Professionalizing Procurement, Nigeria 09

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Presentation by Executive Director of Caribbean Procurement Institute at the National Procurement Conference, Abuja Nigeria 2009

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Professionalizing Procurement, Nigeria 09

  1. 1. Professionalizing Procurement<br />In a Changing World <br />Presented by <br />Margaret Rose<br />Caribbean Procurement Institute<br />
  2. 2. NATIONAL PROCUREMENT<br />FORUM<br />ABUJA, NIGERIA,<br />29th -30th June 2009<br />Business Ethics and Integrityin Public Procurement<br />
  3. 3. Margaret Rose, LLB (Hons) UWI, L.E.C. Executive Director, Caribbean Procurement Institute <br />(CPI), is an attorney at law, qualified to practice throughout the Commonwealth Caribbean for <br />the past fourteen (14) years with extensive litigation and jury trial experience. She is Principal <br />of the Lodewijk Meijer Group of Companies (LMG) and serves as the Chief Executive and <br />Senior Partner in the group’s law firm, LMG ROSE & Partners. The LMG philosophy is based <br />on providing Best of Breed Solutions in a Changing World and the work of the Group is <br /> targeted toward the sustainable development and growth of emerging markets. LMG Rose & Partners particular areas of practice include anti-corruption and procurement law, corporate commercial and taxation law, construction and infrastructure project finance and management. <br />CPI is a private sector organization affiliated to the Lodewijk Meijer Group of Companies and established to serve policy makers and practitioners in the field of procurement dedicated to the promotion of excellent standards in procurement for both public and private sector organizations in the interests of the public good. It has established itself as the premier resource for specialist and world class procurement education , research and expertise in the Caribbean region. As Executive Director of CPI, Ms. Rose has spearheaded the development of the Procurement Intensive Seminar Series ™ which is series of two day intensive training programs designed to give the participant an in-depth and comprehensive coverage of the legal and practical complexities arising in specialized areas in the field of procurement. <br />Ms. Rose advises Government Ministers and both public and private sector bodies and has served on several state and private sector boards and chaired Procurement Advisory Committees and Tenders Committees. <br />Ms. Rose is presently a Director on the Board of Trinidad and Tobago Transparency Institute <br />(TTTI) and serves on the Procurement Reform Committee of TTTI, and the board of the <br />Caribbean Association of Procurement Professionals (CAPP).  In 2008 Ms. Rose was <br />appointed to serve on the Advisory Board of the International Public Procurement Conference <br />(IPPC) body and in April 2009 she was appointed to the Anti Corruption Committee of the <br />World Federation of Engineering Organizations (WFEO).<br />.<br />
  4. 4. Presentation Summary<br /><ul><li>The Changing World
  5. 5. Procurement in the Changing World
  6. 6. Nigeria – New Frontier Market Possibilities
  7. 7. Professionalizing Procurement </li></ul> (i) Tenets of an Efficient Procurement System<br /> (ii) Building Procurement Capacity – Procurement and Certification<br /><ul><li>Best of Breed Solution for a Changing World</li></ul> The Commonwealth Procurement Institute - <br /> Certified Procurement Professionals<br />
  8. 8. To understand our role in the world,we must first understand the world.<br />
  9. 9. The Changing World<br />Isaac Asimov<br />It is change, continuing change, inevitable change, <br />that is the dominant factor in society today.<br />
  10. 10. The Changing World <br />
  11. 11. The Changing World <br />
  12. 12. The Changing World <br />
  13. 13. The Old World Order<br />A Two Block Economic World Order – Market Value based<br />Equities and Bonds (combined) as of Sep 30, 2008<br />North America = 37.4%<br />Easy to understand,<br />US-led world order<br />Em Markets<br />=6.2%<br />Europe/Dev Asia <br />=56.4% <br />Source: <br />LMG Compendeon GTAA<br />
  14. 14. The New World Order<br />A Three Block Economic World Order – GDP Based<br />Situation as of Sep 30, 2008<br />US? EU? BRIC?<br />Where should I invest?<br />Global Exchanges<br />Em Markets<br />=34.7%<br />Exp Growth 2009-11 = 7.0%<br />Europe/Dev Asia <br />=37.7% <br />North America = 27.6%<br />Exp Growth 2009-11 = 2.0%<br />Exp Growth 2009-11 = 1.3%<br />Source: <br />LMG Compendeon GTAA<br />
  15. 15. Global – Globalization of Financial Markets<br />Globalization of Financial Markets resulted in an increase in market correlations:<br />Gradually so in Developed Markets, that were already reasonably integrated in the world economy<br />Spectacularly so in Emerging Markets, due to:<br />A) Trade Liberalization Programs<br />B) Increase in Foreign Direct Investment activities<br />C) Spectacular Growth in Portfolio Investments in Em Markets by Institutional Investors both from Developed Nations and from Em Markets (SWFs)<br />
  16. 16. Gradually Increasing Correlations in Developed Markets<br />Gradual Increase<br />In Correlation<br />
  17. 17. Spectacular Increase in Correlations in Emerging Markets<br />Globalization<br />Dev Markets<br />Spectacular Increase in Correlation in EMs<br />
  18. 18. Procurement <br />In A Changing World<br />The function of procurement is becoming <br />increasingly recognized as the most strategic function<br /> for a government in the present global environment <br />and inextricably tied to economic growth. <br />
  19. 19. Procurement – The Value Exchange<br />Goods<br />Works<br />Services<br />Infrastructure<br />
  20. 20. What’s Different?<br />Procurement viewed as a more strategic function <br /><ul><li>Development tool for the achievement of social industrial and environmental objectives
