48301 PROCUREMENT UNDER WORLD BANK-FINANCED PROJECTS: FY08 ANNUAL REPORT March 25, 2009 Operations Policy and Country Services PROCUREMENT UNDER WORLD BANK-FINANCED PROJECTS: FY08 ANNUAL REPORT Contents Abbreviations and Acronyms .......................................................................................... v Executive Summary........................................................................................................vii I. Introduction........................................................................................................... 1 II. Country Work....................................................................................................... 1 III. Policy, Tools, and Institutional Initiatives.......................................................... 8 IV. Fiduciary Oversight and Compliance............................................................... 12 V. Harmonization and Partnerships...................................................................... 22 VI. Staffing and Capacity Development.................................................................. 26 VII. Joint Procurement/Financial Management Framework Strategy and Procurement Sector Initiatives.......................................................................... 29 VIII. Regional Summaries........................................................................................... 32 A. AFR....................................................................................................................... 32 B. EAP....................................................................................................................... 34 C. ECA....................................................................................................................... 37 D. LCR....................................................................................................................... 39 E. MNA ..................................................................................................................... 41 F. SAR....................................................................................................................... 43 Annex A. Additional Data on Procurement ................................................................. 47 Annex B. Current CPAR and Other ESW Reports..................................................... 55 Tables, Boxes, and Figures Table 1. Procurement ESW Reports Delivered to Clients in FY08 ............................. 2 Table 2. Countries Applying OECD/DAC Benchmarking Tool................................... 3 Table 3. Status of UCS Implementation (through Dec. 2008)....................................... 5 Table 4. IDF Grants for Procurement Capacity Development Initiatives .................. 7 Table 5. Procurement Decentralization Trends, FY06­08.......................................... 13 Table 6. Top 10 Supplier Countries by Major Bank-Financed Contract Amount... 15 Table 7. Procurement Post Reviews Conducted in FY08 by Regions........................ 17 Table 8. PPR of RETFs .................................................................................................. 18 Table 9. Misprocurement Declared in FY08................................................................ 19 iv Table 10. Comparison of Numbers of Complaints, FY04-08..................................... 20 Table 11. Procurement Business Response Time Indicators (FY08) ........................ 21 Table 12. FY08 Procurement Staffing by Region/Unit............................................... 26 Table 13. FY08 Procurement Staffing by Grade and Station.................................... 27 Table A1. Ten Largest IBRD/IDA Borrowers ............................................................ 47 Table A2. Prior Review Contracts by Region and Category..................................... 48 Table A3. Top Ten Supplier Countries for Goods and Equipment.......................... 48 Table A4. Top Ten Supplier Countries for Civil Works............................................ 49 Table A5. Top Ten Supplier Countries for Consultant Services............................... 49 Table A6. Independent Procurement Review ............................................................. 50 Table A7. Misprocurement Declared in FY06-08....................................................... 51 Table A8. Nature of Complaints................................................................................... 51 Table A9. Complaints by Resolution............................................................................ 52 Table B1. Current CPAR and Other ESW Reports................................................... 55 Box 1. Procurement Reform and Capacity Building.................................................... 6 Box 2. IDF Grants Currently Supporting Procurement Capacity Development ...... 7 Box 3. E-Government Procurement (e-GP) Initiatives contributing to GAC............ 8 Box 4. India DIR and Resulting Action Plan to improve Post Review and Supervision .......................................................................................................... 17 Figure 1. Trend of Procurement Prior Review Contracts by Number and Value of Contracts .............................................................................................. 14 Figure 2. FY08 Prior Review Contract Value and Disbursement............................. 15 Figure 3. Trend of OPRC Review by Number of Contracts, FY02­08 .................... 16 Figure 4. Major Nature of Complaints in FY08.......................................................... 20 Figure A1. FY08 Lending Commitment Amount by Region..................................... 47 Figure A2. Post Review Coverage ................................................................................ 50 v ABBREVIATIONS AND ACRONYMS ADB Asian Development Bank AfDB African Development Bank AFR Africa Region AFTPC Africa Region Procurement Unit AML/CFT Anti-money laundering/combating the financing of terrorism CAS Country Assistance Strategy CICA Confederation of International Consulting Associations CPAR Country Procurement Assessment Report CPIP Country Procurement Issue Paper CPPO Chief Procurement Policy Officer CVS Corruption Vulnerability Scan DIR Detailed Implementation Review DPL Development policy lending/loan EAP East Asia and Pacific Region EC European Commission ECA Europe and Central Asia Region ECSPS Europe and Central Asia' Operations Policy & Services Unit e-GP Electronic government procurement ESRP Environmentally and Socially Responsible Procurement ESW Economic and sector work EU European Union F&C Fraud and Corruption FIDIC International Federation of Consulting Engineers FM Financial management FY Fiscal year GAC Governance and anticorruption GICT Global Information & Communication Technology Department HLF High Level Forum HoP Heads of Procurement IAD Internal Auditing Department IAPSO Inter-Agency Procurement Service Organization IBRD International Bank for Reconstruction and Development IDA International Development Association IDB Inter-American Development Bank IDF Institutional Development Fund IEG Independent Evaluation Group IFC International Finance Agency IL Investment Lending INT Integrity Vice Presidency IPR Independent Procurement Review vi ISG Information Solutions Group JV Joint Venture K&L Knowledge and leaning LCR Latin America and Caribbean Region MDB Multilateral development bank MNA Middle East and North Africa Region MOU Memorandum of understanding MPD Master Procurement Document NCB National competitive bidding OBA Output-based aid OECD-DAC Organisation for Economic Co-Operation and Development-Development Assistance Committee OP/BP Operational Policy/Bank Procedure OPCPR Procurement Policy and Services Group OPCS Operations Policy and Country Services (Network) OPR Operational Procurement Review OPRC Operations Procurement Review Committee PAD Project Appraisal Document PEFA Public Expenditure and Financial Accountability (initiative) PPP Private-public partnership PPR Procurement Post Review PR/FM Procurement/Financial Management PREM Poverty Reduction and Economic Management (Network) PRSC Poverty Reduction Support Credit QAG Quality Assurance Group RETF Recipient Executed Trust Fund RFP Request for proposals RPM Regional Procurement Manager SAR South Asia Region SBD Standard bidding document SEPA Procurement Plan Execution System (Spanish) SWAp Sectorwide approach TTL Task team leader UCS Use of country systems UN United Nations UNDB United Nations Development Business UNICEF United Nations Children's Fund PROCUREMENT UNDER WORLD BANK-FINANCED PROJECTS: FY08 ANNUAL REPORT EXECUTIVE SUMMARY 1. The FY08 Annual Report introduces four cross-cutting elements that provide the strategic focus for the work of the procurement sector in the Bank and the basis for the organization of this Report: (a) developing capacity in client countries to further the contributions that good procurement makes toward good governance and development effectiveness; (b) developing and maintaining procurement policy, documents, and tools to support staff and internal and external clients in maintaining quality and monitoring performance through fiduciary oversight; (c) maintaining the commitment to work with other international development partners and stakeholders to ensure that our policies are harmonized, account for industry and other stakeholder concerns, and facilitate good procurement at the country level; and (d) ensuring the continued development of skills and capacity of our staff to deliver the Bank's programs to clients. As in past reports, a section has been included on sector initiatives, which provides the status of ongoing initiatives as well as information on new activities. The report continues the practice of including Regional summaries and highlighting specific country-based activities through the use of informational boxes. Annex A includes additional data collected by the Bank on various procurement indicators as well as analysis and commentary. Annex B provides information of procurement-related economic and sector work (ESW). 2. Use of Country Systems. At the request of the Board of Executive Directors, Operations Policy and Country Services Vice Presidency (OPCS) prepared a detailed methodology on how to proceed with identification of countries and projects to participate in a limited piloting program on the use of country procurement systems. This methodology was prepared and was the basis for conducting extensive consultations between September 2007 and January 2008 in every Region of the Bank and participation from private sector, civil society, and client country government representatives. Following these consultations, the methodology was substantially revised to reflect comments and suggestions. The revised methodology was considered and approved by the Board in April 2008.1 The use of country procurement systems is seen as a key development effort that will support procurement reform in client countries; to the extent countries are able to demonstrate an acceptable level of capacity and performance, they will have the opportunity to be one of the 8-10 countries selected for the piloting program. Key diagnostic tools including the Country Procurement Assessment Report (CPAR) and the Organisation for Economic Co-Operation and Development-Development Assistance Committee (OECD/DAC) benchmarking tool as adapted by the Bank for use in the piloting program, will contribute to determining the level of capacity and performance of countries interested in participating in the piloting program. 1 Use of Country Systems in Bank-Supported Operations: Proposed Piloting Program (R2008-0036/3) was approved on April 24, 2008. viii 3. Procurement Reform. In FY08, the Procurement Sector participated in 15 ESW reports, including CPARs, updates to CPARs, Integrated Fiduciary Assessments (IFAs), and specific sector or sub-national assessments. In addition, more than 35 assessments using the OECD/DAC benchmarking tool have been conducted, contributing to the body of knowledge that will be needed to implement the Bank's use of country procurement systems piloting program. As noted in the report, the Bank has ongoing procurement reform initiatives in most of its client countries that are contributing to improved governance and public sector management. Reform initiatives generally follow and reflect an assessment using the Bank's diagnostic tools to support the government in developing and implementing a reform strategy. Many of these reform initiatives involve improved use of technology to support procurement and increase transparency. Specific information on these reforms is included in the Regional summaries and in information boxes included throughout this report. 4. E-Government Procurement (E-GP). A focus area for the procurement work undertaken to support governance and anticorruption work at the country level is the introduction of the use of technology to support procurement. This work takes many forms, from introducing publicly accessible websites that provide increased access to information on procurement to more advanced e-procurement systems that automate much of the procurement process. This is an area of development that continues to grow as more and more countries develop the level of technology and connectivity required to support such systems. In some cases, the desire to move toward e-procurement has been the key incentive for countries to pursue procurement reform initiatives. All of the Bank's Regions have active initiatives under way to support e-government procurement in client countries. 5. Policy Updates: OP/BP 11.00. The operational policies/Bank procedures (OP/BP) that govern procurement work at the Bank are found in OP/BP 11.00. These policy documents have not been fully updated since 2002. In FY08 the majority of work was completed to bring the internal operational policies and procedures in line with practice and to incorporate the changes driven by Sanctions Reform, implementation of the governance and anticorruption (GAC) agenda, and the use of country procurement systems piloting program. Issuance of the revised operational policies and procedures was also delayed in order to reflect the recommendations emerging from the IDA14 controls review. The final policy documents will be issued in FY09; at the same time, many guidance and technical notes now incorporated into the OP/BP will be retired. Several new guidance notes will be issued to implement and roll out the use of new tools and to cover topics of special interest that are not part of the policy and procedural documents. 6. Procurement Tools and Initiatives. In FY08, work continued to improve tools and develop systems in support of improved quality and efficiency in handling procurement responsibilities. The procurement complaints database was enhanced by adding an alert system and improved functionality, which has enabled better analysis of data collected by the system. A six-month pilot was undertaken in two Regions to test a new post-review module designed to provide a central repository for post review reports and to facilitate collection of post review recommendations and analysis of project risk. ix This post review module will also support better follow-up of corrective actions within project implementing organizations. This module will be introduced in FY09 following the successful piloting exercise. Roll-out of the post review module to all Regions will include training, monitoring, and follow up to provide quick response to issues that may arise during full implementation of the new tool. 7. Dynamic Risk Model. This tool has been undergoing final development and testing to make it available as a user-friendly, web-based tool to complement the assessment of capacity and risk at the project level and provide the facility to track risk and risk mitigation measures during implementation of a project. In FY08, a decision was made to integrate the tool into the Operations Portal used by staff to support project design and implementation activities. The dynamic risk model tool will facilitate a more risk-based approach to design, implementation, and supervision of Bank-supported investment operations. The final design was accepted by the Procurement Sector Board in September 2008 and is scheduled for full introduction in April 2009. Its use will become mandatory after a period of widespread use, currently set for FY10. A requirement for the use of this tool has been included for any projects selected as part of the use of country procurement systems piloting program. 