Diagnostic Report PRINT E-mail
This Diagnostic Report was prepared under an EBRD UNCITRAL common initiative, started in 2011, to promote public procurement reform in CIS countries and Mongolia. It presents the findings and recommendations based on the legal analysis of the national public procurement legal and institutional framework in the Mongolian Republic (Public Procurement Law of Mongolia of 1 February 2006, amended 6 June 2011).

EBRD’s previous assessment in 2010 revealed that the Public Procurement Law needed reform in areas such as communication and notification procedures and procurement methods, including framework agreements and the negative effects of centralisation.
 
This report examined the PPLM and post 2010 interim reforms, assessing the current framework in Mongolia against a benchmark of key standards and best practices as expressed in the 2011 UNCITRAL Model Law on Public Procurement. The assessment was made in cooperation with both local and international experts and was based on a common diagnostic tool that covers each phase of the procurement process from the scope and terms to requirements for recording of procurement decisions. This approach validates locally collected data and ensures the comparability and consistency of the scoring exercise.

Summary of findings and conclusions:

  • There is no general access to case law whereas legislation is accessible on the official public procurement website. The PPLM is vague on scope and enables exclusion of foreign bidders and various categories of contacts with no apparent justification. There are question marks over the integrity and independence on existing centralisation of the legislative, monitoring and review functions.
  • The PPLM is essentially compliant with the various requirements concerning availability and objectivity for tender/solicitation documents. However, the specific method for application of domestic preferences is not prescribed in the PPLM and the actual need for such arrangements is questionable.
  • The PPLM requires publication of various phases of the procurement process, including the award of a contract, but does not appoint any official location for doing so, such as a daily gazette or a web portal. It also requires publication in foreign languages for contracts above a certain limit but is excessively discretionary regarding such tender documents.
  • The PPLM includes various procurement methods, with and without negotiation, and enshrines sufficiently detailed rules and conditions for applying many procedures, including thresholds. However, there are no rules on valuation of contracts essential for applying thresholds, nor for awarding a certain minimum of contracts by eProcurement. Rules for framework agreements are insufficient.
  • The PPLM is compliant on many points for detailed procedures for each procurement method, e.g. time limits, opening and evaluation of tenders to ensure equal treatment. However, there are no requirements on the objectivity and verifiability of evaluation criteria, nor for each tender to set rules on the weighing of such criteria.
  • The PPLM has shortcomings on the requirements for communicating the launch of the tender procedure and other decisions taken during the process, including amendment of tender documents, with transparency and integrity. This includes the lack of advance publication of the intention to use single source procurement. Electronic and paper-based communication are not yet on a par, despite reform plans, and there are still no enabling provisions for eProcurement. Basic requirements for communication to be commonly available, to safeguard integrity and authenticity, and to protect confidential information are all lacking.
  • Regarding review procedures, the PPLM does not include procedural rights for complaints about decisions made by contracting entities, for those wishing to challenge such decisions or for ensuring the effectiveness of a challenge. There is no window to allow for complaints before the contract comes into force, nor does making a challenge suspend contracts entering into force. There is concern that centralisation of institutional functions compromises the independence and integrity of the review process.
  • The Model Law sets out detailed requirements for recording decisions and actions continuously throughout the procurement process. Such records must be available to the involved parties and some parts of the records must be publicly available. These obligations ensure effective monitoring of procurement and the position of parties in review procedures and also increases the accountability of procuring entities. The PPLM does not allow public access to filed records and provides only very general rules concerning confidential information to strike a balance in relation to public access.

The Report made following recommendations:

  • Introduce publication of case law relevant to public procurement and establish an official location for publishing notices and other information;
  • Abolish the broad discretion to exclude foreign suppliers and ensure that any exempted contracts are justified and precisely and narrowly defined.
  • Adjust the conditions for and assess the necessity of domestic preferences.
  • Develop an overall eProcurement implementation strategy and introduce detailed rules governing framework agreements.
  • Review various procedural rules, for example objectivity of evaluation criteria, valuation of contracts and conditions for use of single source procurement.
  • Require use of commonly available communication means, introduce measures to protect the integrity and authenticity of communication and to protect confidential information.
  • Consider how to ensure independence in review, such as establishing an independent review body and providing basic procedural rights for participants in the review process.
  • Introduce public access to recorded basic information on procurement procedures.

The report formulates an action plan to facilitate implementation of the Reform Agenda, outlining the required specific steps for each recommendation.
 
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