  21. 21. Transactional vs Whole life cycle approach
  22. 22. More complex and sophisticated procurement methodologies
  23. 23. eProcurement, </li></li></ul><li>More Strategic Procurement<br />Value Based Approach<br />Rules Based Approach<br />Transactional Approach<br />
  24. 24. Gains to be realized through Good Procurement<br />Direct Effect<br />=<br />Lower <br />Costs<br />Combined Effect<br />=<br />Huge Increase in<br />Project Values;<br />Especially <br />those with long duration<br />Indirect Effect<br />=<br />Lower Risk<br />Premium<br />Better returns on old capital, <br />increases potential for new capital<br />
  25. 25. What’s Different?<br />2. Changed legal risk environment <br /><ul><li>International regimes (UNCITRAL, WTO-GPA, Donors)
  26. 26. Regional Initiatives (EU Public Procurement Directives, EPAs)
  27. 27. Significant Developments in the Common Law of Competitive Bidding
  28. 28. Interaction with a multiplicity of legal texts (Anti-Corruption Statutes, Access to Information Statutes, Whistleblower legislation etc. )</li></li></ul><li>Internationalization of Procurement Standards<br />Significant international initiatives occurred post 1990 for the harmonization of public procurement regimes<br /><ul><li>UNCITRAL Model Law on Procurement of Goods, Construction and Services adopted at the 27th Session 1994
  29. 29. WTO – GPA 1994
  30. 30. EU Public Procurement Directives and</li></ul> EPA <br />
  31. 31. UNCITRAL<br /><ul><li>Established by the UN General Assembly with the mandate to further the progressive harmonization and unification of international trade law
  32. 32. Sixty Member States elected by the General Assembly – Six Working Groups – Observer States and Bodies
  33. 33. Full Text Downloadable at www.uncitral.org</li></li></ul><li>UN Model Procurement LawUNCITRAL<br /><ul><li>Provides a Model regulatory framework for Public Procurement which states can elect to adopt
  34. 34. Covers scope (Articles 1-3), qualifications (Articles 6-8), specifications (Article 16), procurement methods and their operation (Articles 18-51), and review (Articles 52-57)</li></li></ul><li>UN Model Procurement LawUNCITRAL<br /><ul><li>Does not deal with planning, feasibility and budgeting phase OR post award phase, contract administration or implementation
  35. 35. Does not expressly provide for electronic reverse auctions, supplier lists, framework agreements, competitive dialogue</li></li></ul><li>Countries with UNCITRAL based Procurement Law<br /><ul><li>Central and Eastern European Countries : Poland, Albania, the Slovak Republic, Kosovo
  36. 36. Former Soviet Union countries: Russia, Estonia, Georgia, Azerbaijan, Latvia, Kazakhstan, the Kyrgyz Republic
  37. 37. African States : Uganda, Kenya, Tanzania, NIGERIA, Ghana, Malawi, Ethiopia
  38. 38. Caribbean : Guyana, Draft CARICOM</li></ul>Procurement Protocol<br />
  39. 39. NOTE: NO DEVELOPED COUNTRIES – UNCITRAL BASED<br />Only developing and transition economies have undertaken legislative reform on the basis of the UNCITRAL Model Law! <br />
  40. 40. WTO – Government Procurement Agreement <br />The WTO Agreement on Government Procurement (WTO-GPA) came into force at the conclusion of the Uruguay Round of multilateral trade negotiations in 1994 and seeks to provide an international legal framework for the liberalization and governance of public procurement markets. <br />Full Text Available for Download at www.wto.org<br />
  41. 41. WTO – GPA : Main Elements<br /><ul><li>Guarantees of national treatment and non-discrimination for the suppliers of Parties to the Agreement with respect to procurement of covered goods, services and construction services as set out in each Party’s schedules and subject to various exceptions and exclusions noted therein;
  42. 42. Detailed requirements regarding transparency and procedural aspects of the procurement process, in general, designed to ensure that covered procurement under the Agreement is carried out in a transparent and competitive manner that does not discriminate against the goods, services or suppliers of other Parties;
  43. 43. Additional requirements regarding transparency of procurement-related information;
  44. 44. Provisions regarding modifications and rectifications of Parties’ coverage commitments;</li></li></ul><li>WTO – GPA : Main Elements<br /><ul><li>Requirements regarding the availability and nature of domestic review procedures for supplier challenges which must be put in place by all Parties to the Agreement;
  45. 45. Provisions regarding the application of the WTO Dispute Settlement Understanding in this area
  46. 46. Provisions regarding accession to the Agreement and the availability of Special and Differential Treatment for Developing and Least Developed Countries; and
  47. 47. A “built-in-agenda” for improvement of the Agreement, extension of coverage and elimination of remaining discriminatory measures through further negotiations</li></li></ul><li>WTO-GPA Signatories<br /><ul><li>Currently forty (40) WTO Members are covered by the WTO Agreement on Government Procurement. These comprise Canada, the European Community (27 member states), Hong Kong, China, Iceland, Israel, Japan, Korea Liechtenstein, the Netherlands including Aruba, Norway, Singapore, Switzerland and the United States.
  48. 48. Twenty (20) other WTO Members have observer status under the Agreement: Albania, Argentina, Australia, Cameroon, Chile, China, Columbia, Croatia, Georgia, Jordon, the Kyrgyz Republic, Moldova, Mongolia, Oman, Panama, Saudi Arabia, Sri Lanka, Chinese Taipei and Turkey. </li></li></ul><li>WTO-GPA Signatories<br /><ul><li>Four (4) intergovernmental organisations also have GPA observer status: the International Monetary Fund (IMF), the Organization for Economic Co-operation and Development (OECD), the United Nations Conference on Trade and Development (UNCTAD) and the International Trade Centre (ITC).