8. Fiduciary Oversight and Compliance. A key responsibility of procurement staff is to maintain fiduciary oversight for projects under their supervision. The Procurement Anchor collects specific information to track performance and ensure compliance and quality. The Anchor provides this information on a regular basis to the Chief Procurement Policy Officer (CPPO) and to the Sector Board. Some key information on FY08 includes the following: · 298 new lending operations were approved, of which 253 were investment lending and 45 were development policy lending. The total IDA/IBRD commitment value of these operations was $24.7 billion. · There were 1,617 active investment lending operations under supervision in FY08, a slight increase over FY07. · Decentralization of responsibilities to procurement staff in country offices remained stable in FY08, with delegation for investment projects at 76 percent. Such delegations are also managed based on monetary thresholds that determine the authority and clearance levels of staff. · 4,598 contracts with a value of $8.2 billion were subject to prior review, an increase of 6.5 percent by value over FY07, reflecting the Bank's increased investment in larger infrastructure projects. · Post review was conducted on 92 percent of projects subject to post review, representing a 14 percent increase over FY07. · The Operations Procurement Review Committee reviewed more than 140 cases with a combined value above $10 billion, which represented a 14 percent increase over FY07. x 9. Supervision and Post Review of Contracts. Supervision of projects, including the post review of a sampling of contracts not subject to the Bank's prior review, are key functions carried out by procurement staff in undertaking their fiduciary responsibilities. In FY08, the Bank increased its level of post review of projects by 14 percent. The level of post review is a key indicator that continues to be monitored by the Regions, as it is a supervision responsibility that analyses have cited as needing improvement. For example, the IDA14 controls review initiated in FY06 and completed in FY082 had several key recommendations that related to post review, especially with regard to reporting, records management, and follow-up on findings. Many of these recommendations have been reflected in the revised OP/BP 11.00. As a result of the IDA14 controls review, the Sector Board has agreed to address inconsistencies among Regions and has included specific guidance on role and responsibilities with regard to the supervision and implementation of projects in the revised BP 11.00. Another area where post review has been noted as an issue is under Recipient Executed Trust Funds (RETFs). In the case of RETFs, there are large numbers of very small contracts financed by the trust funds. In FY08, the Procurement Anchor began working with the Regions to identify all such trust funds and to begin tracking post review of RETFs as part of regular compliance reporting. This work resulted in the first consolidated list of RETFs. The data covering post review and supervision for RETFs is still incomplete, but initial information is provided in the report and all Regions are working to gather reliable information for continued monitoring in this area. As a result of the growth in RETFs, which is expected to continue, additional policy guidance on maintaining fiduciary oversight has been included in the revised OP/BP 11.00. 10. Harmonization Work under the Heads of Procurement (HoP). The Heads of Procurement of the multilateral development banks (MDBs) meet approximately every nine months to discuss issues of common interest. The group has been a primary source of harmonization of procurement documents and policies over the years. The HoP operates through several standing working groups that report back on their activities to the HoP, where decisions are made to adopt common products and positions. In FY08, the HoP agreed on the Master Procurement Document (MPD) for Procurement of Small Works and Procurement of Plant Design, Supply and Installation. In addition, a cross harmonization was undertaken for all the MPDs agreed to date, resulting in a common approach to specific sections of the Master Procurement Documents regardless of the type of procurement covered by the documents. Other working groups include the e-GP Working Group and a new group formed to develop guidance materials on public-private partnership options. The HoP has also formed a working group on Environmental and Socially Responsible Procurement (ESRP) which looks at the way social and environmental issues should be addressed under procurement projects supported by the MDBs. 11. Joint Venture for Procurement. The Bank continues to co-chair the OECD/DAC Joint Venture for Procurement, a working group under the Working Party on Aid Effectiveness. In FY08, the JV support several country pilots that enabled participating 2 Review of IDA Internal Controls: An IEG Evaluation of Management's Assessment and the IAD Review: Report on the Completion of Part II (AC2008-0154/1) February 25, 2009 xi countries to assess the quality and performance of their procurement systems. This information enabled reporting on procurement to be included in the OECD's monitoring report that tracks progress against the targets of the Paris Declaration. The JV also contributed a study on emerging lessons from the JV pilots that will help improve assessment tools and help cross-country sharing of information to support capacity development in procurement. A Joint Venture meeting was held in Arusha, Tanzania to prepare a commitment document of support to procurement capacity development work that was presented to the high-level forum (HLF) III meeting held in Accra, Ghana in September 2008. 12. Staffing and Capacity Development. Staffing levels remained stable in FY08 but issues concerning decentralization, quality and capacity, and rotation of staff remained. These issues are now considered Bankwide issues. The Procurement Sector focused on quality and capacity development in FY08. A new knowledge and learning (K&L) strategy was drafted that identifies the many different stakeholders requiring different levels of knowledge and learning in the procurement area. The K&L strategy identifies the skill needs of the future based on the Bank's strategy, and it is shaping a training capacity development response that will use technology to facilitate delivery to a highly decentralized staff. FY08 also provided the opportunity to join with our colleagues from the Financial Management Sector to host the Fiduciary Forum, which biennially brings together staff from all Regions to share experiences, build skills, and participate in a weeklong learning event. The work of the Procurement Sector also involves significant outreach and sharing of knowledge with a range of external stakeholders, including civil society and private sector organizations. 13. Procurement Sector Initiatives. The Procurement Sector continues to work closely with colleagues from the Financial Management Sector, holding joint sector board meetings on a regular basis to discuss issues of common concern. One initiative under way is the defining of a joint fiduciary strategy that will articulate common goals and objectives in serving the needs of the Bank and client countries. This strategy will be pursued by defining a set of core objectives under a common framework and then articulating the specific initiatives of each sector that contribute to achieving or support these core objectives. This joint strategy is planned for delivery in FY09. In the meantime, the Procurement Sector has made progress against the initiatives introduced in FY07, which include: (a) expanding the consulting services study, (b) introducing new UN Agency and Trust Fund agreements that will facilitate the involvement of UN agencies in Bank-financed or managed- operations, and, (c) introducing policy and procedures for the use of framework agreements. 14. Other Matters. Some additional new initiatives have been added, including: · Working with INT on governance and anticorruption work to improve coordination, sharing of lessons learned, and timely access to information. · Working with Legal Operations Policy (LEGOP), Integrity Vice Presidency (INT), and the Evaluation and Suspensions Officers (Eos) office on improving the Sanction Process and the Anticorruption Guidelines that were introduced in 2006. xii · Roll out and monitoring of the use of new tools and policies introduced during the fiscal year, including the issuance of guidance notes and training and workshops for staff. · Providing support to the investment lending (IL) reform initiative and ensuring that procurement policies, procedures, and the Guidelines are all updated to support the reform initiative. · Supporting the Paris Declaration and, in particular, the achievement of the commitments emerging from the HLF III as set forth in the Accra Action Agenda. · Scaling up our commitment and involvement in environmental and socially responsible procurement, including addressing diversity, accessibility, and integrity and expanding the core labor standards through the continued participation in the Heads of Procurement and key working groups. · Providing more guidance on handling of procurement in public-private partnerships and ensuring that this work is coordinated with other MDBs. · Preparing a harmonized Request for Proposals under the HoP working group led by the World Bank. PROCUREMENT UNDER WORLD BANK-FINANCED PROJECTS: FY08 ANNUAL REPORT I. INTRODUCTION 1. The FY08 Annual Report introduces several changes in response to the comments received from the Audit Committee following discussion of the FY07 Annual Report. In particular, this year's report begins with a statement on the strategic contributions the procurement sector makes to the achievement of the Bank's institutional objectives. This is in response to the Audit Committee's request that the report be more strategic. Secondly, the report provides more analysis with regard to monitoring of data and how this information contributes to decisionmaking within the sector. 2. Procurement Sector Strategic Focus. The sector's contributions to achieving the Bank's objectives focus on four strategic and cross-cutting elements: (a) our client countries and the contributions that good procurement practices at the country level make toward good governance and development effectiveness; (b) developing and maintaining procurement policy and tools to support staff and clients in maintaining quality and monitoring performance through fiduciary oversight and compliance monitoring; (c) maintaining our commitment to work closely with other international partners so as to ensure that our policies are harmonized and facilitate good procurement at the country level; and (d) developing the skills and capacity of our staff to deliver the Bank's programs to clients. These key elements are the basis for the organization of our Annual Report. 3. Organization of the FY08 Annual Report. Following this introduction and in keeping with the above key cross-cutting elements, Section II discusses country work, providing specific information on capacity development activities at the country level and work toward implementation of the use of country procurement systems. Section III discusses the policy and tools introduced to enhance quality and monitor performance. Section IV reports on quality, oversight, and fiduciary compliance activities. Section V discuses harmonization and partnership activities, which continue to form an important aspect of procurement work. Section VI covers staffing and capacity development activities within the Bank. Section VII discusses the joint procurement financial management strategy and provides information on specific areas of focus in the procurement sector in FY08. Finally, Section VIII highlights Regional achievements during the fiscal year. II. COUNTRY WORK 4. In 2007, the Board of Executive Directors expressed support for proposals to expand the use of country procurement systems under a well defined piloting program. Before approving the pilots, the Board asked the Bank to conduct widespread consultations with stakeholders, in particular with those engaged with Bank-financed procurement. Accordingly, during much of FY08, the Bank, led by Operations Policy and Country Services Network (OPCS), conducted consultations in all the Regions with 2 the private sector, civil society organizations, country counterparts, and with development partners. One consistent message received during the consultation process was the need to ensure that the pilot program would include a strong commitment to development and reform that would address the issues noted during the defined assessment of national procurement systems. This section discusses the procurement sector's contribution to development work on national procurement systems and public sector governance, including procurement economic and sector work and governance and anti-corruption initiatives at the country level. 5. Country Procurement Assessment Reports. In FY08, the procurement sector contributed to 15 economic and sector work (ESW) reports (see Table 1). The current practice for conducting such ESW involves working closely with internal units, such as Poverty Reduction and Economic Management (PREM) Network and Financial Management (FM), and with the regional multilateral development banks (MDBs) to produce integrated reports that will provide the country with a more strategic action plan intended to address issues across the full spectrum of systems involved in public financial management and public sector governance. The CPAR process was enhanced through the introduction and use of the Organisation for Economic Co-Operation and Development-Development Assistance Committee (OECD/DAC) "Methodology for Assessment of National Procurement Systems," a comprehensive procurement benchmarking tool that is now used on a regular basis as part of the country assessment process. Table 1. Procurement ESW Reports Delivered to Clients in FY08 Region Country Type of ESW Report Date (Delivery to Client) Country Procurement Assessment (CPAR) AFR Lesotho LS-CPAR (FY08) 6/19/2008 Mozambique CPAR Update (FY08) 6/30/2008 EAP Philippines PH 2006 Country Proc Assessment Report 6/30/2008 ECA Azerbaijan CPAR Update 6/27/2008 LCR Mexico MX CPAR Update 11/8/2007 MNA Kuwait KW Country Proc Assessment Review 6/2/2008 Integrative Fiduciary Assessment (IFA) AFR Ivory Coast PEMFAR 6/26/2008 ECA Turkey Turkey Health IFA 3/5/2008 LCR Guyana GY PEFA 12/31/2007 India Jharkhand PFM Study 9/27/2007 SAR India PFMA Govt of Himachal Pradesh 6/10/2008 India PFMA Maharashtra 4/17/2008 Other Procurement Studies MNA West Bank/Gaza GZ-Country Procurement Issues Paper 6/30/2008 SAR India Bihar PFM Study 6/27/2008 Procurement Contribution to Other Public Sector Studies ECA Kyrgyz Rep Education IFA - KG 6/17/2008 Tajikistan Health IFA - TJ 6/26/2008 3 6. OECD/DAC Benchmarking Tool. The benchmarking tool, introduced in its final form in 2006, has been applied as part of Bank assessments in more than 35 countries. The tool defines several methods of application: (a) joint assessment, wherein the country and a donor or group of donors jointly assess the procurement system; (b) self-assessment with or without a validation exercise, which enables a country to use the tool to identify its relative strengths and weaknesses compared to the defined benchmarks; and (c) external assessment, which can be done by a donor to help the donor determine the relative risk to funds reliant on the procurement system in the country. The Bank included the application of the benchmarking assessment as one of the steps contributing to the selection of pilots in the Bank's methodology (see Use of Country Systems paragraph below). In all cases where the Bank is using the OECD/DAC benchmarking tool, it has participated in the assessment process or conducted its own validation of the assessment. Table 2 provides a list of countries that have applied the OECD/DAC benchmarking tool. Table 2. Countries Applying OECD/DAC Benchmarking Tool AFR EAP ECA LCR MNA SAR Botswana Indonesia Albania Brazil Morocco Afghanistan Burkina Faso Lao PDR FYR Macedonia Colombia Kuwait Pakistan CAR Mongolia Georgia Mexico Nepal Congo Rep Philippines Kyrgyz Republic Panama Sri Lanka Côte d'Ivoire Solomon Is. Turkey Paraguay India Cameroon Thailand Azerbaijan Peru (OECD/DAC Ghana Vietnam benchmarking Lesotho only in two Nigeria states) Rwanda Senegal Tanzania 7. Use of Country Systems. Following discussions with the Bank's Board of Directors in June 2007 on the Use of Country Systems in Bank-Supported Operations: Status Report, OPCS prepared a detailed methodology on the use of country procurement systems. This methodology was publicly posted in September 2007 to open a period of extensive consultations carried out with a wide range of interested stakeholders between September 2007 and January 2008. The consultations produced numerous comments and opinions, all of which were made publicly available on a dedicated external website. Following these consultations, the Bank revised the methodology to reflect the comments received and submitted a formal paper, Use of Country Systems in Bank-Supported Operations: Proposed Piloting Program (R2008-0036/3) to the Board for consideration and approval to proceed with a pilot program. The Board approved the pilot program in April 2008. Some of the key elements of the pilot program are summarized below: · Identify up to 12 countries representing all six operational Regions of the Bank to participate in the pilot program. · Identify suitable projects or sectors in each pilot country based on the criteria defined in the methodology. 