Public Procurement Reform and Importance in the Current Economic Climate Contributions to Economic Stability and Growth Pamela Bigart World Bank 22 May 2009

Importance of Procurement Public Procurement systems are at the center of the way public money is spent since budgets get translated into services largely through the government’s purchase of goods, works and services

Public Procurement systems are at the center of the way public money is spent since budgets get translated into services largely through the government’s purchase of goods, works and services

What’s Procurement Got to do with It? Percentage of GDP Economy, Efficiency and Value for Money Service Delivery Foreign Investment in Country Investment in Building Private Sector Capacity Trade Policy – Opening Doors for Growth and Competition

Percentage of GDP

Economy, Efficiency and Value for Money

Service Delivery

Foreign Investment in Country

Investment in Building Private Sector Capacity

Trade Policy – Opening Doors for Growth and Competition

GDP and Percentage of Budget Overall spending on procurement by governments has been estimated to be 15% of GDP (much higher in many countries) Procurement as a percentage of budget expenditure ranges from to as high as 70% Clearly, efficient procurement translates to obtaining more value for money

Overall spending on procurement by governments has been estimated to be 15% of GDP (much higher in many countries)

Procurement as a percentage of budget expenditure ranges from to as high as 70%

Clearly, efficient procurement translates to obtaining more value for money

Size of Procurement in Selected Countries Country Global Angola Azerbaijan Bulgaria Dominican Republic Malawi Vietnam % Total Expenditure 12-20% 58% 34% 30% 20% 40% 40%

Country

Global

Angola

Azerbaijan

Bulgaria

Dominican Republic

Malawi

Vietnam

% Total Expenditure

12-20%

58%

34%

30%

20%

40%

40%

Economy, Efficiency and Value for Money Economy and efficiency are traditional principles of a well functioning public procurement system – generally delivered through competitive marketplace Value for money is expanding traditional focus to include achieving results through the public procurement system – brings into play the concept of quality and other criteria as a means of determining effective use of public funds and service delivery

Economy and efficiency are traditional principles of a well functioning public procurement system – generally delivered through competitive marketplace

Value for money is expanding traditional focus to include achieving results through the public procurement system – brings into play the concept of quality and other criteria as a means of determining effective use of public funds and service delivery

Service Delivery Many systems are focusing less on the input side (paying for goods, works or services) to a focus on the service delivery side. Ensuring that goods, works and services purchased through the government system provide for the needs of the citizens Use of result focused instruments with payment based on delivery of required services or on performance criteria

Many systems are focusing less on the input side (paying for goods, works or services) to a focus on the service delivery side.

Ensuring that goods, works and services purchased through the government system provide for the needs of the citizens

Use of result focused instruments with payment based on delivery of required services or on performance criteria

Foreign Investment Public procurement helps define the business environment in a country Attracting new business investors into the country requires a fair playing field where foreign investors see the opportunity for development and growth

Public procurement helps define the business environment in a country

Attracting new business investors into the country requires a fair playing field where foreign investors see the opportunity for development and growth

Building Private Sector Capacity Competition Partnership Training Facilitation Governance environment Information

Competition

Partnership

Training

Facilitation

Governance environment

Information

Opening Doors for Growth and Competition Cross border trade agreements Exposure to competition Reducing dependencies on governmental protectionist policies

Cross border trade agreements

Exposure to competition

Reducing dependencies on governmental protectionist policies

Role of Technology Expands access to market Provides for greater transparency Increases confidence in governance Increases efficiency Captures data for better management and results Involves stakeholders

Expands access to market

Provides for greater transparency

Increases confidence in governance

Increases efficiency

Captures data for better management and results

Involves stakeholders

What is Procurement Reform? Creating a sound, transparent and fair legal framework Supporting implementation with tools, documents and procedures Ensuring quality and capacity of those implementing procurement Sound, transparent and fair governance and public financial management system with full integration

Creating a sound, transparent and fair legal framework

Supporting implementation with tools, documents and procedures

Ensuring quality and capacity of those implementing procurement

Sound, transparent and fair governance and public financial management system with full integration

Procurement Reform (continued) Supporting a competitive market Feedback mechanisms to ensure that system remains relevant Controls and accountability Access to Information Reliable partner Stakeholder involvement

Supporting a competitive market

Feedback mechanisms to ensure that system remains relevant

Controls and accountability

Access to Information

Reliable partner

Stakeholder involvement

What Lessons have we Learned? Procurement reform costs money and takes time Some reforms can deliver results in the short term Reform cannot be effective if isolated from broader public sector management and financial management reform Reforms require long term commitment to achieve sustainable results

Procurement reform costs money and takes time

Some reforms can deliver results in the short term

Reform cannot be effective if isolated from broader public sector management and financial management reform

Reforms require long term commitment to achieve sustainable results