  49. 49. At present, there are eight (8) WTO Members which are in the process of acceding to the GPA: Albania, Georgia, Jordon, the Kyrgyz Republic, Moldova, Oman, Panama and Chinese Taipei.
  50. 50. Note Limited execution by ACP Developing </li></ul> States <br />
  51. 51. Donor Regimes<br /><ul><li>World Bank, IDB, ADB and other regional banks have established procedures and processes for procurements undertaken with donor funds
  52. 52. World Bank Procurement Rules & Guidelines http://web.worldbank.org/WBSITE/EXTERNAL/PROJECTS/PROCUREMENT/0,,pagePK:84271~theSitePK:84266,00.html
  53. 53. IDB Procurement Guidelines http://www.iadb.org/exr/english/BUSINESS_OPP/bus_opp_procurem_procedurs.htm
  54. 54. ADB Procurement Guidelines http://www.afdb.org/en/documents/project-related-procurement/policies-and-procedures/</li></li></ul><li>Challenges with Donor Regimes<br /><ul><li>The Multiplicity of regimes in states with immature procurement systems causes confusion among professionals interacting with and implementing the function of procurement.
  55. 55. There is a lack of domestic ownership of the procedures which stymies long term capacity development.
  56. 56. Donor funded procurement reform projects tend to produce systems heavily influenced by the donor.</li></li></ul><li>EU Public Procurement Directives<br /><ul><li>Directive coordinating the procurement procedures of entities operating in the water, energy, transport and postal services sectors, 2004/17/EC
  57. 57. Directive on the coordination of procedures for the award of public works contracts, public supply contracts and public service contracts, 2004/18/EC</li></ul> - transparent <br /> - open procedures <br /> - fair conditions of competition for suppliers<br />
  58. 58. The New ERA – EPAs <br /><ul><li>Despite the pressures of the developed countries on developing states to accede to the WTO – GPA which will mandate transparent public procurement processes and non-discrimination between suppliers – the developing countries have resisted.
  59. 59. EPAs are trade and economic partnerships between regional groups of African Caribbean and Pacific (ACP) countries and the EU. They replace the trade arrangements of the EU-ACP Cotonou Partnership Agreement which expired at the end of 2007. The ACP countries decided themselves on the regional groupings for EPA negotiations. There are four negotiating regions in Africa, one in the Pacific and one in the Caribbean. The Caribbean group is made up of the 15 CARIFORUM countries.
  60. 60. Now with the negotiation of EPAs between the EC and ACP territories, traditional “behind the border” issues such as public procurement, competition and investment policy, domestic space is threatened</li></li></ul><li>CARIFORUM – EC EPA<br /><ul><li>Arguably the most significant development in regional procurement policy
  61. 61. CARIFORUM comprises CARICOM Member States and Dominican Republic and Cuba.
  62. 62. In 2001 CARICOM and Dominican Republic signed an FTAA agreeing to harmonize procurement policy
  63. 63. CARIFORUM is the agreed organization with responsibility for negotiating trade arrangements with Third States</li></li></ul><li>CARIFORUM – EC EPA<br /><ul><li>On 16th December 2007 the CARIFORUM Member States (except Cuba) and the EC initialed an EPA
  64. 64. Latest page in ACP-EU relations . On 2nd September 2008 EPA was to be formally signed. Rumblings among member states postponed the finalization.
  65. 65. EPA signed by all CARICOM Member States 15th October 2008.
  66. 66. CARIFORUM-EC EPA contains provisions relating to public procurement – made history on the world stage as the first of it’s kind between developed and developing states!</li></li></ul><li>CARIFORUM – EC EPA<br /><ul><li>Two modalities for procurement policy in international agreements </li></ul> (a) Transparency <br /> (b) Non-discrimination / national treatment <br /><ul><li>WTO-GPA – deals with both. (Note limited execution by ACP developing countries)
  67. 67. CRNM asserts that the CARIFORUM – EC EPA – deals ONLY with transparency provisions </li></li></ul><li>CARIFORUM EC EPA<br />However see Article 167.1.2 which obliges parties not to discriminate against foreign companies that have a commercial presence in a CARIFORUM State and as such qualify as a domestic company for public procurement bids. <br />
  68. 68. CARIFORUM- EC EPA<br />CARIFORUM EC EPA <br />
  69. 69. COMPARING REGIMES UNCITRAL/WTO-GPA/DONOR/ EPA<br />
  70. 70. ECOWAS EC EPA<br />NIGERIA must now continue to deal with the on going ECOWAS EC EPA negotiations. <br />Government procurement and trade and investment experts can learn from the CARIFORUM experience.<br />NIGERIA has the potential to be the leader in the ECOWAS negotiations – opting to serve as the anchor for the smaller, poorer West African states. <br />Côte d’Ivoire’s has signed.<br />Ghana soon to follow. <br />Will Nigeria be able to lead?<br />
  71. 71. Significant Developments in the Common Law of Competitive Bidding <br />Implied Tender Contract Doctrine – Ron Engineering 1981 (Canada)<br />BlackPool Case 1990 (UK)<br />Pratt Contractors Privy Council Decision 2004 (New Zealand)<br />NH v UDECOTT Cv. App. 95 of 2005 – judgment delivered 17th March 2006 (Trinidad and Tobago)<br />
  72. 72. The Ten Stages of the Procurement Cycle<br />1. <br />Identifying <br />Needs<br /> 2. <br />Determining <br />Procurement <br />Method <br />10. <br />Assessing <br />Performance<br />9. <br />Contract <br />Performance <br />and<br />Management<br />3. <br />Tender Call <br />Drafting<br />8. <br />Contract<br /> Execution <br />4. <br />Issuing <br />Tender Call<br />7. <br />Selection <br />of Supplier<br />5. <br />Submission <br />of Tenders<br />6. <br />Evaluation <br />of Tenders<br />Diagram, <br />Paul Emmanueli<br />CPI Faculty Director<br />
  73. 73. The Formation of Contract A and Contract B<br />Purchaser’s Offer to Enter Into Contract A<br />Purchaser Issues <br />Tender Call<br />Purchaser’s Invitation to Treat on Contract B<br />Bidder’s Acceptance of Contract A Offer<br />Contract A Formed<br />Bidder Submits <br />Compliant Tender<br />Bidder’s Binding Offer to Enter Contract B<br />Purchaser Accepts Bidder’s Contract B Offer<br />Purchaser Selects <br />Bidder’s Tender<br />Bidder Must Honour its Tender to Comply With Contract A<br />Diagram, <br />Paul Emmanueli<br />CPI Faculty Director<br />
  74. 74. Procurement in the Changing World - Summary<br /><ul><li>Procurement shift from administrative to more strategic function
  75. 75. Procurement no longer viewed as a transaction but occurring over the whole life cycle. Efficiency in procurement function must necessitate proper systems and capacity at each stage of the cycle.