4 · Ensure that countries participating in the pilot program, as well as those not selected as pilots, benefit from a coordinated capacity development program to address issues noted in the system during the assessment process. · Organize an International Technical Advisory Group (ITAG) to advise the Bank during the implementation of the pilot program and provide a voice for the various stakeholders that have an interest in procurement under Bank-supported operations. · Conduct equivalency assessments of practices used in potential pilot countries against the policies of the Bank, including review of the standard documents used for procurement in the countries using the Bank's harmonized master procurement documents as the standard for equivalency. · Simplify the treatment of the selection of consultants by allowing pilot countries to use their own procedures for the selection of consultants below defined thresholds (without conducting an equivalence assessment) as long as the procedures are fair, transparent, and acceptable to the Bank. · Ensure transparency in the pilots by requiring each selected project to implement a publicly and easily accessible electronic system to publicize opportunities and awards along with other key procurement information. · Require all pilot countries to continue to use United Nations Development Business (UNDB) to publicize procurement opportunities whenever it is determined that there will be international interest (to be based on the procurement plan for each project included in the pilot program). · Require a program of performance monitoring at the project level and annual reporting. In addition, the Bank will monitor and report to the Board against a set of predefined indicators for each of the pilots. 8. Implementing the Use of Country Systems. Board approval was received in April 2008. By the end of FY08, several candidate countries were identified by Regions and implementation of the assessment methodology was initiated. Funds were not made available in FY08; however, the FY09 budget provided extra funds to support implementation and this money has been distributed to each country nominated by the Regions as potential pilots to support the implementation of the methodology. Most of the implementation activities have been undertaken in FY09, Table 3 provides the detailed status of the implementation process. 5 Table 3. Status of UCS Implementation (through Dec. 2008) Region Country Action/Status Timing AFR Senegal (i) Funds transferred Oct 08 (ii) OECD assessment validation Jan 09 AFR Rwanda (i) Funds transferred (ii) OECD assessment update 1st QTR 09 (Feb 09) AFR Ghana (i) Funds transferred (ii) OECD assessment update 2nd QTR 09 AFR Burkina Faso (i) Substituted for Tanzania Nov. 08 (ii) OECD assessment 2nd QTR 09 (Apr 09) EAP Philippines (i) OECD assessment validation TBD EAP Mongolia (i) OECD assessment update 2nd QTR 09 EAP Laos (i) OECD assessment 2nd QTR 09 EAP Vietnam (under consideration) (i) OECD assessment TBD ECA Turkey (i) Funds transferred (ii) OECD assessment validation Under finalization (iii) Equivalence under way Initiated ­ Nov 08 ECA Macedonia (i) Funds transferred Nov. 08 (ii) OECD Assessment update 1st QTR 09 LCR Brazil (i) Funds transferred Oct. 08 (ii) OECD Assessment draft Nov. 08 forwarded LCR Panama (i) Funds transferred Oct 08 (ii) Assessment underway Oct 08 LCR Colombia (i) Funds transferred Oct 08 (ii) Assessment underway Oct 08 MNA Morocco (i) Funds transferred Nov 08 (ii) OECD Assessment update Nov 08 MNA Jordan (i) Funds transferred Nov 08 SAR India Sector (Power Grid) Under consideration TBD SAR India-State (Andhra Pradesh) Under consideration TBD SAR Bhutan Under consideration TBD SAR Pakistan-Provide (Punjab) Under consideration TBD 9. Procurement Reform. Capacity development activities are undertaken at the country level based on the particular needs of each country and their interest in addressing procurement reform initiatives. Much of the work is financed through small grants, but in some cases specific projects have been designed to support procurement reform or to support broader public sector governance reforms that include procurement components. The contribution of a well-performing procurement system to country governance and public sector management continues to be recognized. As a result, more funds are being made available to finance procurement reform components in projects or to develop and implement stand-alone procurement reform projects. As noted previously, the expanded emphasis on the use of country systems has focused more attention on capacity development activities in the area of procurement. Continued growth in Bank contributions and other donor participation in support of procurement reform initiatives is anticipated. Box 1 provides details on some reform initiatives that are under way. 6 Box 1. Procurement Reform and Capacity Building · Afghanistan. Under the ongoing Capacity Building and Reform program, procurement performance is being monitored by the Procurement Policy Unit through an e-MIS. A procurement training system has been institutionalized for capacity building of central as well as sub-central-level public officials. Under the program, the country has also prepared the country Public Procurement Law and Regulations; however, substantial efforts are needed to make the law of international standard. · Africa Region. The Region continues to be involved in national procurement reforms in over 36 countries. A systematic monitoring of progress is conducted by the AFR team using its Observatory tool which also served as a model for the OECD/DAC benchmarking tool. · Bangladesh. After completing legislative and institutional reform, the Government is now focusing, with Bank's TA through a second reform project, in monitoring the performance of the system in key sectors. Concurrently, the country is continuing the extensive capacity development program, under the second project, after developing a critical mass of 25 national trainers combined with over 1900 staff trained in the first phase. · Brazil. The Bank has been monitoring the performance of the Minas Gerais State procurement system since 2004. A diagnostic study was conducted by the Bank to address underperformance revealed by certain indicators, which highlighted a need to reengineer the State's piecemeal budget process. As a result, the client will consolidate demand for goods and services and carry out fewer bids as a way to improve efficiency. · Bhutan. Public Procurement Policy Division (PPD) under Ministry of Finance has been established and is functioning. The PPD is in the process of releasing SBD for Civil Work contracts. The PPD is also in the process of hiring a consulting firm to implement capacity building in procurement reform. · Nepal. The Public Procurement Monitoring Office (PPMO) was established in late 2007 to ensure effective implementation of the new public procurement law. Procurement performance monitoring benchmarks were established to monitor reforms. · Palestinian Authority. The PA adopted a three-year reform and development plan envisioning a process of reforms to control expenditures. Substantial effort is still needed to complete the procurement reform due to changes in government that have delayed the ratification and enactment of new laws and regulations for procurement. The current government has reaffirmed its commitment to move forward on needed reforms. · Peru. A study of the efficiency of procurement systems in the Vaso de Leche program, including supply chain management and distribution utilized by municipalities, identified (i) priority problems in the process chain of the program's administration, (ii) examples of good practices, (iii) concrete recommendations for feasible reforms, and (iv) potential savings from 15 percent to 41 percent. · Sri Lanka. While there was a significant setback in taking the reform agenda forward, with the disbanding of the National Procurement Agency, Sri Lanka has developed a good set of procurement guidelines and standardized documents under the FY05/FY08 IDF-supported program. The guidelines are followed consistently, at the central and decentralized levels. 10. Institutional Development Fund (IDF). The IDF is a $25 million annual grant facility designed to provide initial funding for capacity development activities in a number of key focus areas, such as procurement, financial management, and governance. It is one of the few funding resources available to procurement staff to design procurement reform activities in support of client countries. The allocation of IDF resources is made by Regional committees based on review and selection of proposals received from staff. Specified criteria for selection include financing of upstream, action- oriented capacity development activities related to the Country Assistance Strategy 7 (CAS). In FY08, five grants were awarded for procurement activities (see Table 4), while efforts supported by IDF grants were under way in several countries (see Box 2 for examples). Table 4. IDF Grants for Procurement Capacity Development Initiatives Region Country Project AFR Nigeria Ekiti Procurement Reform Initiative Strengthening the Capacity of the Procurement Service in Implementing the EAP Philippines Philippine Government Electronic Procurement System LCR Haiti Institutional Strengthening for Donor Project Implementation LCR Columbia Procurement Law Reform SAR Nepal Procurement Technical Assistance Project Box 2. IDF Grants Currently Supporting Procurement Capacity Development · Brazil. An IDF grant is supporting the implementation of a management information system for civil works contracts in the state of Minas Gerais. · Caribbean Region. An IDF grant is supporting the governments of the sub-region to implement key recommendations of the FY07 OECS Policy Note on Project Fiduciary Management - to develop and sustain the institutional capacity in financial management, procurement, and project management. The effort will enable the countries to implement capital projects in support of their development agendas. · China. The Procurement Training Program in China, established under an IDF grant from the Bank, was completed successfully. Five Chinese universities formed a training network; to ensure the sustainability of the training program after its completion, the network continued to provide procurement training to project officers, tendering companies, and government agencies. Three to four workshops are offered per year. · Djibouti. An IDF grant facilitated the update of the existing Procurement Code and dialogue between authorities and consultants on achieving best practice outcomes. · Pakistan. An IDF grant is supporting procurement reform in North-West Frontier Province ­ to modify the Procurement Law and Regulations and to institutionalize a procurement training system. · Nepal. An IDF grant facilitates strengthening institutional capacity of the Public Procurement Monitoring Office. · Nigeria (Ekiti Procurement Reform Initiative). The Grant's objective is to strengthen the capacity of the Ekiti State Due Process office to institute procurement processes and practices that promote accountability and efficient use of public resources. · Tonga. An IDF grant was issued to the Government of Tonga to support drafting a new procurement law. 11. Governance and Anticorruption. Capacity development and reform of institutions at the country level that effectively and systematically address GAC issues are key components of the GAC Implementation Plan. Many such activities are specifically addressing procurement capacity development and reform. One area that is recognized as contributing to better governance and greater transparency to mitigate risk of corruption in the procurement area is the introduction of e-procurement. Box 3 8 provides country-level examples on how e-procurement reform is supporting GAC implementation. Box 3. E-Government Procurement (e-GP) Initiatives Contributing to GAC · In AFR, public procurement websites have been established in Burkina Faso, Cameroon, Côte d'Ivoire, Ghana, Kenya, Malawi, Rwanda, Senegal, Sierra Leone, South Africa, Tanzania, Uganda, Madagascar, Mozambique, Nigeria, and Zambia. Websites in Cape Verde, Niger, and Benin are under preparation. These websites greatly increase transparency and provide information that enables a wide range of stakeholders to contribute to the monitoring of government procurement. · In EAP, the Bank has been providing financial support and technical expertise to countries interested in developing e-GP systems. In Indonesia, a major study helped identify and resolve challenges to establishing a sound system; this effort included a roadmap, setting roles and responsibilities, and establishing interoperability and core data standards. In the Philippines, an e-GP pilot demonstrated remarkable improvements in the transparency of the bidding process, leading to an 800 percent increase in the number of participants. · In ECA, the Region will use Governance Partnership Facility (GPF) funding made available through GAC to assist Albania and Moldova to develop their e-GP strategy. · In LCR, all of the Bank's clients have implemented forms of e-GP that range from information systems to fully transactional systems. The Bank is working to strengthen the use and the transparency of these systems, to increase their benefit to improved governance. · In SAR, the Bank has been working to strengthen the use and transparency of the procurement process with e-GP. Public procurement websites have been established in Afghanistan, many states of India and in some central line ministries, Bangladesh, Pakistan, and Sri Lanka. In Bangladesh, e-GP is a major component of a second reform project, where the existing procurement management information system is being upgraded to fully developed e-GP. In Afghanistan, bidders can download bidding documents from online procurement portal. In Nepal, an e-mail based bidding was piloted under one Road Sector Project to address the issue of collusion among bidders. 12. Electronic Government Procurement. The Procurement Sector continues to promote the use of electronic means in the area of public procurement as part of the Bank's work in the area of procurement reform and as a contribution to the GAC agenda as noted above. There is an e-GP core team formed from staff in the Regions, the Procurement Anchor, and the Global Information and Communication Technologies (GICT) department that raises awareness and provides support to countries. III. POLICY, TOOLS, AND INSTITUTIONAL INITIATIVES 13. The development of new policy and the maintenance and update of existing policy continues to be a core function for the Procurement Anchor. Initiatives that are introduced at the institutional level must be reflected in applicable policy. Examples of recent institutional initiatives affecting procurement policy include implementation of the governance and anti-corruption policy (GAC); Sanctions Reform; use of country systems; rapid response to emergencies; and greater engagement with the private sector through private-public partnerships. Increasingly, system-based tools are being designed and introduced to support implementation of policy and monitoring of compliance. This 9 section will cover some of the new or revised policies introduced in FY08 and the system-based tools developed to support and improve implementation. 14. OP/BP 11.00. Major updates were initiated to Operational Policy/Bank Procedure (OP/BP) 11.00 ­ Procurement, which had not been fully updated since 2002. The revised policy documents will be completed and introduced in FY09. Updates will include: · Coverage of new initiatives · More comprehensive coverage in general by incorporating subjects currently covered by guidance notes · Revised thresholds for a range of procurement responsibilities and actions · Clarified decision matrix, including a clarification of roles and responsibilities · Policy framework for use of country systems pilot program · Guidance for staff on handling of allegations of fraud and corruption in procurement · Incorporation of recommendations from the IDA14 Control Review. 15. Output-Based Aid (OBA). The Procurement Policy and Services Group (OPCPR) participated with staff from the Finance, Economics and Urban Development (FEU) sector to prepare a guidance note on Procurement Issues in Structuring Output- Based Aid (OBA) Operations Financed by the Bank, which was issued in April 2008. This is an example of Procurement Anchor staff working closely with other sectors and groups to ensure that procurement policy is properly reflected in specialized types of operations. In the case of OBA, procurement considerations included: · Whether the service provider is an incumbent or will be selected competitively. · Determining the amount of the agreed subsidy payment to the service provider; this is handled differently depending on whether there is a competitive selection or an incumbent. · The subsidy payment, once fixed, does not change regardless of the costs to the service provider. A fixed subsidy payment acts as an incentive to the service provider to use efficient procurement methods for its own needs to keep costs as low as possible. 