Download - E-Procurement: Opportunities & Challenges by Sanjay Pradhan, Vice President World Bank Institute
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E-Procurement: Opportunities & Challenges
by Sanjay Pradhan, Vice President
World Bank Institute
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Key Elements of Discussion:
Situate e-procurement reforms within a broader framework of governance: focus on supply and demand for reform
E-Procurement can provide significant benefits, but requires important conditions for success
Important to understand and manage political economy of reform
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1. Situate reforms in a broader framework of governance and anticorruption: focus on supply and demand for reform
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Political Governance• Political competition, broad-based political parties• Transparency & regulation of party financing
Formal Oversight Institutions
• Independent judiciary• Legislative oversight • Independent
oversight (SAI)• Global initiatives: UN,
OECD Convention, anti-money laundering
Citizen
s/Firm
s
Citizens/Firms
Cit
izen
s/F
irm
s
Citizens/Firms
Decentralization and Local Participation• Decentralization with downward accountability• Community Driven Development (CDD)• Oversight by parent-teacher associations & user groups
Civil Society & Media• Free press, FOI• Civil society watchdogs
Private Sector Interface• Streamlined regulation• Extractive Industry
Transparency Initiative• Collective business
associations
Public Sector Management
• Public finance management & procurement
• Civil service meritocracy & adequate pay
• Service delivery and regulatory agencies in sectors
Good Governance has many Good Governance has many dimensions …dimensions …
Outcomes: Services,
Regulations, Corruption
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Strengthening Governance Systems: Strengthening Governance Systems: Balancing Supply & DemandBalancing Supply & Demand
Demand-sideDemand-side Strengthen accountability arrangements – elections, political parties, effective parliaments, independent judiciary, free press, vibrant civil society, accountable local governments – that enable citizens and firms to hold state institutions to account
Supply-sideSupply-side Strengthen the state’s bureaucratic capability – leadership, skills, human resource, financial management, information systems – to deliver public goods and services
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Strengthening Demand for Public Strengthening Demand for Public Financial AccountabilityFinancial Accountability
Participatory Budgeting,
Puerto Alegra(Brazil)
Civil Society Oversight on procurement
(Slovakia)
Strengthening Supreme Audit Institutions
(Hungary)
Public Expenditure Tracking & Information Campaigns (Ghana, Madagascar, Mozambique, Peru, Senegal, Tanzania, Zambia)
Procurement oversight by
CSOs (Philippines)
Strengthening Public Accounts Committees of
Parliament(India)
Transparent, competitive e-procurement(Latin America)
Strengthening Public Accounts Committees
of Parliament (Kenya, Ghana, Zambia --
AFR)
Accountability, Transparency & Integrity
Project(Tanzania)
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2. E-procurement can deliver substantial benefits but requires important conditions for success
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E-Procurement & Citizen Oversight
E-Procurement: LACE-Procurement: LAC
All supplier companies register, indicating areas of business (e.g., IT, construction, furniture)
Public agencies submit tenders through internet
Automatic e-mail to all companies in selected area
Online information on name, position of official in-charge
Online information on results: who participated, proposals made, scores received, who won bid, historical record of agency’s purchases & contracts
Engaging CSOs: PhilippinesEngaging CSOs: Philippines
Legal foundation a mess with over 100 laws and regulations
New omnibus law needed for clarity and predictability in the process
New law in 2003 with determined efforts of reform minded public officials allied with strong and unified advocacy efforts of CSOs to offset entrenched vested interests
For credible enforcement: requirement that all bids and awards committees must have at least one observer from a certified CSO
Extensive training of CSOs now under way
Legal foundation a mess with over 100 laws and regulations
New omnibus law needed for clarity and predictability in the process
New law in 2003 with determined efforts of reform minded public officials allied with strong and unified advocacy efforts of CSOs to offset entrenched vested interests
For credible enforcement: requirement that all bids and awards committees must have at least one observer from a certified CSO
Extensive training of CSOs now under way
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Impact of e-Procurement
Increased efficiency due to competition, transparency and lower transaction costs
Reduced opportunity for fraud & corruption due to automated procedures
Public procurement monitoring
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Number of bidders has tripled
Example Korea
Enhanced Transparency of Public Procurement
Stimulated e-Commerce in the Private Sector
Real-time basisBidding info