  76. 76. Domestic Sovereignty over Procurement Systems slowly being eroded. Trade Agreements, International trade bodies and Donor Regimes demanding more OPEN procurement.
  77. 77. Courts more aggressive to protect rights of bidders</li></li></ul><li>Procurement in the Changing World – Summary <br /><ul><li>Strengthened Anti-Corruption and Access to Information Regimes both domestically and internationally – Multiplicity of legal Texts.
  78. 78. More sophisticated procurement methodologies, new P3 structures and Private Finance Initiatives, </li></ul> DBFM, DBFOM, BOLT, BOOT, BOT, Framework Agreements, Supplier Lists, Negotiated Formats eg. Competitive Dialogue under EU Directives and eProcurement, eAuctions<br /><ul><li>Green Procurement initiatives </li></li></ul><li>NIGERIA<br />New Frontier Market Possibilities <br />Winston Churchill<br />There is nothing wrong with change,<br /> if it is in the right direction.<br />
  79. 79. Part of Next – 11Goldman Sachs 2005<br />One of the New Frontier Champions?<br />
  80. 80. Nigeria as one of the Frontier Champions?<br /><ul><li>Leader in ECOWAS
  81. 81. Substantial Oil Reserves
  82. 82. Sovereign Wealth Fund (Excess Currency Account)
  83. 83. TI Corruption Perception Index/Democratic Initiative
  84. 84. Significant Legislative Reforms
  85. 85. Ex – South Africa – Largest Stock Exchange in Sub Saharan Africa
  86. 86. Enormous labour capacity (young population)</li></li></ul><li>Nigeria; The Short TermReal Economy and Politics<br />NEGATIVE FACTORS <br /><ul><li>Instability Niger Delta (MEND)
  87. 87. Oil production at 1.8 mn barrel per day versus 2.3 mn budgeted
  88. 88. Relatively poor GDP growth of 2.1% over 2009 (Renaissance Capital)</li></ul>Sources: Renaissance Capital and LMG Compendeon<br />
  89. 89. Nigeria; The Short TermReal Economy and Politics<br />POSITIVE FACTORS<br /><ul><li>Little substantial in the short term.</li></ul>Sources: Renaissance Capital and LMG Compendeon<br />
  90. 90. Nigeria; The Short TermMonetary Economy and Stock Market<br />NEGATIVE FACTORS<br /><ul><li>Stock Market liquidity is an issue with TURN/MV ≈ 3-4% (almost like Private Equity!)
  91. 91. Naira weakness not totally gone yet, notwithstanding actions by CBN and ECA
  92. 92. Budget deficit calculations ’09 (3-4%) could be optimistic </li></ul>Sources: Renaissance Capital and LMG Compendeon<br />
  93. 93. Nigeria; The Short TermMonetary Economy and Stock Market<br />POSITIVE FACTORS<br /><ul><li>Recent oil price strength (US$ 70+) helps the budget (US$ 45)
  94. 94. Stock Market bottoming out after dramatic 70% drop (P/E 2009 ≈ 5)
  95. 95. Most local investors are piling up cash with interest rate and inflation trends working against them
  96. 96. High inflation levels (14-15%) will drop due to Global Crisis
  97. 97. Low Foreign and Public Debt; Room for Leverage if Necessary</li></ul>Sources: Renaissance Capital and LMG Compendeon<br />
  98. 98. Nigeria; The Long TermReal Economy and Politics<br />NEGATIVE FACTORS <br /><ul><li> The political situation will continue to be uncertain, albeit that LMG Compendeon and Renaissance Capital believe that things can be solved</li></ul>However, LMG Compendeon analysts believe that government is aware of this risk (see speeches and actions of Min. of Finance Muhtar)<br />Sources: Renaissance Capital and LMG Compendeon<br />
  99. 99. Nigeria; The Long TermReal Economy and Politics<br />POSITIVE EFFECTS<br /><ul><li>Low Foreign and Public Debt
  100. 100. LMG Compendeon: Expected growth GDP 2009-2012 5.5% and that is including the poor 2.1% for ’09
  101. 101. Oil resources and demand recovery will prove an enormous asset that will remain responsible for the bulk of foreign reserve inflow
  102. 102. The domestic and regional markets in other industries will grow in importance
  103. 103. Enormous pool of cheap and relatively young labor (compare the major theme in Goldman Sachs’s Next-11)</li></ul>Sources: Renaissance Capital and LMG Compendeon<br />
  104. 104. Nigeria; The Long TermMonetary Economy and Stock Market<br />NEGATIVE FACTORS <br /><ul><li>High volatility and systematic market risk will remain. This leads to a relatively high country risk premium
  105. 105. Lack of transparency of the banking system and ECA might hinder growth (However note positive)</li></ul>Sources: Renaissance Capital and LMG Compendeon<br />
  106. 106. Nigeria; The Long TermMonetary Economy Stock Market<br />POSITIVE EFFECTS<br /><ul><li>Stock Market with huge Potential. One of Goldman’s Next-11
  107. 107. Role as regional financial center highly likely
  108. 108. ECA is a strong asset. SWFs can be transformed into catalyst for growth
  109. 109. Diversification effect of an economy less dependent on oil can mitigate high country risk premium</li></ul>Sources: Renaissance Capital and LMG Compendeon<br />
  110. 110. Nigeria; Combining the Short and Long Term<br />In Summary:<br /><ul><li>Real economic outlook doesn’t look good yet in the short-term. No real improvement before the end of the year.