16. Procurement Tools and Initiatives. During the fiscal year, OPCPR continued to improve several of its quality control initiatives implemented during the last fiscal year, in line with ongoing simplification efforts. The Anchor also focused on completing ongoing system development programs to ensure timely release in line with its new e- learning initiatives. Below is a summary of the work OPCPR conducted in this area during FY08. · Procurement Complaints System. OPCPR continued to enhance the Procurement Complaints System during the fiscal year as it addressed new requirements for developing a more comprehensive fiduciary tool for reporting and analyzing complaint-related information. The system's management and reporting 10 functionality was enhanced by developing (a) an alert system to direct users to seek Regional Procurement Manager (RPM) clearance before closing complaint cases, and (b) reports for analyzing late payments and distribution of complaints across prior-review and post-review categories. The Procurement Sector Board has approved a series of new features that will be developed during FY09, including (a) updating pick lists with new attributes (e.g., "nature of complaint" and "resolution of complaint"), (b) an alert feature for pending complaint cases, and (c) automated case management reports for RPMs. · Dynamic risk model application. A prototype of this tool was developed in early 2004, presented at the March 2004 Fiduciary Forum, and piloted in 2005/06. In early FY08, the decision was made to integrate the tool into the Operations Portal. The Procurement Sector Board accepted the final design of the risk model in September 2008. Detailed business requirements were developed by the Information Solutions Group (ISG) in late 2008. This tool is expected to be available online in April 2009 and will be mandated for use during FY10. More details about this tool are included in paragraph 17 below. · Post-review module. Following the completion of the module during the last fiscal year, OPCPR has launched the post-review module in the Operations Portal and deployed a six-month pilot program in LCR and EAP. The purpose of the pilot, which ended in December 2008, was to test the application and gather feedback from end-users about its functionality, ease of use, and value added to project teams. The module provides projects with a central repository for post- review reports and gathers recommendations and risk ratings that can be fed manually into project supervision reports for follow-up. · Simplification of Form-384. Continuing its efforts to simplify the processing of procurement information, OPCPR completed the new Form-384 module online; ISG has also completed the system requirements and is in the process of coding the application. The system will be ready for release in May 2009 in the Operations Portal and will provide end-users with the ability to enter procurement contract award information in one simple website. The process also integrates the anti-money laundering (AML) system into the Form-384 workflow and strengthens the AML check system by allowing end-users to create procurement contracts only if the AML check is negative. · Anti-money laundering/combating the financing of terrorism (AML/CFT) functionality in the Operations Portal. With the Form-384 module ready for release, the AML/CFT control will become a fully integrated application in the Operations Portal and will further streamline procurement processes. During FY07, the AML/CFT functionality had been deployed as a backdoor system end- users could not see or use; rather, the AML/CFT check would occur as a background function and alert end-users if the results of a supplier check were positive. With the new Form-384 module ready for release, the related AML/CFT system will be used as a stand-alone product that provides teams with a simple query mechanism to check suppliers awarded prior review contracts as well as 11 contracts subject to post-review or contracts executed by the Bank. System deployment will also be in May 2009, together with the Form-384 module in Operations Portal. · Development of e-learning software. During FY07, OPCPR focused on developing e-learning software for the release of its new applications in the Operations Portal. Its scheduled release date is January 2009; the Procurement Anchor has already begun work on scripting and recording training programs for the procurement publications and contract award modules in Clients Connection and the Post-Review, Form-384, and AML/CFT systems in the Operations Portal. The e-learning systems will provide staff in country offices with opportunities to learn how to operate the new systems and to receive 384 Certification through an online program that automatically updates the Learning Management System. The e-learning initiative will also streamline capacity building among staff and provide an efficient method of delivery of procurement courses to country offices. 17. The Dynamic Risk Model. The model's dual purposes are to build borrowers' capacity by helping them identify ways to improve project management and implementation, and to enable Bank procurement staff and management to design procurement and supervision arrangements and allocate resources by focusing effort on activities and projects with greater procurement risk. Its primary objective is to assess and track in real time the fiduciary aspects and procurement risk of the lending portfolio and of borrower capacity. An initial baseline risk assessment is updated through the life of each project based on project-related findings from supervision and post review and country-related analytic work. The model aggregates risk factors into specific categories, including (a) inherent risks, relating primarily to country capacity and business environment and project design and complexity; and (b) control risks, relating to project implementing agencies' internal control structure, policies, and procedures. The system is used to (a) identify and record changes in project risk; (b) provide a template for the Project Appraisal Document (PAD) and the risk assessment; (c) identify required supervision activities, including the identified risk mitigation measures; (d) identify areas of satisfactory and unsatisfactory performance; (e) report on progress with risk mitigation; and (f) support the implementation status and results report (ISR) performance rating. As noted above, the system has been piloted and will be introduced in FY09/10. It will be used in particular with those projects identified under the Use of Country Systems piloting program, as was committed in the approved methodology for the pilots. 18. New Procurement Documents. All policy changes that affect implementation of procurement in the contracting process must be reflected in the standard and sample documents provided by the Bank to support procurement under Bank-financed projects. In FY08, new documents were posted as follows: · Procurement of Plant Design, Supply and Installation ­ April 2008 · Procurement of Works ­ Smaller Contract ­ April 2008 · Procurement Issues in Structuring Output-Based Aid (OBA) Operations - April 2008. 12 IV. FIDUCIARY OVERSIGHT AND COMPLIANCE 19. An important responsibility of the Procurement Anchor is to maintain oversight with regard to the performance of the Regions. This responsibility is undertaken by obtaining performance data from each Region on a range of activities. The reporting on activities is supported by a team made up of staff from each Region. The Procurement Anchor collects the data and conducts a review of the data for overall quality, completeness, and consistency. Currently, semi-annual reporting is provided to the Chief Procurement Policy Officer (CPPO) and the Regional Procurement Managers. When the information indicates inconsistencies or quality issues, it is discussed at the Sector Board or with a particular RPM if the issue appears to be Regionally based. Multiregional issues noted in the data will often result in a discussion as to whether there is a need to update policy or provide specific training for staff to improve performance. The following information covers the key data tracked by the Procurement Anchor and the actions taken with regard to analysis and use of the information. 20. Lending Portfolio. In FY08, 298 new operations (99 IBRD and 199 IDA) with a total commitment of $24.7 billion were approved. Of these operations, 253 were investment lending operations and 45 were development policy lending operations. There was a slight increase from 1,599 active operations in FY07 to 1,617 operations in FY08. The distribution of FY08 lending by Regions and the lending portfolio by leading borrowers are depicted in Figure A1 and Table A1, respectively, in Annex A. 21. Procurement Decentralization. The level of decentralization of procurement authority to staff located in country offices remained stable in FY08 (see Table 5), with modest increases noted in Africa (AFR), East Asia and Pacific (EAP), and South Asia (SAR) and reductions in Europe and Central Asia (ECA) and Middle East and North Africa (MNA). Levels in Latin America and the Caribbean (LCR) remained unchanged. The level of decentralization of authority for projects under implementation in FY08 is at a Bankwide average of 76 percent, which confirms the prediction that the consistent level of decentralization will remain at around 75 percent. Although the authority for these projects is with staff in the country offices, certain approvals and clearances, based primarily on monetary thresholds, are required to be handled by the Regional Procurement Manager and team or the Operations Procurement Review Committee (OPRC). Staffing issues associated with decentralization relating to mobility, career development, and costs exist. These issues are not unique to the Procurement Sector and have been under consideration by the Bank's Human Resources group to establish Bankwide policies that will facilitate decentralization and staff mobility. Section VI covers additional detail on how the sector is managing its staffing issues. 13 Table 5. Procurement Decentralization Trends, FY06­08 Decentralization AFR EAP ECA LCR MNA SAR Bank- wide FY05 Decentralization % 85 85 51 65 34 99 72 Investment Projects in Portfolio 371 246 324 291 118 167 1,517 Delegated to COs 317 210 165 190 40 165 1,087 FY06 Decentralization % 92 87 56 65 56 98 77 Investment Projects in Portfolio 416 268 326 291 113 187 1601 Delegated to COs 384 232 184 190 63 183 1,236 FY07 Decentralization % 89 94 62 55 57 98 76 Investment Projects in Portfolio 394 228 327 281 102 171 1503 Delegated to COs 350 214 204 155 58 168 1,149 FY08 Decentralization % 90 95 61 55 41 100 76 Investment Projects in Portfolio 411 235 313 286 98 182 1525 Delegated to COs 370 224 190 158 40 182 1164 22. Prior Review Contract Award Data. The Bank collects data on all contracts that have been subject to prior review using the Form-384 database, and it provides this data online for interested stakeholders, both internal and external to the Bank. This information enables a review of awarded contracts by country, Region, and sector as well as by contract type (goods, works, and consulting services). This database only captures prior-reviewed contracts and it therefore provides a limited view of the number, type, and value of contracts financed under Bank-supported investment operations. Figure 1 presents trends on value and number of contracts subject to prior review for FY04-08. 23. Prior Reviews. In FY08, 4,598 contracts were subject to prior review by Bank staff. This represents a substantial decrease (26 percent) from the 6,251 contracts subject to prior reviewed in FY07. Prior-reviewed contracts by value increased by 6.5 percent, from $7.7 billion in FY07 to $8.2 billion in FY08. The average value of individual contracts subject to prior review increased 45 percent, from $1.23 million in FY07 to $1.78 million in FY08. This data is used by management to track the overall trends in prior review. The Bank's current strategy is to take a risk-based approach in terms of allocation of staff time for review and oversight of procurement under Bank-financed projects. Focusing staff attention on high value contracts is consistent with this approach and is reflected in the prior-review data. 14 Figure 1. Trend of Procurement Prior Review Contracts by Number and Value of Contracts Trend of Procurement Prior Review Contracts by Contract Amount and Number (FY04 - FY08) Number of US$ Million Contract 10,000 10,000 8,000 8,000 6,000 6,000 4,000 4,000 Fiscal Year 2004 2005 2006 2007 2008 Amount (US$ M) 8,481 8,964 7,478 7,655 8,178 Number 8,301 8,145 6,757 6,251 4,598 24. Prior Review as a Percentage of Disbursement. The value of contracts reviewed as a percentage of the Bank's disbursement remained consistent with that of FY07, at an average of 42 percent. Figure 2 shows FY08 data by Region of prior review of contracts in relation to disbursements. (The data facilitates informed decisionmaking by managers as to whether the percentage level is considered sufficient for fiduciary oversight.) Variations among Regions relate both to the capacity of countries in the Region and to the types of projects under implementation in the Regions. For example, disbursements under development policy lending do not involve prior review, and disbursement under projects involving community-driven development components or highly decentralized procurement of low value goods, works, and services involves limited, if any, prior review. As noted in the chart below, the ratio of prior review to disbursement levels is particularly low in three regions, AFR, MNA, and SAR. Follow- up with these Regions confirms that the ratios are consistent with the types of projects that are in the Regions' portfolios. 15 Figure 2. FY08 Prior Review Contract Value and Disbursement FY08 Prior Review Contract Value and Project Disbursement Amount (US$M) 20,000 15,000 n illio M 10,000 $SU 5,000 0 Bank- AFR EAP ECA LCR MNA SAR Region wide Disbursed amount 4,927 3,499 3,215 3,353 1,098 3,468 19,560 Prior review contract value 1,089 2,968 1,570 1,710 276 565 8,178 % reviewed contract value / 22% 85% 45% 53% 25% 17% 42% disbursed amount 25. Leading Suppliers. Table 6 depicts the top 10 supplier countries for FY06-08 and provides the percentage of the Bank's portfolio represented by contracts awarded to these countries. China continued to lead this list. Among the top 10 supplier countries, China, Brazil, India, Vietnam and Indonesia also led the list of top 10 Bank borrowers during the reporting period. The percentage of contracts awarded to the top supplier countries increased 12 percent in FY08 compared to FY07. This trend underscores the success of firms from borrowing countries in competing effectively for Bank-financed contracts and demonstrates that there is a continued opportunity for qualified firms in borrowing country to win contracts under large infrastructure-type projects. Additional data drawn from the Form-384 database is provided in Annex A Table 6. Top 10 Supplier Countries by Major Bank-Financed Contract Amount Rank \ FY 2006 2007 2008 1 China China China 2 India Germany Brazil 3 Brazil India Russia 4 Russia Italy India 5 France United Kingdom Italy 6 Germany Argentina Argentina 7 Denmark Russia Spain 8 UN Agencies* Turkey Vietnam 9 Pakistan Indonesia Indonesia 10 Turkey France France % of Total Portfolio 54 55 67 Note: "UN Agencies" is a grouping of United Nations (UN) agencies that receive supply contracts, which primarily cover vaccines and other drugs and orders from the Inter-Agency Procurement Service Organization (IAPSO) catalogue. 