|Harmonising international procurement practices|
Multilateral Development Bank (MDB) heads of procurement met at the EBRD HQ from 18-22 June
Projects financed by the EBRD generate many tendering opportunities for goods, public works and associated services, as well as consultants. In 2011 the Bank’s clients signed 272 contracts worth €2.6 billion with firms from 39 countries winning EBRD-financed contracts.
The efficiency of the procurement process directly affects the costs and the time required for project completion and the ultimate performance of the operation. Good procurement practices should therefore lead to significant time and money savings for the Bank's clients and help ensure successful project implementation and operation.
In its continuous efforts to seek best practice in international procurement and in order to harmonise and standardise procurement processes with its peers, the EBRD’s Procurement Department, together with the Consultancy Services Unit, hosted a regular gathering of Multilateral Development Bank (MDB) heads of procurement from 18-22 June.
Over the course of five days, heads of procurement and procurement specialists from the EBRD, World Bank, Asian Development Bank, African Development Bank, EIB and other MDBs discussed recent developments and future challenges for procurement processes both globally and for their particular regions of operations.
Good standards of harmonisation reached
“One of our conclusions is that we have reached a good standard of harmonisation among MDBs,” says Jan Jackholt, the EBRD's Director of Procurement. “We have been meeting with our colleagues in the other MDBs for over 10 years and feel that we have reached a plateau regarding harmonised policies and procedures. This year’s discussions therefore centred on issues such as improvements in implementation monitoring, as well as country and sector-specific approaches to procurement.”
Dilek Macit, EBRD Director of Consultancy Services, points to the example of the harmonised Request for Proposals for consultants and relevant contracts. “By harmonising we are enabling our clients and the consultants to work with the same documents,” Dilek explains.
Such instruments make the whole process more efficient and effective as client capacity is enhanced. The clients do not have to become knowledgeable about the different tender documents of each MDB, but can instead rely on one set. Mistakes are reduced, leading to fewer complaints or dissatisfied bidders, and consultants know what the rules of the competition are. This all leads to fair and transparent processes and paves the way to transition.
The next stage of the harmonisation effort for consultancy procurement is to simplify the documents. “This is a loud request from the MDBs to help our clients. We also have to modernise by incorporating IT technology into procurement methods,” says Dilek.
Abnormally low tender prices
The participants further discussed issues like difficulties in monitoring quality and providing meaningful figures on contract awards; the differences in procurement eligibility rules between MDBs in situations of joint co-financing; as well as the increasing problem of abnormally low tender prices.
“We sometimes face the problem that a tenderer for a work contract provides unsustainable prices in order to win the contract,” Jan explains. “This has been an increasing problem during the last years of world economic turmoil. The issue has also been brought to the attention of the EU by affected countries such as Poland and is now part of the on-going discussion during the revision process of the EU Directives.”
For the MDB community this is a difficult problem to address. But better guidance on how to carry out a detailed price evaluation may help clients to find out if low prices are hiding non adherence to issues like social and environmental compliance or unrealistic work programmes that may be a cause of non-compliance.
Helping countries reform their public procurement laws
During the meeting, the EBRD’s Legal Transition Programme offered insights into how the Legal Transition Team, together with the Procurement Department, supports governments in the EBRD region in their efforts to modernise their public procurement systems.
Open and fair procedures for awarding public sector contracts for goods, works and services help to create dependable and stable markets for efficient private enterprises. They also form the basis for accountability and cost-effective use of public funds, a matter that is of concern for both the Bank and its countries of operations.
In order to inspire the development of the public procurement legal framework and best practice, the Legal Transition Programme is conducting comparative assessments and develops technical cooperation with the Bank’s countries of operations. The recently launched programme – the EBRD UNCITRAL Initiative on Enhancing Public Procurement Regulation in the CIS region and Mongolia – is a joint technical cooperation project of the EBRD and the United Nations Commission on International Trade Law (UNCITRAL) promoting the updating of national public procurement regulations in line with international best practice.
At the heads of procurement meeting, Michel Nussbaumer, Head of the Bank's Legal Transition Programme, Eliza Niewiadomska, the LTP public procurement counsel, and Caroline Nicholas from UNCITRAL presented an update on the progress of the Initiative, which aims to support countries that have expressed interest in updating their procurement regulations to match the standards of the 2011 UNCITRAL Model Law on Public Procurement. So far the Initiative activities cover Armenia, Azerbaijan, Moldova, Mongolia, the Kyrgyz Republic and Tajikistan, with the Russian Federation expected to join soon.
“It is of utmost importance that the Initiative enjoys broad support and participation by stakeholders such as the MDBs and other international organisations,” stresses Eliza. “We are very pleased with the great interest and support already provided by many of our fellow MDBs during national policy workshops organised by the Initiative in Armenia, Azerbaijan and Moldova.”
So what’s next for the MDBs' procurement experts? “While harmonisation will continue to be on the agenda for the heads of procurement meetings, I expect future discussions will focus on development of new tools within, for example, e-procurement, use of different types of contracts and the Bank's ability to exercise its fiduciary function,” says Jan.
By Claire Ricklefs