  111. 111. But as so often: monetary factors and the stock market might be ‘leading indicators’. Signs of improvement and opportunities already visible.
  112. 112. We understand that the government will be ‘busy’ mitigating the effects of the Global Crisis and fighting the upheaval in the Niger Delta.</li></ul>Sources: Renaissance Capital and LMG Compendeon<br />
  113. 113. Nigeria; Combining the Short and Long Term<br /><ul><li>But this provides a chance to focus on ‘structural’ policies to ensure that the long-term potential of the country (one of the flagships in Goldman Sachs’ Next-11) will be realized:
  114. 114. Attract Foreign Investors (both FDI and Portfolio)
  115. 115. Improve Transparency of the Banking System and ECA
  116. 116. Enhancing procurement capacity and efficiency
  117. 117. Diversify the Economy (compare Trinidad’s Vision 2020)
  118. 118. Improve Education through increased investments
  119. 119. Improve Health through increased investments
  120. 120. (Infant Mortality ↓; Life Expectancy ↑)</li></ul>Sources: Renaissance Capital and LMG Compendeon<br />
  121. 121. YES NIGERIA CAN!<br />TI Corruption Perception Index<br />According to the Transparency International Corruption Perception Index. In 2001, 2002 and 2003, Nigeria was ranked the second most corrupt country out of the surveyed countries. From 2005 to 2007, Nigeria ranked the eighth, twenty second, and thirty second most corrupt among the surveyed countries. In 2008 one hundred and twentieth!<br />
  122. 122. Charting a Procurement Strategy <br />
  123. 123. Professionalizing<br />Procurement<br />Margaret Mead<br />Never doubt that a small group of thoughtful, <br />committed citizens can change the world. <br />Indeed, it is the only thing that ever has.<br />
  124. 124. Procurement as a Development Tool<br />
  125. 125. Tenets of a Sound Procurement System<br />
  126. 126. Nigeria Public Procurement System <br />Procurement Professionalism requires more than an understanding of the rules<br />
  127. 127. The Ten Stages of the Procurement Cycle<br />1. <br />Identifying <br />Needs<br /> 2. <br />Determining <br />Procurement <br />Method <br />10. <br />Assessing <br />Performance<br />9. <br />Contract <br />Performance <br />and<br />Management<br />3. <br />Tender Call <br />Drafting<br />8. <br />Contract<br /> Execution <br />4. <br />Issuing <br />Tender Call<br />7. <br />Selection <br />of Supplier<br />5. <br />Submission <br />of Tenders<br />6. <br />Evaluation <br />of Tenders<br />Diagram, <br />Paul Emmanueli<br />CPI Faculty Director<br />
  128. 128. What functions will these professionals perform?<br /><ul><li>Strategic Procurement Planning including inter alia tender call formats and sourcing strategies, Spend Analyses and Procurement Risk Management
  129. 129. Drafting and Preparation of Tender Documents including Instructions to Bidders and Terms and Conditions of Contract
  130. 130. Managing Disclosure duties throughout the procurement cycle.
  131. 131. Advising on compliance and interpretation of Tender Rules, Bid Evaluation and Award on high risk projects
  132. 132. Handling Bid protests/ Complaints</li></li></ul><li>What functions will these professionals perform?<br /><ul><li>Specific RFP Management in high risk projects including risk mitigation in the RFP process, understanding most effective strategies for specific projects, implementation of International best practice in the RFP process
  133. 133. Business Integrity Management and Ethical decision making
  134. 134. Negotiation of Public Private Partnerships (PPP's) and Private Finance Initiatives (PFI's)
  135. 135. EProcurement, including advice on transnational issues in eTendering, eAuctions, Procurement cards, Digital Certificates etc.,</li></li></ul><li>What functions will these professionals perform?<br /><ul><li>Alternative Dispute Resolution and litigation services for the management of procurement disputes
  136. 136. Evaluation and revision of existing procurement rules, processes and procedures to conform to international best practice.
  137. 137. Performance of Procurement Risk assessments.