16 26. Operations Procurement Review Committee. The Operations Procurement Review Committee (OPRC) continues to play a key oversight role with regard to procurement by reviewing and clearing the highest value and most complex contracts financed under Bank-supported operations.1 During FY08, OPRC reviewed 141 cases (a 2 percent increase from FY07), with a combined value over $10 billion (a 14 percent increase from FY07). The number of high-value contracts began increasing in FY05, with the Bank's renewed financing of large infrastructure projects. The overall average contract/case value increased $7 million over that of FY07. Figure 3 shows the numbers of cases reviewed by the OPRC since FY02. This information is used to establish new thresholds for OPRC reviews that will be included in the policy updates issued in FY09. The new thresholds will be adjusted for inflation (since the current monetary thresholds have not been adjusted since 1992) and will be rationalized on a risk-based approach to capture an appropriate level of contracts in various categories of procurement. The OPRC has always been available for review of complex cases regardless of value at the request of the RPM. Figure 3. Trend of OPRC Review by Number of Contracts, FY02­08 Trend of OPRC Review Cases (FY02-FY08) 160 140 141 138 essaCfo 120 100 89 erb 80 74 muN 60 58 40 52 52 20 0 FY02 FY03 FY04 FY05 FY06 FY07 FY08 27. Procurement Post Review. During FY08, procurement post reviews (PPRs) were conducted on 695 projects, representing 92 percent of the projects subject to post review. The review coverage increased 14 percent over that of FY07. PPR has been an integral part of Regional procurement staff work and has a significant impact on client capacity building through follow-up work with clients to address issues noted. Indications of misprocurement under Bank-supported operations are usually found during PPRs. It should be noted that the percentage of projects subject to post review has increased 39 percent from FY03 to FY08. The rise in post review is consistent with the 1 This includes (a) contracts for procurement of goods, works, and nonconsulting services costing $25 million or more; (b) consulting services contracts costing $10 million or more; and (c) single-source consulting service contracts costing $5 million or more. Other cases may be considered at the request of the RPMs. 17 decrease in prior review of contracts. Both are monitored to maintain the overall balance needed to meet fiduciary oversight responsibilities. During FY08, a Detailed Implementation Review (DIR) was conducted on several health sector projects in India. The DIR noted a number of deficiencies in the handling of supervision and post review that confirmed findings noted during Quality Assurance Group (QAG) reviews and Internal Audit Department (IAD) audits. Box 4 summarizes some of the actions taken as a result of the DIR and other reviews; these efforts are intended to help ensure that increased reliance on post review does not result in reduced quality of fiduciary oversight. Table 7 shows the FY08 post-review figures by Region. Box 4. Action Plan to improve Post Review and Supervision The Detailed Implementation Review (DIR) of several health projects in India confirmed other issues concerning the quality and adequacy of procurement post review and supervision work. A Procurement Action Plan was developed to address the noted vulnerabilities. The action plan included the following: · Enhancing fiduciary instruments and processes in procurement, including post review, improved identification of fraud and corruption, and improved monitoring of complaints. · Enhancing procurement staffing and capacity and providing training to other sector staff on procurement. · In SAR, restructuring the procurement function to streamline procedures for review, delegating supervision of CO staff to a Lead Procurement Specialist, and increasing collaboration among the procurement team and other sector and country office teams. Table 7. Procurement Post Reviews Conducted in FY08 by Regions Item\Region AFR EAP ECA LCR MNA SAR Bankwide Number of projects subject to 187 113 136 160 50 108 754 post review a Number of projects post 141 105 131 160 50 108 695 reviewed b Percentage of projects post 75 93 96 100 100 100 92% reviewed a. All investment projects (IBRD/IDA) in FY08 portfolio, excluding projects requiring 100% Bank prior review and projects with insufficient contracts for post reviews. b. Data include projects under independent procurement reviews. 28. Procurement Post Review on Recipient-executed Trust Funds. In addition to conducting fiduciary compliance monitoring and review on IBRD and IDA lending projects through PPRs, substantial efforts have also been undertaken to review recipient- executed trust funds (RETFs), which also require oversight by the Bank. There currently is no comprehensive tracking system in the Bank for the trust funds. To collect information on RETFs, OPCPR worked with the Regions and consulted related units and 18 offices in the Bank. Table 8 presents the information collected through this process. Although this data is recognized as still being incomplete, it provides some indication of the potential workload presented by PPRs of RETFs. This information is being analyzed by OPCS Procurement/Financial Management (PR/FM) to contribute to the development of policy on procurement and financial management support to trust funds. New policy will be issued in FY09. Table 8. PPR of RETFs Initial Data on Procurement Post Review of Recipient-Executed Trust Funds (FY08) Items Item\Region AFR EAP MNA Total 1 # Projects in portfolio1 197 378 72 647 2 # Projects with contracts 100% subject to prior review 0 26 10 36 3 # Projects with insufficient contracts for post review2 105 125 45 275 4 # Projects subject to post review3 92 227 17 336 5 # Projects post reviewed 4 20 47 15 82 6 Percentage of projects post reviewed5 24 21 88 44 7 # contracts reviewed 112 3,035 166 3,313 8 Total value of reviewed contracts (US$ million equivalent) 94 78 7 179 1. Total number of trust fund projects in portfolio in FY08. 2. Includes project that are new or nearing completion. 3. Total of item 2 and 3 subtracted from item 1. 4. Data includes projects under independent procurement review. 5. Ratio between the numbers in item 5 and item 4. 29. Independent Procurement Review (IPR). During FY08, IPRs were conducted in 16 countries,2 covered 41 projects, and entailed the review of 807 contracts. The number of IPRs remained about the same as that in FY07, but the number of countries increased by six. IPR findings help identify generic issues in the portfolio, provide guidance to task teams on implementation arrangements and risk mitigation measures, and provide feedback to their respective counterparts in implementing agencies. Independent procurement reviews are contracted by the Regions using funds made available for that purpose. There is no requirement to conduct such reviews, which are seen as a complement to procurement post review. During the IDA14 control review,3 management noted that IPRs add value to the Bank's control framework and recommended that consistent financing be made available to conduct IPRs following a risk-based approach. The recommendations arising from IDA14 control review are being implemented over time. Those having financial implications, such as increased use of 2 These included Argentina, Brazil, Colombia, Croatia, Georgia, Guinea-Bissau, India, Lesotho, Paraguay, and South Africa. 3 The IDA14 control review was initiated in FY06 and is continuing in a phased approach. This review is examining financial management and procurement controls, including adherence to controls, procedures, and guidance. 19 IPRs, may not be implemented until the FY09 budget year or later. (More information on the IDA14 control review is provided in paragraph 34.) 30. Misprocurement. The number of contracts and value of declared misprocurement varies widely from year to year and are a function of many factors, including the performance and level of experience of implementing agencies under the many projects supported by the Bank, frequency and extent of post reviews, and the completion of specialized reviews such as IPRs or DIRs that supplement procurement post reviews. Based on information maintained by RPM offices, there were 42 contracts under 10 projects in eight countries where misprocurement was declared in FY08. The total value of the 42 contracts was just under $9 million. PPRs remain the main source for the identification of misprocurement. Some misprocurement was discovered as a result of complaints received from bidders and consultants. (Detailed data on misprocurement declared in FY08 are shown in Table 9, and additional comparative data on misprocurement declared in FY06-FY08 is included in Annex A.) Although data are maintained on misprocurement declared each fiscal year, no particular trends have been noted other than that the figures vary from year to year. Table 9. Misprocurement Declared in FY08 Contract Value If related to Region Country No. of Fraud and Contract (USD How Identified equivalent) Corruption (yes/no) AFR Ethiopia 5 224,180 Post review Yes Vietnam 1 566,863 Prior review No EAP China 6 860,232 Post review Yes Honduras 25 728,698 Post review Yes LCR Grenada 1 1,072,626 complaint No MNA West Bank and Gaza 2 3,655,804 Prior-review and supervision No Bangladesh 1 54,920 Prior-review (during review of bid evaluation) Yes SAR No Afghanistan 1 1,800,000 Prior-review 31. Complaints. A Bankwide Complaints Database was rolled out in FY06. Since then there have been frequent enhancements added to the Complaints Database to improve the capture of data and the ability to analyze the basis for complaints and to track the timely resolution of complaints. During FY08, 332 complaints were registered, involving 183 projects in 60 borrower countries. (Table 10 provides information on the number of complaints received and handled in implementation of Bank-financed projects over the past five years.) The number of complaints in a Region varies from year to year and the data is monitored to enable each Region to determine if the number of complaints indicates a need for corrective action or training. SAR has consistently registered the most complaints. Follow-up with the Region indicates that it is common practice in the countries in the Region to register complaints and not unique to procurement under Bank- financed projects. 20 Table 10. Comparison of Numbers of Complaints, FY04-08 FY AFR EAP ECA LCR MNA SAR Total 04 56 53 66 9 20 256 460 05 38 22 32 7 36 148 283 06 76 87 69 31 30 95 388 07 52 71 89 19 22 93 346 08 50 51 97 9 19 106 332 32. Complaint Trends. The nature of complaints submitted in FY08 showed only moderate changes in comparison to FY07. "Qualification of other firms," "Application of evaluation criteria," and "Allegation of fraud and corruption" are the most common concerns. (Figure 4 provides information on the most frequent basis for complaints submitted in FY08, and Annex A provides additional data drawn from the Complaints Database.) Figure 4. Major Nature of Complaints in FY08 Allegation of Payment fraud and Combined 7% Technical corruption financial and Application of evaluation 8% technical rating evaluation 6% 5% criteria 11% Own qualification issue Other 5% 12% Technical Specifications Quality of 5% Qualification of bidding other firm document/RFP 22% 4% 33. Payment Issues. Over the past few years, interest has grown on the issue of timely payment for contracts awarded under Bank-supported operations. A new facility added to the Complaints Database in FY06 now enables the Bank to monitor and report on the handling of complaints and disputes regarding payment under contracts. (Annex A provides detailed information on FY08 payment issues as captured by the Complaints Database.) 34. Responsiveness to Clients. In FY06 the Procurement Sector began tracking performance data with regard to response times of procurement staff to clients, tracked against the Bank standard response time (seven days) on procurement-related documents. This information is used by Regional Management Teams to oversee quality and ensure that procurement staff are providing timely service to our borrowers and to the task teams 21 they serve within the Bank. Information was incomplete in FY06 as several Regions had yet to develop monitoring systems. In FY07 and FY08, all six Regions completed development of monitoring systems and reported on their performance in this area. Table 11 shows a consistently quick response time across all Regions, with the Bankwide average being two days. Table 11. Procurement Business Response Time Indicators (FY08) Procurement Business Response Time Indicators (FY08) Region Average response time Percent of Meeting (Day) Standard Service Time AFR 2.2 93 EAP 3.4 92 ECA 1.6 95 LCR 3.5 92 MNA 1.4 98 SAR 1.6 94 Bankwide average 2 94 35. Quality Assurance Group (QAG). QAG normally conducts annual quality assurance reviews on the quality at entry for Bank projects and the quality of supervision of Bank projects. Procurement is examined as part of both reviews and has consistently scored in the high 90th percentile for satisfactory or above quality. Issues were raised once again in FY08 when the quality of supervision QAG review resulted in 100 percent satisfactory or better ratings for handling of procurement. These results were not consistent with other findings, including Internal Auditing Department (IAD), Integrity Vice Presidency (INT), and Independent Evaluation Group (IEG) reviews. As a result, in FY08 the Procurement Anchor worked with QAG to develop a new assessment process that would combine aspects of quality at entry and quality of supervision, including reviewing factors that are consider to contribute to fraud and corruption. The new assessment is a quality of implementation assessment, which was initiated in early FY09. Although the results of this new assessment will not be known for some months, it is anticipated that the new method will yield a better identification of where issues related to quality of procurement under Bank-financed projects remain. During FY08, QAG was the subject of an IAD audit, which confirmed the need revise some of the traditional methods used by QAG and to move the focus from implementing current policy to determining if current policy is helping to achieve quality results under Bank-financed projects. 36. Managing Risk in Investment Lending (MRIL). The Procurement Anchor continued to support the review of high-risk projects identified through a Regionally managed MRIL process that is used to identify risk based on a range of factors. OPCS conducts reviews on those projects that are in the highest risk category before they are taken to the Board. The Procurement Anchor provides a similar review function for processing of projects as emergency operations under OP 8.0 Rapid Response to Crisis and Emergencies, including review of some of the specialized programs that are handled on an emergency basis, such as Avian Flu. These reviews are intended to both add value 22 from a quality perspective, and to ensure compliance with a range of policies in the procurement area, including meeting conditions for processing a project under OP 8.0. V. HARMONIZATION AND PARTNERSHIPS 37. The Procurement Sector has long provided leadership in the area of harmonization and partnerships with external organizations. Early work was initiated under the Heads of Procurement of the multilateral development banks, which started meeting as a group in the 1990s. Even earlier, the Procurement Sector recognized the need to reach out to the private sector and obtain their input in the process of setting the policies and procedures for procurement under Bank-financed projects. The commitment to harmonization and partnerships has grown over the years, with the Bank taking leadership in harmonizing tools and policies with a range of organizations that now include bilateral donors that participate with the Bank through the OECD/DAC Joint Venture for Procurement and UN organizations that engage with the Bank through a variety of modalities. Frequent dialogue with private sector organizations on a range of procurement issues is facilitated by the many formal and informal meetings held each year. 38. Heads of Procurement. The Heads of Procurement (HoP) from the MDBs meet as a group every nine months. There are various working groups under the HoP that also meet on a regular basis to prepare the documents that are agreed as part of the HoP's harmonization work program. The following summarizes the FY08 activities of the HoP. · The Master Procurement Documents (MPDs) for Procurement of Small Works and for Procurement of Plant Design, Supply and Installation were approved by the HoP and posted for use by the participating organizations at the beginning of FY08. · Cross-harmonization of MPDs for Goods, Works, Small Works and Plants was completed, resulting in commonality in style, format, and language for specific sections (e.g., the instruction to bidders) of the Master Procurement Documents for all the four types of procurement. The cross-harmonized MPD was approved by the HoP at their June 2008 meeting. This cross- harmonization brought consistency to the various harmonized documents produced by differing working groups over a period of several years. In FY09, each participating MDB will issue a new series of standard bidding documents based on the new cross-harmonized MPDs. · In line with the priorities of the HoP, a new working group was created to develop guidance material on procurement of Private-Public Partnership (PPP) options. Collaborative work within the World Bank Group in FY08 resulted in a note defining options from the Bank perspective. This work will enable a unified Word Bank Group position to be presented to the HoP working group on PPP in March 2009. 23 · The Bank's Procurement Anchor chaired the MDB e-GP Working Group, which continued development of a harmonized IT Standard Bidding Document to be made available to client countries as an interactive web-based application. This document and web-based application will be introduced in FY09. 39. OECD-DAC Joint Venture. Following the Paris Declaration issued in March 2005, the Organisation for Economic Co-Operation and Development-Development Assistance Committee (OECD) Working Party on Aid Effectiveness oversaw the creation of several joint ventures that brought together donor and client country participants in technical areas covered under the Paris Declaration. The Joint Venture for Procurement was created to support donor coordinated and harmonized work in the area of procurement reform at the country level. Membership in the joint venture (JV) includes bilateral donors, UN organizations, client country representatives, the European Commission (EC), and the MDBs. The World Bank has traditional held one of the co- chair positions in recognition of the leadership role it plays with regard to setting international good practices in the area of procurement and its ongoing commitment to procurement capacity development activities in client countries. 