Procurement Case Study - Chile


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Procurement Case Study - Chile
Jorge Claro, President and CEO, International Procurement Institute
The International Procurement Institute, together with the Graduate School, USDA, present
this session focusing on a recent procurement assessment conducted in Chile. Mr. Claro
will provide an overview of how the OECD/DAC assessment was applied in a country
procurement assessment report conducted in Chile. The session will conclude with an
interactive discussion on the environment required for successful application of the tool
and issues that should be anticipated while conducting the benchmarking.

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Procurement Case Study - Chile

  1. 1. Application of the OECD/DAC assessment methodology: Chile’s CPAR Jorge Claro, President and CEO International Procurement Institute, INPRI
  2. 2. Country Procurement Assessment Report (CPAR) <ul><li>Execution of loans/grants are carried out generally observing the policies of the MDBs </li></ul><ul><li>There is intention to utilize national systems </li></ul><ul><ul><li>MDB’s Country Assistance Strategies must include procurement considerations </li></ul></ul><ul><ul><li>The CPAR is the most important tool to determine the soundness of a national system, allowing MDBs to assess a country’s ability to successfully execute the projects financed by them </li></ul></ul>
  3. 3. Chilean Setting <ul><li>The process started in 2007 but budgetary constraints and bureaucratic hurdles delayed its start until 2008 </li></ul><ul><ul><li>2009 is an election year in Chile and the political climate has changed as government priorities have shifted </li></ul></ul><ul><ul><li>What was a priority and had a champion in 2007 lost its momentum </li></ul></ul>
  4. 4. Chilean Setting <ul><li>MDBs leverage in Chile is limited </li></ul><ul><ul><li>The Government has easy access to International Capital Markets </li></ul></ul><ul><ul><li>IADB made a loan to Transantiago, the Santiago Public Transportation System. </li></ul></ul><ul><ul><ul><li>The loan was declared unconstitutional </li></ul></ul></ul>
  5. 5. Chilean Setting <ul><li>Transantiago is the subject of a major domestic dispute amongst parliamentary factions, centering on effectiveness, rate increases and sources of funding for the system. It has affected IDB’s position in the country </li></ul><ul><ul><li>The loan has not been repaid </li></ul></ul>
  6. 6. Chilean Setting <ul><li>The CPAR must be negotiated at the highest levels of government </li></ul><ul><ul><li>Procurement authorities may have their own perspectives or agendas </li></ul></ul><ul><li>Chile is not a member of the OECD, but has expressed an interest in joining </li></ul>
  7. 7. Setting <ul><li>The OECD/DAC methodology is </li></ul><ul><ul><li>Highly Participatory </li></ul></ul><ul><ul><ul><li>Many stakeholders have to be identified </li></ul></ul></ul><ul><ul><ul><li>Represents a serious investment of time and resources, and the participation of many public officials requires political will </li></ul></ul></ul><ul><ul><li>Somewhat rigid, missing nuances of the procurement process </li></ul></ul><ul><ul><ul><li>Market Conditions </li></ul></ul></ul><ul><ul><ul><li>Legal Aspects </li></ul></ul></ul>
  8. 8. Key Players <ul><li>Government of Chile </li></ul><ul><ul><li>Ministry of Finance </li></ul></ul><ul><ul><li>Procurement Authority </li></ul></ul><ul><ul><li>Ministry of Works </li></ul></ul><ul><ul><li>Ministry of Housing </li></ul></ul><ul><ul><li>Supreme Audit Entity </li></ul></ul><ul><li>IADB/WB Team </li></ul><ul><ul><li>Bank Staff </li></ul></ul><ul><ul><li>Local Consultants </li></ul></ul><ul><ul><ul><li>Legal Consultant </li></ul></ul></ul><ul><ul><ul><li>Economists </li></ul></ul></ul><ul><ul><ul><li>Procurement Specialists </li></ul></ul></ul><ul><ul><li>International Consultants </li></ul></ul><ul><ul><ul><li>Procurement Specialists </li></ul></ul></ul>
  9. 9. Key Players <ul><li>ChileCompra Users </li></ul><ul><ul><li>All Ministries </li></ul></ul><ul><ul><li>Decentralized Entities </li></ul></ul><ul><ul><li>Armed Forces </li></ul></ul><ul><ul><li>Local and Regional Governments </li></ul></ul><ul><ul><li>Vendors and Suppliers </li></ul></ul><ul><ul><ul><li>Small and Medium Enterprises </li></ul></ul></ul><ul><ul><ul><li>Importers and Exporters </li></ul></ul></ul><ul><li>Organized Constituencies </li></ul><ul><ul><li>Chambers of Commerce </li></ul></ul><ul><ul><li>Professional Associations </li></ul></ul><ul><li>Media </li></ul><ul><li>Pro-OECD Lobby </li></ul>
  10. 10. Issues <ul><li>The OECD/DAC Methodology is not applied in a vacuum </li></ul><ul><li>Participation from all sectors and stakeholders is essential </li></ul><ul><ul><li>Identifying all of them is difficult </li></ul></ul><ul><ul><li>Only a strong central authority will have the authority to convene them </li></ul></ul><ul><li>Delays caused initial levels of participation and ownership to wane </li></ul>
  11. 11. Issues <ul><li>Procurement authorities play a critical role in validation workshops </li></ul><ul><ul><li>A procurement strategic plan for 2008 – 2012 was published without inputs from the CPAR </li></ul></ul><ul><ul><ul><li>CPAR findings that differed from or meant changes to the plan would have been controversial </li></ul></ul></ul><ul><ul><li>Attitudes towards the exercise set the tone </li></ul></ul><ul><ul><ul><li>Willingness to learn from others and address problems is essential, but can be constrained by the desire to obtain the best possible grade for a system that is perceived as adequate </li></ul></ul></ul>
  12. 12. Issues <ul><li>Limited budget had impact on depth and breadth of audit samples and regional coverage </li></ul><ul><ul><li>Sample selection requires country knowledge and is key to exercise </li></ul></ul>
  13. 13. Issues <ul><li>When systems are perceived as poor, Governments are more amenable to finding problems and identifying solutions </li></ul><ul><li>When systems are perceived as adequate, Governments prefer not to identify issues and leave the system as-is, as priorities lay elsewhere </li></ul><ul><ul><li>Chile is perceived internally as having a very good system and is regarded as the standard-setter in the region </li></ul></ul>
  14. 14. Approaches <ul><li>The OECD/DAC Methodology appears to be more applicable to emerging economies than to developed countries </li></ul><ul><ul><li>The WB/IADB team had to reconcile the OECD/DAC’s scientific rigor to the realities of a highly charged political scenario </li></ul></ul>
  15. 15. Approaches <ul><li>The WB/IADB team had to find ways to produce a CPAR after the validation workshops yielded results that contradicted the initial findings of the local consultants </li></ul>
  16. 16. Outcome <ul><li>The CPAR was completed in 2008 and the draft report is currently undergoing revisions (May 2009) </li></ul><ul><li>Though the exercise was successful, opportunities for a more in-depth discussion on present and future issues and further refinement of the system could, perhaps, have been exploited further </li></ul>
  17. 17. The end <ul><li>Comments and questions are welcome </li></ul><ul><li>Jorge Claro </li></ul><ul><li>President and CEO </li></ul><ul><li>INPRI </li></ul><ul><li>10708 Lady Slipper Tr. </li></ul><ul><li>North Bethesda, MD 20852 </li></ul><ul><li>Tel 301 230-9011 </li></ul><ul><li>[email_address] </li></ul>