  138. 138. Performance of Procurement Fraud Audits
  139. 139. Efficient Management of Freedom of Information Requests under the new Access to Information Regime being implemented globally.</li></li></ul><li>What functions will these professionals perform?<br /><ul><li>Review, audit and report on the effectiveness and efficiency of the procurement function
  140. 140. Contract Negotiation and Administration
  141. 141.   Strategic Supply Chain Management
  142. 142. Value Engineering
  143. 143. Whole Life Cycle Costing, Financing Models for P3 structures</li></li></ul><li>Two salient points….<br /><ul><li>What is clear is that the procurement function in the present global environment is a cross disciplinary function requiring the interaction of several disciplines in order to attain optimum efficiency.
  144. 144. The need for a common, transferable body of knowledge is critical. </li></li></ul><li>How has procurement education responded to the changing role of procurement in the world today?<br />
  145. 145. Guy Callender and Darin Matthews The Role of Immanence in the future of Public Procurement (International Public Procurement Conference Proceedings, Vol 3<br />“In the case of procurement and supply chain management, the speed with which outside influences are changing procurement knowledge and practice result in the core body of knowledge within procurement being summarized as the capacity to manage procurement practice using a constantly variable mix of knowledge drawn from other disciplines to achieve the results of practitioners in the field….. Procurement professionals need to be able to evaluate procurement influences across a range of discipline areas at a professional standard of knowledge rather than just demonstrating a working appreciation of these content areas”<br /> (See also Giunipero, 2000; Humphreys, 2001; Wynstra, van Wheele, & Weggerman, <br /> 2001).<br />
  146. 146. How it operates now..<br />Growing Focus<br />Limited Focus<br />Full<br />Focus<br />
  147. 147. Purchasing Certifications – Pre 1990<br />World divided into two main blocks <br />Notice the Focus on Operational layer<br />
  148. 148. Purchasing Certifications Post 1990<br />As the strategic nature of the function of procurement and the need to enhance the profile of the procurement practitioner became recognized – more and more training and “professional” associations have developed. Too numerous to mention all!<br /><ul><li>CIPS UK
  149. 149. NIGP (US, CANADA)
  150. 150. Council of Supply Chain Management (SCM)
  151. 151. Universal Public Purchasing Council (UPPC)
  152. 152. Most national procurement regulatory bodies</li></ul>have training programmes for their staff<br />Common feature – focus on purchasing and supply chain practitioners<br />
  153. 153. CIPS (UK) <br />International Qualification in Purchasing and Supply<br />The International Certificate and Advanced Certificate in Purchasing and Supply is an appropriate starting point for non UK-based learners.<br />International Certificate in Purchasing and Supply<br />C1 Understanding purchasing principles<br />C2 Selecting the right supplier<br />C3 Effective negotiation in purchasing and supply<br />C4 Managing inventory<br />C5 The business environment for purchasing and supply<br />International Advanced Certificate in Purchasing and Supply<br />A6 Analysing the supply market<br />A7 An introduction to purchasing strategy<br />A8 Preparing and managing contracts<br />A9 International logistics<br />A10 Measuring performance in purchasing and supply<br />[Excerpt www.cips.org]<br />
  154. 154. CIPS (UK)<br />Level 2 Introductory Certificate in Purchasing and Supply<br />The Level 2 Introductory Certificate in Purchasing and Supply qualification is a stand-alone qualification, taking a minimum of 20 guided learning hours.  It has been developed in order to cover the basic principles of purchasing and supply. It is one unit, consisting of four elements:<br />The role and scope of purchasing<br />Systems and procedures in purchasing<br />Working with suppliers<br />The importance of purchasing contracts<br />The Level 2 Introductory Certificate will be assessed<br /> using a one hour online test. <br />
  155. 155. CIPS (UK)<br />Level 3 Certificate in Purchasing and Supply<br />This award is the ideal entry point for anyone new to the profession as no prior qualifications or experience is required. It comprises five units:<br />L3-01 Understanding the purchasing environment<br />L3-02 Purchasing operations<br />L3-03 Client and supplier relationships<br />L3-04 Securing supply<br />L3-05 Purchasing in action -  Integrative unit<br />Level 4 Foundation Diploma in Purchasing and Supply<br />Many members who have previous business experience or qualifications commence their CIPS studies with Level 4. Together with Level 5 and 6<br /> it is the most common route to reach full Membership and obtain <br />the designatory letters MCIPS.<br />L4-01 Effective negotiation in purchasing and supply<br />L4-02 Developing contracts in purchasing and supply<br />L4-03 Measuring purchasing performance<br />L4-04 Managing purchasing and supply relationships<br />L4-05 Purchasing contexts<br />
  156. 156. CIPS (UK)<br />Level 5 Advanced Diploma in Purchasing and Supply <br />The Advanced Diploma has five units but this award introduces optional units to learners. There are three core units and a choice of six optional units, from which candidates must complete two.<br />Core units:<br />L5-01 Management in the Purchasing Function<br />L5-02 Risk Management and Supply Chain Vulnerability<br />L5-03 Improving Supply Chain Performance<br />Optional Units:<br />L5-10 Marketing for Purchasers<br />L5-11 Storage and Distribution<br />L5-12 Operations Management in the Supply Chain<br />L5-13 The Machinery of Government<br />L5-14 Contracting in the Public Sector  <br />L5-15 Sustainable Procurement<br />