40. Joint Venture Pilots. The JV piloting program (actively supported by the World Bank) was initiated in FY07 and reached one of its milestones at the end of FY08. The countries participating in the pilot were able to contribute to the 2008 Monitoring Report that tracks progress in achieving the targets set by the Paris Declaration. The application of the OECD/DAC benchmarking tool introduced in July 2006 enabled countries to establish a baseline of procurement information, which provided the first such data included in a monitoring report. This baseline information will facilitate tracking progress in subsequent reporting exercises. To capture lessons learned and share experiences among the pilot countries and with the membership of the JV for Procurement, the JV commissioned a study that was published in 2008, Compendium of Country Examples and Lessons Learned from Applying the Methodology for Assessment of National Procurement Systems. The World Bank and the Inter-American Development Bank worked closely with the consultant hired to research and prepare the study. As the information contained in the publication was somewhat preliminary in nature, given the duration of the pilots at the point the study was undertaken, the JV decided that this will be an evolving publication that will continue to be updated as experience grows. The JV pilots are planned to continue at least through 2010 and will contribute to a second round of reporting. 41. Procurement Workshops. Following the announcement of the JV for Procurement pilots, a series of "kick-off" workshops sponsored by the JV, the Bank, and other donors was held to provide each pilot country with training on applying the benchmarking tool, validating results, and developing a strategy to address weaknesses identified in the system. These workshops proved their value in supporting the JV for Procurement pilots and furthering the interest of participating organizations and countries in working together to support procurement reform. Many countries not participating as JV pilots requested workshops to develop a better understanding of the OECD/DAC benchmarking and performance monitoring tools and to benefit from a structured 24 approach to developing a capacity development strategy for procurement reform. Among the non-pilot countries attending these workshops were Panama, Colombia, Yemen, Rwanda, and Botswana. The workshops are open to any country in the Region wishing to participate. The regional MDBs and the World Bank have provided financial support to countries that are not JV pilot countries to enable their participation. 42. JV for Procurement Meeting. The third meeting of the Joint Venture for Procurement was held in Arusha, Tanzania in May 2008. This meeting brought together pilot countries and donors in advance of the September 2008 HLF III meeting in Accra, Ghana, to share experiences under the pilots and discuss the contributions and reporting that would be made to the HLF III. A key outcome of the third meeting of the JV for Procurement was "The Arusha Declaration," which provided the JV with the opportunity to obtain commitment around a consensus agreement as to continued support for the work of procurement capacity development. The following are some of the key commitments from the Declaration: · continue to work collaboratively within a growing, welcoming membership structure as equal members of an international forum focused on learning and sharing best procurement practices; · in collaboration with others, develop and test strategies and tools to combat fraud and corruption related to public procurement; · continue to learn, discuss, and understand better the issues and challenges involved in the use of country procurement systems and fostering of alignment; and · move toward a coordinated approach to assess and strengthen country systems so as to promote good governance and ownership in the public sector. 43. Environmentally and Socially Responsible Procurement (ESRP). OPCPR, representing OPCS, teamed with the Sustainable Development Network (SDN), Human Development Network, Social Protection (HDNSP), and the Legal Department in examining how the Bank could approach the issue of disability, accessibility, and Universal Design (UD) in Bank-financed projects and whether the introduction of UD to Bank-financed projects required changes to Bank policies. Following extensive consultation among these offices, a discussion held at the June 2008 HoP meeting, and a technical briefing to the Board on disability, the following conclusions were agreed: · Since the introduction of UD to Bank-financed projects is primarily a matter of project design and technical specifications, and indirectly, a procurement one, there is no need to propose a new safeguard or to amend the procurement and the selection of consultant guidelines. · In the absence of generally accepted international standards on UD, mainstreaming UD in Bank operations could be easily achieved with a clear policy that all Bank-financed design-build projects and new construction of transportation infrastructure, HD infrastructure (such as schools and 25 hospitals), relevant pedestrian environment or equipment to be used by transport users (in particular in mass transit), should be made accessible. For this purpose, all terms of reference (ToRs) for consultant assignments dealing with design and preparation of related technical specifications should include consideration of UD/accessibility objectives in the scope of works; this approach that would not require any significant change in procurement or contracting practices and would not add significantly to costs. · At the international level, UD could be mainstreamed in phases. The HoP of the MDBs have agreed to include in the user's guide of the harmonized Request for Proposal (RFP) document, guidance on drafting ToRs for design consultants, and in the user's guide of the harmonized Master Procurement Documents (MPDs) for Procurement of Works and of Goods, guidance on preparing technical specifications. Each MDB would also consult internally with sector colleagues and develop a checklist of standards and technical specifications for promoting UD in infrastructure, transport. and HD projects. (The Bank's transport sector has already drafted a transport strategy designed to frame accessibility issues in developing countries, and it has developed a set of guidelines for rapid transit systems.) In addition, the recently created HoP Environmentally and Socially Responsible Procurement (ESRP) working group will review in FY09 the MPDs for goods and works to assess whether there is a need to include contractual clauses on contractors' and suppliers' responsibility with regard to UD. 44. Core Labor Standards. At the June 2008 meeting, the MDBs' HoP agreed that the two core labor standards addressing workers organizations and nondiscrimination and equal opportunity, introduced solely by the Bank in the particular conditions of its Standard Bidding Document (SBD) for Procurement of Works, would be added to the two core labor standards (CLS) prohibiting forced or compulsory labor and harmful child labor already included in the harmonized general conditions of contract that form part of the Master Procurement Document for Works. The text of the two new CLS that will be introduced into the harmonized general conditions is identical to that utilized in the International Finance Corporation (IFC)'s similar standards. The HoP also agreed to modify the language of the two CLS already in the harmonized general conditions to make it consistent with that of the IFC's similar standards. These modifications, which require agreement with the International Federation of Consulting Engineers (FIDIC), owner of the copyrights on the harmonized general conditions of contract, are to be discussed with FIDIC in FY09. 45. Private Sector Associations. The Bank has maintained close working relationships with many private sector associations that represent the business community providing goods, works, and services under Bank-supported projects. These associations meet regularly with the World Bank; increasingly, such meetings involve other MDBs. In the past, the Bank has sought comments from industry groups on proposed changes to its guidelines and has often relied on industry good practice in developing SBDs for use under Bank-financed projects. This work with the associations has contributed to the 26 harmonization agenda by expanding discussions to key stakeholders involved in procurement and issues surrounding procurement, such as ethics, quality control, and environmentally responsible procurement. In FY08, the Bank and other MDBs met with the Confederation of International Consulting Associations (CICA) to follow up on topics (including integrity, use of country systems in procurement, and updates/changes proposed to SBDs), and participated in Washington in a workshop on integrity and sustainability in procurement sponsored by FIDIC and hosted jointly by the Bank and the Inter-American Development Bank. 46. Collaboration with Integrity Department. A report issued in FY08 referred to as the Volker Report, contained recommendations on ways to improve the Bank's handling of fraud and corruption and its Sanctions Process. One recommendation involved having the Integrity Department improve it collaboration and cooperation with other units within the Bank, including with the Procurement Sector. As a result, the Procurement Anchor named one lead specialist as a focal person to work with INT and develop an memorandum of understanding (MOU) as to how the sector could work more closely with INT both to provide them with a greater understanding of procurement and to benefit from the specific knowledge and lessons learned by INT as they work on investigating fraud and corruption. This work began in FY 08 with a joint one-day retreat involving senior procurement staff from across the Bank and senior staff from the various units in INT. An MOU was prepared and signed by OPCS and INT. As a result, cooperative work is ongoing to develop a protocol for handling of suspected fraud and corruption cases and to develop communications tools that will expose staff to some of the indicators of fraud and corruption, called "red flags," that need to be acted upon when they are found in Bank-financed projects. VI. STAFFING AND CAPACITY DEVELOPMENT 47. Although the number of staff remained broadly stable in FY08, the sector, along with the institution, examined ways to better serve growing demands and maintain a high level of quality. Decentralization, long an issue in the Procurement Sector, has become a Bankwide issue. In FY08, the sector focused primarily on delivering a successful Fiduciary Forum to address capacity development and on developing a strategic and prioritized Knowledge and Learning (K&L) Strategy to build stronger procurement skills in specialist and nonspecialized staff. 48. Staffing Resources. Staffing resources for the Procurement Sector increased in FY08 by two additional staff, to a total of 209 staff. Table 12 depicts the distribution of procurement staff by Region. Table 12. FY08 Procurement Staffing by Region/Unit Region AFR EAP ECA LCR MNA SAR OPC Bankwide Number of Staff 53 38 37 26 14 30 11 209 27 49. Table 13 shows the percentage of staff that are local appointments versus international appointments. The primary movement of staff among Regions continues to be on the basis of competitive selection, generally involving promotion. This will change under new HR policies that will begin implementation in FY09. Table 13. FY08 Procurement Staffing by Grade and Station Grade / Station CO Appt HQ Appt Total CO % GD 11 11 22 50 GE 23 15 38 61 GF 50 8 58 86 GG 24 46 70 34 GH 3 17 20 15 GI 0 1 1 0 Total 111 98 209 53 50. Staffing Concerns. Although the overall number of staff has remained stable, the numbers have not kept pace with the increased workload demands on staff in the sector. The Procurement Sector Board holds regular meetings of its HR Sub-Committee chaired by the OPCS Operations Services Department (OS) Director. During meetings in FY08 the Sector worked on the following issues: · identification of pipeline of high potential staff · organizing voluntary rotation of staff to comply with Bankwide guidelines on length of stay in units offered in advance of the mandatory rotation scheduled in FY09 · overcoming difficulties in attracting staff from outside of sector and from outside the Bank · addressing capacity building and training to develop a broader set of skills for staff. 51. Rotational Assignments. The issue of rotating staff is now being addressed as part of a Bankwide exercise that was initiated in late FY08 and is continuing in FY09. The first stage of this institutional exercise has focused only on nonmanagerial GH level staff. In preparation for the rotation, promotions and hiring at the H-level were frozen. Many of the issues that affect procurement staff who are highly decentralized are now seen as institutional issues and are being addressed by HR on an institutional basis. These include questions of pay, benefits, and relocation of families, along with incentives for staff to move to country offices and to serve in difficult countries. 52. Procurement Specialist Staff Development. Development of procurement staff capacity remains an activity largely undertaken on the job and through the oversight of the Regional Procurement Management Teams. Training is delivered when procurement staff are gathered for activities such as Regional retreats or when the RPM or his/her staff travel to country offices. In addition, most of the Regions are using a form of "hub" management that places a number of country offices under the responsibility of an internationally hired senior or lead procurement staff. These hub coordinators are 28 responsible for overseeing the quality and performance of the staff in their hub and they use their frequent visits to country offices to provide guidance and procurement training to staff. In several Regions where the time difference allows, videoconferences are arranged on a regular basis to provide staff an opportunity to share experiences with their colleagues, to become informed on key messages from Management, and to discuss issues of common interest. To enhance staff capacity development, most Regions augment their training programs by providing local hire country office staff with an opportunity to work at Bank headquarters for developmental assignments of varying lengths. During such assignments, staff also have the opportunity to attend training courses that are generally not available in the country offices. 53. Fiduciary Forum. Every two years the Procurement Sector joins with the Financial Management Sector to host a major staff capacity development event called the Fiduciary Forum. This event was held in March 2008 and involved over 400 staff from offices around the world. The Forum provides an opportunity to deal with issues that staff raise to management and for management to discuss new initiatives with staff. The FY08 event focused as well on providing staff with the opportunity to share experiences with their colleagues. Key issues discussed at the Forum included the use of country systems, issues surrounding handling of fraud and corruption, and the increasing importance of fiduciary staff working together to improve the design and implementation of projects. Over 30 training activities open to staff on a self-selection basis complemented various joint and sector-specific sessions that were organized. As in the past, guests were invited from other MDBs and from organizations that frequently work with the Bank fiduciary staff. Other training events were scheduled before and after the week of the Fiduciary Forum to provide staff from country offices with additional training opportunities. 54. A New Knowledge and Learning Strategy. In FY08, the Procurement Sector Board considered a new and comprehensive proposed K&L Strategy. The strategy looked at the various needs arising from different staff in the Bank as well as client country staff working on Bank-financed projects. The Sector Board agreed that the strategy was comprehensive but felt that it did not adequately prioritize development of K&L activities and did not reflect funding available for training. As a result, the strategy was revised to advance several activities as priority actions. These include: · Complete redesign of the existing procurement core curriculum courses to take advantage of new online training techniques that will ease maintenance of the materials and lower cost of delivery. A key element of the redesign is making the training courses more accessible to decentralized staff. The new design effort was initiated in FY09, with new courses planned for introduction in late FY09. · Greater focus on training for procurement specialized staff that draws on the knowledge and skills of staff involved in the formulation of policies. These courses will be accompanied by workshops and clinics and maximize the use of real case studies drawn, in particular, from the cases presented to the OPRC. 29 · Create a method of certification for task team leaders (TTLs) that will ensure they have achieved a level of understanding of procurement needed to carry out their responsibilities. 