under the authority delegated by the Board, has approved the provision of technical assistance not exceeding the equivalent of $750,000 to be financed on a grant basis for Strengthening the Asia Pacific Public Electronic Procurement Network, and hereby reports this action to the Board.

11 Terms of Reference for Consultants (accessible from the list of linked documents in Appendix 3). 12 Such as the methodology for assessing procurement system tools, the World Bank’s country procurement

assessment report tool, the World Bank’s alternative procurement arrangements assessment tool, or ADB’s country, sector, or agency procurement assessment tool.

Appendix 1 5

DESIGN AND MONITORING FRAMEWORK Impact the TA is Aligned with Enhanced transparency and efficiency in the procurement process by continuously modernizing the procurement systems, including e-procurement.a

Results Chain Performance Indicators

with Targets and Baselines

Data Sources and Reporting Mechanisms Risks

Outcome

Capacity of public procurement agencies to implement e-GP solutions based on international best practices strengthened

At least 30% of ADB open competitive bidding contracts will be processed through e-GP systems by 2023 (Baseline: not applicable)

ADB’s procurement review system

DMCs do not pursue cross-border trade openness as part of the requirement for e-GP development and deployment. DMCs do not mainstream the use of their e-GP system for all of their government procurement activities.

Outputs

1. e-GP mainstreamed

1a. At least 30 ADB DMCs shift to an e-GP system by 2022 (2017 baseline: 22 DMCs)

1b. At least six more ADB DMCs conduct pilot tenders on SaaS by 2022 (2017 baseline: 3 DMCs)

1a. e-GP summary of assessments disclosed on ADB website

1b. Post-tender reports

DMCs do not prioritize budgetary resources to implement e-GP. DMCs capacity to operate and maintain is adversely affected by limited or lack of dedicated personnel. ADB assistance is hindered by lack of full cooperation of the DMCs.

2. Skills sets on e-GP strengthened

2a. At least four conferences held, each targeting at least 40 DMC officials in 2019, 2020, 2021, and 2022 (Baseline: average of 70 participants at the conferences of 2015, 2016, 2017, 2018)b

2b. At least two regional capacity-building events held, each targeting 20 DMC officials in 2020 and 2021 (Baseline: not applicable)

2a. Conference program, materials, and reports

2b. Summary reports on procurement capacity-building events

6 Appendix 1

Results Chain Performance Indicators

with Targets and Baselines

Data Sources and Reporting Mechanisms Risks

3. Knowledge products on emerging issues of digitized procurement prepared

3a. Working papers on blockchain for inter-operability of different e-government systems disclosed (by 2020)

3b. Working paper on use of commercial trading platforms for small-value government purchases disclosed (by 2019)

3c. Working paper on use of artificial intelligence disclosed (by 2020)

3. ADB website

Key Activities with Milestones 1. e-GP mainstreamed

1.1. Set up framework agreements for e-GP assessment experts (Q1 2019). 1.2. Contract e-GP security audit firm(s) and SaaS service provider, as required by DMCs

(Q1 2019–Q2 2022). 1.3. e-GP assessments concluded (Q1 2019–Q2 2022). 1.4. Contract SaaS provider(s) (Q2 2019–Q2 2020).

2. Skills sets on e-GP strengthened 2.1. Recruit logistics coordinator for procurement capacity events (Q1 2019). 2.2. Liaise with other development partners for joint procurement capacity-building events

(continuously throughout the TA implementation period). 3. Knowledge products on emerging issues of digitized procurement prepared

3.1. Identify emerging issues in coordination with the Asia-Pacific Public e-Procurement Network secretariat (Q2 2019–Q1 2021).

3.2. Select subject matter experts to research and prepare working papers (Q3 2019–Q2 2022). TA Management Activities

Quarterly reports on contract awards and disbursements Monthly monitoring Disclosure of all reports

Inputs ADB: $750,000 Technical Assistance Special Fund (TASF 6)

ADB = Asian Development Bank, DMC = developing member country, e-GP = electronic government procurement, Q = quarter, SaaS = Software as a Service, TA = technical assistance. a ADB. 2017. ADB Procurement Policy. Manila. https://www.adb.org/documents/adb-procurement-policy. b Target decreased due to limited TA funds. Source: Asian Development Bank.

Appendix 2 7

COST ESTIMATES AND FINANCING PLAN ($’000)

Item Amount Asian Development Banka

1. Consultants a. Remuneration and per diem

i. International consultants 320.0 ii. National consultants 39.0

b. Out-of-pocket expenditures i. International and local travel 50.0 ii. Miscellaneous administration and support costs 10.0 iii. Others (software licenses) 10.0

2. Training, seminars, workshops, forum, and conferences a. Facilitators 65.0 b. Travel cost of Asian Development Bank staff acting as resource

persons 30.0

c. Venue rental and related facilities 50.0 d. Participants 120.0 e. Representation 50.0

3. Contingencies 6.0 Total 750.0

Note: The technical assistance is estimated to cost $750,000, of which contribution from the Asian Development Bank is presented in the table above. a Financed by the Asian Development Bank’s Technical Assistance Special Fund (TASF 6). Source: Asian Development Bank estimates.

8 Appendix 2

LIST OF LINKED DOCUMENTS http://www.adb.org/Documents/LinkedDocs/?id=52109-001-TAReport

1. Terms of Reference for Consultants Supplementary Document 2. Terms of Reference and Functional Requirements for Software as a Service