  157. 157. CIPS (UK)<br />Level 6 Graduate Diploma in Purchasing and Supply<br />The Graduate Diploma has five units, there are three compulsory core units and two optional units must be chosen from a choice of five. When the Graduate Diploma has been successfully completed, members can apply to become a full Member of CIPS which entitles them to use the designation, MCIPS after their name.<br />Core units:<br />L6-01 Leading and influencing in purchasing<br />L6-02 Strategic supply chain management<br />L6-03 Supply chain management in practice -  Integrative unit<br />Optional units:<br />L6-10 Legal aspects in purchasing and supply<br />L6-11 Advanced project management<br />L6-12 Finance for purchasers<br />L6-13 Strategic Public Sector Programme Management<br />L6-14 Public Sector Stakeholders and Governance<br />
  158. 158. CIPS (UK)<br />Level 7 Executive Diploma in Purchasing and Supply Management<br />This qualification is an opportunity for members who have already achieved MCIPS to undertake further personal and professional development. <br />The Executive Diploma uses a self-managed learning approach and has four elements:<br />a strategic learning contract<br />a literature review<br />a business project<br />a self-review and evaluation.<br />
  159. 159. SCM Associations and Certification Programs<br />The following is a list of trade and professional associations, and links to any of their certification programs specifically in the supply chain management area involved in some aspect of supply chain management. <br />AME - The Association for Manufacturing Excellence3115 No. Wilke Rd., Suite GArlington Heights IL 60004+1 224.232.5980<br />APICS – The Educational Society for Resource Management Certification Programs5301 Shawnee Road Alexandria, VA 22312+1 800.444.2742<br />AST&L - The American Society of Transportation & LogisticsCetification Programs1700 N. Moore Street, Suite 1900Arlington, VA 22209+1 703.524.5011<br />
  160. 160. SCM Associations and Certification Programs <br />ATA - American Trucking Association2200 Mill RoadAlexandria, VA 22314+1 703.838.1700<br />ISM - Institute for Supply ManagementCertification ProgramsP.O. Box 22160 Tempe, AZ 85285+1 480.752.6276<br />IWLA - International Warehouse Logistics Association2800 S. River Road, Suite 260 Des Plaines, IL 60018 +1 847.813.4699<br />MHIA - Material Handling Industry of America8720 Red Oak Blvd., Suite 201Charlotte, NC 28217-3992 +1 704.676.1190<br />
  161. 161. SCM Associations and Certification Programs<br />NITL - National Industrial Transportation League1700 North Moore Street, Suite 1900Arlington, VA 22209 +1 703.524.5011<br />SmartWay Transport Partnership2000 TraverwoodAnn Arbor, MI 48105+1 734.214.4767<br />SOLE – The International Society of LogisticsCertification Programs810 Professional Place, Suite 111Hyattsville, Maryland 20785+1 301.459.8446<br />
  162. 162. SCM Associations and Certification Programs<br />SCC - Supply-Chain Council1400 Eye St., NW Ste. 1050Washington, D.C. USA 20005+1 202.962.0440<br />VICS - Voluntary Interindustry Commerce Solutions AssociationCertification Program1009 Lenox Drive, Suite 202Lawrenceville, NJ 08648+1 609.620.4590<br />WERC - Warehouse Education & Research Council1100 Jorie Boulevard, Suite 170Oak Brook, IL 60523+1 630.990.0001<br />
  163. 163. But For whom?<br />Responsive to the needs of Strategic Procurement<br />
  164. 164. Universities and Institutes…<br />Universities have very recently, begun to respond to the need for more strategic and specialised procurement education. <br /><ul><li>University of Nottingham – Public Procurement Research Group; Public Procurement Law Review, Phd Program and now LLM in Public Procurement Law from September 2009!
  165. 165. University of Rome Tor Vergata – Master in Procurement Management September 2009!
  166. 166. International Law Institute</li></li></ul><li>International Federation of Purchasing and Supply Management (IFPSM) <br /><ul><li>Unique organization, worthy of mention
  167. 167. A Federation of Associations serving the needs of purchasing and supply management professionals.
  168. 168. A union of 43 National and Regional Purchasing Associations worldwide. Within this circle, about 200,000 Purchasing Professionals can be reached.
  169. 169. IFPSM facilitates the development and distribution of knowledge to elevate and advance the procurement profession, thus favorably impacting the standard of living of citizens worldwide through improved business practices.
  170. 170. The term procurement is taken to embrace purchasing, materials management, logistics, supply chain management and strategic sourcing.
  171. 171. IFPSM is a non-political, independent and non-profit oriented </li></ul>International Organization, registered in Aarau, Switzerland.<br />
  172. 172. How it should operate<br />Full<br />Focus<br />
  173. 173. Best of Breed Solution for a Changing World<br />THE CARIBBEAN PROCUREMENT INSTITUTE (“CPI”) is a private sector organization established in December 2006 to serve policy makers and practitioners in the field of procurement. We are dedicated to the promotion of excellent standards in procurement for both public and private sector organizations in the interests of the public good. <br />
  174. 174. Best of Breed Solution for a Changing World<br />Several professionals from the disciplines of law, finance, development studies, construction, IT and Oil and Gas got together to begin to develop a common transferable body of knowledge in the field of public procurement. <br />During 2007, CPI liaised with world experts, practitioners and academics to develop a defining philosophy for the entity. <br />
  175. 175. Best of Breed Solution for a Changing World<br />HOW <br />ARE WE DIFFERENT?<br />
  176. 176. Four reasons…<br /><ul><li>Promotion of a broad appreciation of the concept of “value” not focusing only on the economic indicators as a measure of value.