55. Procurement Training for Non-specialist Staff. The traditional core curriculum training courses introduced in 2001 were updated in FY08. However, it was recognized that these courses required a complete overhaul and were costly to deliver as they relied wholly on classroom delivery. As a result, a decision was made to end delivery at the end of FY08 and use the resources available in FY09 to focus on redesign according to the priorities agreed for the K&L strategy. Procurement Anchor staff remain available to provide procurement input to other Bank operational training and have participated in delivering training on the procurement of specialized goods and services, procurement under OBA projects, and procurement in private-public partnerships. 56. Outreach Program. During FY08, the anchor continued its outreach program, meeting the high demand from the private sector industry for knowledge of Bank's procurement policies and procedures, through procurement presentations to delegations from both part one and part two countries.4 The focuses of the presentations were the Bank's lending operations, procurement guidelines, and business opportunities under Bank-financed projects. Anchor staff further took part in giving lectures in various learning institutes on public procurement and e-procurement. The new K&L strategy tries to address the issue of limited staff time for these types of activities by giving priority to the more high-impact events (e.g., FIDIC and BIMILACI conferences) and by engaging more Regional staff in these activities, subject to their availability. VII. JOINT PROCUREMENT/FINANCIAL MANAGEMENT FRAMEWORK STRATEGY AND PROCUREMENT SECTOR INITIATIVES 57. The Procurement Sector Board and the Financial Management Sector Board meet jointly under the chair of the Director for Operations Services, who oversees the Anchors for both sectors. This enables issues of common interest to both sectors to be discussed and consensus reached on a joint approach or solution to the issues. During FY08, much work was undertaken on developing a joint strategy for the two sectors that would identify the common framework that guides them as well as the individual elements of focus for each sector. This structure recognizes that while both Procurement and Financial Management share common objectives on fiduciary and development activities, their contributions and focus may be different. The joint strategy is currently scheduled for promulgation in FY09. 58. Procurement Sector Initiatives. The following provides information on progress during FY08 on the new initiatives that were identified in the FY07 Annual Report, and identifies additional initiatives that have emerged. 4 2008 Africa Business Forum, Canada, Korea; Scotland; France; Netherlands; El Salvador; Nicaragua; and Italy. 30 · Consulting Services. The Bank reviewed its Procurement and Consultant Guidelines to ascertain whether they (a) foster the required results/outcomes; (b) address the needs of client countries with varying levels of capacity in terms of developing their own country systems; (c) are relevant in the globalized world characterized by regional and multilateral procurement rules, such as those of the EU and Government Procurement Agreement (GPA); (d) appropriately reflect technological (e.g., e-GP and the use of electronic framework agreements for procurement consultancy services); (e) are relevant to new methods of purchasing and financing, such as the use of framework agreements or private-public partnerships; and (f) take adequate account of issues such as integrity, corruption, terrorism, and money laundering. · UN Agencies and Trust Fund Agreements. A Fiduciary Principles Accord (FPA), an umbrella agreement between the Bank and the UN applicable to trust funds under OP 8.0, Rapid Response to Crisis and Emergencies, was concluded in October 2008. A template was also agreed that can be used when UNICEF is hired by borrowers to provide health goods and related services. This template is based on a waiver that will expire in August 2009. Meanwhile, OPCS is conducting similar discussions with other UN agencies that support Bank- financed projects so as to conclude agreements that will facilitate working with UN agencies involved in Bank-supported operations. · Framework Agreements. A Bankwide working group drawn from staff from the Regions and led by the Procurement Anchor is working on framework agreements. The use of such agreements continues to grow. The Bank is taking a broad look at usage, especially in the context of e-GP, as well as looking at specific sectors such as health and education, where framework agreements are already proving to be useful to simplification and efficiency of procurement. 59. Memorandum of Understanding (MOU) with INT. An MOU was signed with INT following a joint retreat in FY08 that brought together procurement and INT staff. As a result of this MOU, several initiatives are under way and will be introduced in FY09. These include: · Joint training to enable sharing of lessons and indicators of corruption in procurement found during INT investigations. · Development of communication mechanisms that will provide staff with "just-in- time" information when they are designing projects, reviewing documents, or supervising projects. A manual and a website are under development. · Joint preparation of "red flags" that will bring together procurement knowledge with the findings of INT during investigations. · Contributions to the Dynamic Risk model to ensure consistency with INT tools. · A joint protocol that will establish roles and responsibilities and timeline guidance for handling of suspected fraud and corruption in operations. 31 · Joint training events on red flags, new tools, and handling of complaints related to fraud and corruption 60. Sanctions Reform and Anticorruption Guidelines. In FY06, the Bank introduced a package of reform measures that updated the procedures followed by the Bank when fraud and corruption under Bank-financed operations has been discovered. Sanctions reform resulted in broadening the definitions of fraud and corruption, expanding the scope beyond procurement, and introducing a new set of Anticorruption Guidelines. During the course of implementation since, some issues have arisen. In FY08, these issues were categorized and prioritized so as to be addressed by several working groups created late in FY08. OPCS, INT, Office of Evaluation and Suspension (OES), and LEG are taking the lead on this initiative and coordinating with other organizations that are part of the World Bank Group to ensure consistency. The issues include: · How to reduce the processing time for the sanctions process without negatively impacting due process. · How to provide staff and borrowers with information on firms/individuals under investigation that is timely and accurate without compromising investigations or compromising policies. · How can the Bank recognize debarment by other organizations or act on public admissions of fraud and corruption by firms/individuals. · What additional policy changes are needed to facilitate better implementation of Sanctions Reforms and the Anticorruption Guidelines. 61. Harmonization Initiatives. As noted under the section on harmonization, the Bank continues to provide leadership on a number of initiatives through the HoP and its working groups and through its involvement with the OECD/DAC Joint Venture for Procurement. It is recognized as well that there are significant contributions the Procurement Sector can make to meeting the commitments under the Accra Action Agenda (AAA). Briefly a few of the planned initiatives include: · Environmental and Socially Responsible Procurement: The HoP working group will address a number of procurement enhancements in this area, including expansion of core labor standards and ways to address integrity, diversity, and accessibility. · Selection of Consultants: The HoP working group is preparing a harmonized Request for Proposal. · Private-Public Partnerships (PPP): Preparation of common guidance for the handling of procurement when international financial institutions (IFIs) are involved in financing of PPPs. 32 · Use of Country Systems: Continuing the implementation of the Bank's UCS piloting program and providing lessons learned and capacity-building support to a growing group of countries. 62. Rollout of Policy and Tools. The Procurement Sector has designed new tools to support quality and improve implementation of operations, including a new post- review template and the dynamic risk model. These tools are being introduced in FY09, initially on a limited basis, and will require a full roll-out including training for staff in all Regions. In addition, the new OP/BP 11.00 will be introduced in FY09 and will require a communications and roll-out strategy to introduce the new policy to the Regions. Substantial involvement is anticipated in the planned IL Reform initiative, which may include introducing new procurement policy or updating existing policies to accommodate changes in the handling of procurement under investment lending. VIII. REGIONAL SUMMARIES 63. This section contains the Regional summaries. Major thematic areas covered include procurement reform, governance and anticorruption, harmonization and simplification, e-government procurement, independent procurement reviews and post- review activities, country-related analytic work, and capacity development. The structure of the Regional summaries is arranged by themes and covers prominent examples of procurement work executed during the fiscal year. A. AFR 64. The Africa Region portfolio consists of approximately 400 projects and 400 Trust Funds in 47 countries. The Region's involvement spans projects in all sectors in all countries. With a significant increase in the Africa portfolio from the previous fiscal year, the RPM office has cleared over 200 contract awards totaling $2 billion. 65. Procurement Readiness in Projects. In FY08, Africa Region Procurement Unit (AFTPC) paid increased attention to procurement implementation readiness, with a focus on assisting teams in moving the projects forward to implementation. The focus was triggered by the IDA lending surge in Africa. To this end, AFTPC conducted an assessment of procurement implementation readiness in 43 projects; results showed that eight projects (23 percent) had major delays, 11 projects (31 percent) had significant delays, and 16 projects (46 percent) had no significant delays. AFTPC advised the Task Team Leaders to take appropriate and timely actions to improve overall readiness. 66. Response Time and Service Standards. The Africa Regional Procurement Manager's (RPM) office has taken measures to improve the Region's response time when handling major high value procurement issues. These include development and implementation of: · An automated procurement tracking and reporting system to automate internal document review and distribution and to assess response times throughout the procurement cycle. 33 · An integrated e-mail account that routes Regional procurement correspondence through the RPM office to monitor response lags and to prevent potential bottlenecks by optimizing the allocation of resources. · RPM submission forms to capture key issues and recommendations of task teams requesting procurement support from the RPM office. · Web-based no-objection templates that task teams can download and use to prepare no-objections for any type of procurement and at any stage in the procurement cycle. 67. National Procurement Reforms. The Region continues to be involved in national procurement reforms in over 36 countries. Action plans are usually derived from ESW, such as CPARs or Public Expenditure Management and Financial Accountability Reviews (PEMFARs), and are supported by specific IDF grants or project components. Procurement reforms are systematically reflected in CASs, poverty reduction support credits (PRSCs), and policy papers; this allows for some visibility and support to procurement reforms. The RPM office gives special attention to providing guidance on policy papers submitted to the regional operations committee (ROC) meetings, and inputs are appreciated by Country Economists and Country Directors. A systematic monitoring of progress accomplished by these reforms is conducted by the AFR procurement team, using the "observatory" tool introduced in 2001 by the Region. The tool serves as a model for developing the OECD-DAC base-line indicators. 68. Use of Country Systems. Senegal, Rwanda, and Ghana have expressed interest in participating in the pilot program for the use of country procurement systems. The Bank has also identified Burkina Faso as a potential candidate. Assessments will be conducted during FY09 to determine which countries will be part of the pilot. 69. Experience with the Rapid Response Policy (OP/BP 8.0). AFR has applied OP 8.0 in at least six emergency operations and three post-conflict operations (e.g., DRC, Sudan, Sierra Leone, Central African Republic (CAR), and Côte d'Ivoire) with simplified and flexible procurement procedures and use of UN agencies, and/or fiduciary/procurement agents. The RPM Office is providing guidance to ensure consistency of responses to emergencies and post-conflict conditions, and procurement specialists have been trained to provide adequate advice and rapid responses. The Region has also designated a focal point for rapid response to procurement-related matters, to ensure adequate managerial attention to such projects. In addition, capacity has been built by AFTPC to strengthen the presence of procurement staff in this area. 70. Food Crisis and Fast Track Operations. In response to the food crisis generated by the spike in commodity prices, the Global Food Crisis Response Program (GFRP) has approved $83 million. In the fourth quarter of FY08, grant money for 10 African countries and $120 million has been approved through restructuring of ongoing IDA programs. The procurement team has been involved in the preparation of projects in 17 countries. 34 71. Education for All­Fast Track Initiative (EFA-FTI). Africa has the largest number of FTI countries (e.g., Mali, Mauritania, Mozambique, Sierra Leone, Sao Tome Principe, Senegal, Madagascar, Malawi, Uganda, Zambia, Gambia, and Burkina Faso). This initiative entails a coordinated effort with all the donors. Pooled funds and harmonization of procurement procedures were introduced to accelerate project implementation. The Region has also (a) established a trust fund to finance procurement consultants to assist with the preparation of EFA-FTI projects, and (b) the RPM office is involved in discussions with governments and donors to review issues associated with "pooled funds" procurement and fiduciary safeguards in implementing the education plans of participating countries. 72. Cooperation and Harmonization: AFTPC­AfDB. The Region met with the African Development Bank (AfDB) to take stock of progress made in implementing joint procurement activities. Agreements reached on areas of cooperation and main achievements to date are summarized below: · Building Internal Procurement Capacity in AfDB/ORPU. It was agreed that the Bank will continuously share its experience in decentralization to enable AfDB to succeed in its process of decentralizing the procurement function to the field offices. · Establishing a Common Approach to Fiduciary Oversight in Projects Financed by Both Banks. For projects financed by both banks, AfDB agreed to adopt the World Bank's Guidelines for (a) Procurement and for Use of Consultants, (b) Procurement Capacity Assessment of project implementing agencies (PIAs) for projects or sectors, and (c) Rapid Response to Crises and Emergencies (procurement portion only). · Streamlining the Banks' Support. Both banks agreed to prepare jointly a set of common training materials and carry out workshops in regional member countries. The World Bank agreed to share (a) the new CPAR Guidelines, including the concept of the OECD/DAC baseline indicators and the list of planned ESW (e.g., CPAR, PEMFAR, CIFA) and (b) all of the information of the Observatory for Procurement Reforms in AFR. Both institutions will eventually work with one common observatory on procurement reforms in sub-Saharan Africa. 73. Capacity Building. During FY08, the Region conducted 43 procurement workshops and clinics in 22 countries. A total of 1,523 participants from various disciplines attended. Topics covered included health and HIV/AIDS, infrastructure, human development, and agriculture. An array of workshops on the different aspects of procurement was also conducted. B. EAP 74. The procurement function in EAP is carried out mainly in decentralized country offices. About 93 percent of PS/PAS are organized into six different Procurement Hubs: 35 Beijing, Hanoi, Jakarta, Manila, Phnom Penh, and Sydney. Each hub is overseen by an internationally recruited Procurement Hub Leader. 