No room for arbitrary decisions
Competitive biddings of micro-purchases
Diminished the possibility of corruption
Created the computer Business environment
Promoted an e-Commerce mindset
Enhanced the credibility of e-Commerce
Helped build the infrastructure
Use digital signiture to ensure security
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Savings (Examples)
KOREA
ROMANIA
BRAZIL
INDIA
www.g2b.go.kr
www.e-licitatie.ro
www.bec.sp.gov.br
eprocurement.gov.in
Total volume of US$ 44 bn in 2006 with transaction cost
savings of US$ 4.5 bn (http://www.pps.go.kr/english/ )
650,000 electronic auctions between 3/2002 and 10/2006 with
savings of US$ 178 mn (http://www.mcti.ro/index.php?id=28&L=1&lege=1289)
From 2000 to 2006, 51% savings in transaction costs and
25.5% in price reductions (http://www.relogiodaeconomia.sp.gov.br/br/home_results.asp)
US$ 3.6 bn of transactions in 2005 with
savings of US$ 238.2 mn due to tender discounts in the same year(http://ccaharyana.gov.in/e-procurement.htm)
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Conditions for Successful Implementation
Strong government leadership (e.g. Korea, Mexico at presidential level)
Appropriate implementation framework (e.g. procurement policy, legislation, capacity building, standards)
Infrastructure development (connectivity)
Complaints mechanism & resolution
Oversight over collusion & bid rigging
Managing political economy of reform
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Bid Rigging Schemes & Red Flags
“Complementary” bidding
Round robinDivide the pieCoercionLow balling/
“Change orders”
Bidders have same address or bid price
Wide gap between winner & all others
Winning bidder subcontracts to losers
Qualified bidders do not bid
Lowest bidder later submits substantial change orders
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3. Vested Interest
Focus on managing the political economy of reforms
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The World BankSanjay Pradhan
PREM Public Sector GovernancePage 16
Media
Private Sector
Municipal Government
Military
State (Bureaucracy)Political Parties
Civil Society
International Legislative Branch
Judiciary
1
Entrenched Corruption Networks: Montesinos in Peru
Source: “Robust Web of Corruption: Peru’s Intelligence Chief Vladimiro Montesinos,” Kennedy School of Government Case Program, Case C14-04-1722.0, based on research by Professor Luis Moreno Ocampo; Peru: Resource Dependency Network, 2000
Vladimiro Montesinos
Alberto Fujimori
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Philippines: Procurement Reform
Walang Ku-Corrupt Movement (Youth)
Philippine Contractors Association(private sector – main stakeholder)
Local chambers of Commerce (Private sector)
Procurement Watch:Drew other civil society groups into the advocacy efforts and
coordinated the activities
Forging Coalitions for Reform
CBCP(Church)
PAGBA & AGAP(w/in Gov’t)
Transparency and Accountability Network (20+ member groups)
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Summary
Situate e-procurement reforms within a broader framework of governance: focus on supply and demand for reform
E-Procurement can provide significant benefits, but requires important conditions for success
Important to understand and manage political economy of reform
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The End
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Lessons learned: e-Government vs better government
Consider and promote e-government as a government-centered effort
Replace every paper-based process by an electronic process
Offer ‘ministry-specific’ e-solutions Focus primarily on first rate
technological systems
Focus the e-government process on users (citizens & businesses)
Use e-government as a tool to foster changes in attitudes and thinking, and as an instrument for reforms
Rally government-wide efforts, and an ‘all-of-government’ approach (front office)
Understand and tackle underlying political obstacles to reform
Ways to fail Ways to go
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Examples of Broader E-Government Reforms
• Citizen Service Centers & One-Stop Shops (Bahia, Brazil; e-Seva in AP, India; online Motor Vehicles Departments)
• E-procurement (Brazil, Chile, India, Korea, Mexico, Philippines, Romania, others)
• Land titling (Karnataka, India: 18m titles issued)
• New Business Registration (Jamaica, Jordan, China)
• Online counseling for teacher transfer (Karnataka, India)
• Online customs (70 countries)
• Online municipal services (Seoul, Korea)
• Property registration (AP, Kanartaka, Maharastra, India)
• Railway reservations (India: 5 billion passengers/year)
• Tax payment (Mexico, Singapore, India, Chile)
• Trade facilitation (Tunisia)
• Treasury & integrated financial management systems (50 countries)
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What is the mystery behind e-GP?
What is the impact of e-GP?
What is the best approach to successful e-GP implementation?
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The Use of ICT in Procurement
… to publish and distribute public procurement information (online portal)
… to support public procurement transactions (e-Tendering, Purchasing from e-Catalogues, e-Reverse Auctions)
… to monitor and manage public procurement (PMIS linked to FMIS and other systems)