  177. 177. Eschewing the transactional approach to the function of procurement and promoting an appreciation of the function of procurement within the context of the entire procurement cycle and as it relates to financial management, legal accountability and risk management paradigms
  178. 178. The programmes are specifically designed to serve the needs of ALL stakeholders involved in the various stages of the procurement cycle including decision makers (leaders, policy makers, CEOs, Directors), professionals interacting with the procurement (lawyers, accountants, Auditors, Quantity Surveyors, Engineers, Architects, Project Managers) procurement managers, purchasing, logistics and supply officers and private sector participants in procurement (suppliers, contractors and consultants)
  179. 179. Commitment to the creation of region specific and relevant programmes developed jointly by international and regional academic and </li></ul> practitioner experts<br />
  180. 180. The Integrated approach…<br />
  181. 181. What we have done so far….<br />Establishment of a faculty of International academics and practitioner experts to assist in the development of courses for ALL professionals interacting with the function of procurement.<br />
  182. 182. What we have done so far<br />First Caribbean Public Procurement Conference (CPPC) March 2008, over 170 leading world and regional academics, public officials and professionals. <br />
  183. 183. What we have done so far…<br /><ul><li>CAPPs establishment is being jointly facilitated by CPI and the International Federation for Purchasing and Supply Management (IFPSM).
  184. 184. Partnered with International bodies to further develop the common transferable body of knowledge in procurement.
  185. 185. Developed the Procurement Intensive Seminar Series™ and trained close to 200 professionals during 2008.
  186. 186. Developed and trademarked the NEW professional designation of Procurement Professional</li></ul> PP – Procurement Professional <br /> LPP - Legal Procurement Professional<br /> CPP – Construction Procurement Professional <br /> FPP – Finance Procurement Professional <br /> PMPP – Project Management Procurement Professional <br />
  187. 187. What we have done so far..<br />CPI has sponsored the establishment of a voluntary association of procurement professionals the Caribbean Association of Procurement Professionals (CAPP) 2008. With 216 registrants this new association has established its vision as “A Caribbean with world class procurement”. Some of the objectives of CAPP are<br /><ul><li>To promote high standards of professionalism, ethics and integrity among all those engaged in procurement
  188. 188. To increase the appreciation of the value of procurement good practice by raising the profile of procurement professionals in the region.
  189. 189. To encourage learning, knowledge sharing and consensus building in the region.
  190. 190. To establish and implement training and certification standards and requirements for the procurement profession
  191. 191. To work with its members to establish and mentor national chapter associations.
  192. 192. To promote reform in procurement regimes consistent with established best practice</li></li></ul><li>What we are doing….<br /><ul><li>In 2008 CPI partnered with The Procurement Office, Ontario, Canada – to establish the non-profit Commonwealth Procurement Institute.
  193. 193. The Commonwealth Procurement Institute,</li></ul>Headquartered in Ontario, Canada will license institutes and associations of professionals desirous of working toward the new professional designations. <br />
  194. 194. The Objectives of The Commonwealth Procurement Institute <br />To spread and improve appreciation of the value of procurement good practice by raising the profile of procurement at the leadership level in both the public and private sectors and acting as a catalyst for learning, knowledge sharing, and consensus building throughout the Commonwealth and worldwide.<br />To educate leaders and develop professional skills among practitioners in the art and science of procurement towards achieving excellent standards and maximising value in public and private sector organizations.<br />For the benefit of the public good, to promote high standards of professional skill, ethics and integrity among all those engaged in procurement.<br />To promote the development and utilization of a common transferable body of knowledge in the field of procurement.<br />
  195. 195. The Objectives of The Commonwealth Procurement Institute <br />To support, encourage and promote institutions and associations established to serve the needs of procurement professionals and all professionals interacting with the function of procurement for the public good. <br />6. To promote and encourage continuous research and development in the field of procurement <br />7. To educate persons engaged in the practice of procurement and by means of examination and other methods of assessment to certify the skills and knowledge of such persons.<br />8. To provide specialist expertise to Governments, tertiary institutions, associations, leaders and organisations engaged in the function of procurement.<br />
  196. 196. What we are doing…<br /><ul><li>In 2008 Caribbean Procurement Research Group (CPRG) established. First Working Paper Series exploring the positive incentives for anti-corruption mechanisms and policies ‘The Value of Virtue’ October 2009
  197. 197. Masters in Procurement Management with University of Rome Tor Vergata – September 2009. Graduates will receive (Msc). Procurement Management and </li></ul> (PP) Certified Procurement Professional designation<br />
  198. 198. Charles Holden, Director General of IFPSM<br />&quot;The International Federation of Purchasing and Supply Management is proud to be working closely with CPI to assist in the investment in higher levels of procurement professionalism within the Caribbean, particularly the formation of the professional association CAPP. <br />Accordingly, it is recognized as a highly beneficial advance for such professionalism that CPI is able to introduce in partnership with the University of Rome, a Master Programme in Procurement Management.  Such a programme adds significantly <br />to the recognition of Caribbean practitioners <br />in the International marketplace&quot;<br />
  199. 199. THANK YOU be the change you wish to see in the world<br />Mahatma Gandhi<br />
  200. 200. Acknowledgements<br />Dr. Erik L. van Dijk, <br />CPI Faculty <br /> Director ESG Finance & Investments <br />CEO/CIO<br />LMG Compendeon<br />120 Abercromby Street, <br />Port of Spain, Trinidad<br />www.lmgcompendeon.com<br />Caribbean Procurement Institute<br />120 Abercromby Street, <br />Port of Spain, Trinidad,<br />www.caribbeanprocurementinstitute.com<br />Renaissance Capital<br />5th Floor Professional Centre Plot 1B, Bank PHB Crescent Victoria Island, Lagos Nigeria<br />www.rencap.com<br />Goldman Sachs<br />32 Old SlipNew York, NY 10005<br />United States<br />www2.goldmansachs.com/gsam <br />

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