75. Public Procurement Reform. Substantial public procurement reform activities were carried out throughout FY08, as highlighted below: · Through DPL support, Indonesia established a National Public Procurement Office, an independent regulatory body responsible for the development of procurement strategies, policies, and regulations governing the procurement of publicly funded goods, works, and services. · The Bank also supported the Government of China in revising the country's Model Bidding Documents for Works and Goods under the national competitive bidding (NCB) procedures. · The Bank followed up with the government of Mongolia on the OECD-DAC assessment exercise. Mongolia is also discussing with the Bank the possibility of including the country in the UCS pilot program. · An IDF grant was issued to the Government of Tonga to support drafting a new procurement law, while the Bank assisted the government in revising existing national procurement guidelines and developing a set of new procurement guidelines for goods, works, and consultancy services. In Lao PDR, the Ministry of Finance approved the new Standard Bidding Documents. · In Cambodia, following the INT investigations that led to the declaration of 43 incidences of misprocurement and to the suspension of three Bank- financed projects, the entire procurement under the Bank-financed projects has been outsourced to an Independent Procurement Agent (IPA). The dialogue with the Government and progress on procurement reform activities slowed during the year. The development and implementation of a national procurement capacity-building program is the immediate priority; this has been agreed in principle with the Government and is expected to start in FY09. · In Thailand, the Bank has provided substantial comments on a new draft Procurement Decree, which is now under review by the Office of State Council . In addition, agency performance indicators are being developed. · In Vietnam, the Bank continues to (a) support the efforts of the government to improve its public procurement framework and (b) assist with the updating of the CPAR and completion of the assessment of the public procurement framework in accordance with the OECD/DAC baseline indicator system methodology. 76. e-Government Procurement (e-GP). The Bank has been provided financial support and technical expertise to EAP countries interested in development of e-GP, including: 36 · Indonesia. The Bank financed a study to assess the efforts of the government in the development of e-Government procurement. The study found that major challenges to establishing a sound e-GP system include (a) development of a roadmap; (b) setting the roles and responsibilities of different stakeholders; (c) ensuring minimum inter-operability; and (d) setting core data standards for the various e-GP providers to comply with. · China. A national e-GP development strategy has been formulated and a regulatory framework has been established for the implementation of e-GP in phases through piloting in selected provinces and eventual scaling up to nationwide coverage. The e-GP platform has been developed incorporating the latest technology, and it will enable over 90 percent of procurement activities to be conducted online. The platform will eventually be linked to the government's financial management information system. · Mongolia. The government is working with KOIKA, a South Korean agency, in developing its e-GP system, following the outcome of a feasibility study conducted in November 2007. The study provided a strategic plan to develop and implement a national e-GP system. · Manila. An e-GP pilot was conducted by six implementing agencies and has showed remarkable improvements in the transparency of the bidding process. For example: the number of users (suppliers and contractors) increased by more than 800 percent and the publication of electronic notices has increased by 4000 percent. The Bank approved an IDF grant to develop the system further (Phases 2-5), including enhancing its capacity for virtual storage, e- payment, and e-bidding. With some modifications now in place, the system is considered acceptable for use under NCB in projects financed by the ADB and World Bank. 77. Governance and Anticorruption. The Bank continues to promote measures to reduce the fiduciary risks facing the Bank's portfolio in EAP countries through increased attention to procurement-related governance issues; many such measures have been incorporated into project design and supervision. In addition, more emphasis has been given to building demand-side accountability in Vietnam and innovative anticorruption measures were included into the Philippines Second National Roads Improvement Management Project. A Generic Internal Audit Manual, with a focus on procurement auditing, was completed in June 2008 in the Philippines. 78. Harmonization and Simplification. Activities in this area include the following. · In the Beijing Hub, the Bank has been maintaining a regular dialogue with the ADB procurement team to identify common procurement issues affecting project implementation in China and to seek a harmonized approach to resolving these issues. 37 · In the Sydney Hub, the Bank involved bilateral and multilateral donors in several procurement reform initiatives (e.g., drafting new procurement legislation in Tonga, development of new Procurement Guidelines in Samoa, and notable procurement reform programs in Timor-Leste). This will help in harmonization of procurement policies, procedures, and preparation of standard procurement documents. · In the Hanoi Hub, the Bank continued to provide leading support to the efforts for harmonizing donor-government procurement procedures and system. The Bank also played a key role in the development of the joint strategic action plan. · The Government of Philippines issued harmonized and simplified Local Government Units Procurement Manuals in early 2008. Harmonized bidding documents and procurement manuals are being used in the Bank-financed projects. C. ECA 79. The ECA procurement team continues to provide a wide range of fiduciary services to support task teams, lead or provide inputs into analytic and diagnostic sector work, and deliver extensive training to borrowers. The work is largely based on cross- cutting themes of governance and anticorruption, capacity building, use of the country systems, and regional donor harmonization and cooperation. The RPM office is organized around four main pillars: (a) sector and diagnostic work, fiduciary assessments, and capacity building and use of country systems, (b) fiduciary function oversight and quality control and quality assurance, (c) GAC, training and outreach, and (d) administration and management of about 40 procurement staff and consultants. 80. Use of Country Systems and Capacity Building. The Region has made significant progress in the area of use of country systems. · In Albania, standard bidding documents for NCB civil works were harmonized (between the Bank and the national standard documents). · In Croatia, the Bank assisted the Ministry of Education to refine the NCB (open tender) documents for the use in the education sector program. · Diagnostic and sector work conducted in fiscal year 2008 included an Integrative Fiduciary Assessment of the health sector in Turkey, a CPAR update in Azerbaijan, a Kyrgyz Education IFA, and Macedonia and Belarus inputs to the Public Expenditure and Financial Accountability (PEFA). · Following Board approval to start piloting the use of country systems in procurement, two ECA countries, Turkey and Macedonia, have been identified for the pilot. The first step of conducting the OECD/DAC benchmarking exercise in Turkey has been completed and the final report is planned for delivery in FY09. 38 81. Electronic Government Procurement (e-GP). The Bank supported e-GP initiatives in Azerbaijan, Armenia, and Georgia, mainly through IDF grants. The Region will seek to develop a strategy in FY09 to scale up support, focusing on C-GAC countries (Albania and Moldova) and taking advantage of Governance Partnership Facility (GPF) funding, for which both countries plan to apply in the next fiscal year. 82. Training, Outreach, and Capacity Building. The ECA procurement team completed 62 training activities for approximately 2,000 participants in FY08. In FY09, one of the strategic priorities and challenges will be to define a more systematic approach developed for each country to scale up best practices in ECA and Bankwide in borrowers' capacity building. The internal challenge is the experience and skills mix of ECA procurement staff to support the strategy. Retooling and an aggressive training program for procurement staff has been planned for FY09. 83. Initiatives to Improve Quality of Fiduciary Work. The RPM office participates in a weekly review of upstream products and discussion of Risk Identification Worksheets (RIW) to provide guidance to the task teams, including on corruption risks and mitigation measures. A retired ECA RPM has been retained as a consultant to mentor field-based staff in reviewing procurement documents and dealing with complicated complaints cases. ECA's new RPM has developed a quality control monitoring plan to be rolled out in FY09. 84. Independent Procurement Reviews and Procurement Post Reviews. One IPR under the Turkey portfolio was completed, covering six projects and 122 contracts and focused on identification of red flags and improving transparency in procurement processes. Findings and recommendations pointed to the need for a series of improvements, including better filing procedures, improved data links between procurement plan and contract amendments, and a reduction of time lags between the evaluation and approval of award and between award notification and contract signing. Post reviews on all active projects under supervision continued to be monitored by the RPM office. In FY08, 95 percent of active projects were covered by PPRs or IPRs, during which about 1,100 contracts were reviewed. 85. Innovative Approaches to Portfolio Supervision. A few innovative approaches to portfolio supervision were tested during FY08, including: · A forensic review in the Macedonia Education project to verify allegations of corruption made by a consulting firm. The outcome resulted in a dismissal of earlier allegations and proof of insufficient work by the consulting firm. The Bank team that conducted the review went beyond the review of the files carried out by the consulting firm and conducted site-based interviews with participants of procurement process. · A specialized Croatia portfolio review was carried out to look at IT procurement practices in different projects. Findings were used in a training workshop on IT procurement for the implementing agencies. 39 · A country portfolio fiduciary review was conducted in Tajikistan to take a comprehensive look at the lending and project portfolio. The task was led by procurement unit of the Europe and Central Asia Operations Policy and Services (ECSPS) and included financial management, disbursement, and technical (engineering) specialists. · A corruption vulnerability scan was carried out in Moldova to access vulnerability of the Bank-financed portfolio by examining the environment in which the projects are being implemented and exposed to the corruption risk "outside of the protective ring" of Bank guidelines and procedures. 86. Governance and Anticorruption. The Region has set up a GAC Steering Committee with representatives from each sector and country unit to ensure that GAC issues are covered in their respective areas. The Region's procurement team actively contributed to (a) the Steering Committee learning sub-committee in developing the Region's GAC learning strategy, (b) design of the GAC101 training program, and (c) leading the development of fiduciary training for TTLs (for delivery in FY09). D. LCR 87. In LCR, client countries increasingly focus on government procurement as a key instrument to promote economic and social development, sound public expenditure management, and transparency in the public sector. To support implementation of these priorities, the Region has worked on providing assistance to clients in comprehensive reform efforts and discreet interventions, while maintaining an active policy dialogue on integration of procurement into the public financial management agenda. 88. Harmonization. The objectives of the partnership initiatives between the World Bank and the Inter-American Development Bank (IDB) included (a) strengthening collaboration between the institutions and increasing the impact of development initiatives, and (b) supporting the development of the national procurement systems and developing procurement capacity in client countries. Results of these initiatives include an agreement to implement the Procurement Plan Execution System (SEPA) in number of client countries for both institutions and preparation of joint CPARs and other assessment tools as well as peer-reviewing of OECD/DAC procurement indicators assessments. 89. Innovation. The Regional procurement team continued to implement innovative approaches intended to measure the effectiveness of client public procurement systems. This work included an assessment of the purchasing and contracting strategy in government procurement and a cost/benefit analysis of streamlining of systems to improve efficiency (e.g., Vaso de Leche program, and procurement of school books). This assessment identifies opportunities for achieving better efficiencies and economies of scale and provides recommendations vis-à-vis the current enabling regulatory framework and implementation instruments/methodologies. In FY08, these studies were carried out in two sectors in Peru. 90. E-Government Procurement. All of the Bank's Latin American clients have implemented e-procurement, ranging from systems that only publish procurement 40 information to systems that are fully transactional. The Region is assisting client countries in further strengthening the use and the transparency of these systems. 91. Implementing the Governance and Anti-Corruption Agenda. The Region continues to implement the GAC agenda through an integrated approach that includes a comprehensive portfolio risk management strategy, assistance to countries in strengthening national systems within broader public sector strategies, and capacity building for both client staff (through training) and Bank teams (through Regional procurement training, innovation fairs, dissemination of the "Corruption Warning Signs," and a good practice note and operational toolkit on corruption red flags in procurement and financial management). On the operational side, a joint financial management and procurement team has been working on in-depth reviews of projects with increased fiduciary risk. These reviews provide better understanding of issues and identify mitigating actions to reduce risks while improving results on the ground. For projects with specific fiduciary risks, the team has developed fiduciary action plans (e.g., Honduras Rural Competitiveness Project). In cases of other projects, such as the Minas Gerais SWAP in Brazil, supervision blends innovative assessment of an agreed set of performance indicators with traditional post-review supervision to maximize impact of post-review exercises. 92. SEPA. The Procurement Plan Execution System (SEPA in Spanish), an innovative, web-based system, developed in FY07 to address the issues of procurement planning and management, is proving to be useful tool in increasing the transparency and accountability. So far, the system has been introduced in Argentina, Mexico, Panama, Paraguay, Peru, and Uruguay. Implementation is planned for Guatemala, Honduras, Bolivia, Brazil, Colombia, Costa Rica, Ecuador, El Salvador, Guyana, Jamaica, Nicaragua, and the OECS countries, among others. 93. Procurement Reform. The LCR procurement team has been actively involved in procurement reform activities in most countries in the Region. Country highlights include: · Brazil. The team worked on (a) a review of indicators developed to assess at the performance of the procurement system of the State of Minas Gerais; (b) terms of reference for independent audits of procurement-related aspects of the Minas Gerais SWAP operation (with Supreme Auditors in the State of Minas Gerais); (c) assistance to the government in developing a strategy for procuring services (e.g., security, cleaning, etc) with the objective of identifying opportunities for savings (in partnership with PREM as part of the AAA Good Governance); (d) an IDF grant intended to support implementation of the electronic invoicing system in the State of Minas Gerais, and (e) design and implementation of a management information system of civil works contracts; · Colombia. The Region continues to support procurement reform through the provision of technical assistance. The new regulation resulting from the reform aims to improve the efficiency of the public procurement system. 41 · Mexico. The FY08 CPAR generated positive results in terms of dialogue and reforms. In line with recommendations of the resulting action plan, the Secretariat of Public Administration decided to create a new Strategic Procurement Unit with an objective to move from a compliance-based system to one based on efficiency of public expenditure. The Bank provided technical assistance to develop the ToR for the Unit. The government included funding for procurement reform in the new public sector loan. · Peru. The Bank carried out several pieces of analytic work related to the efficiency of the Peruvian government's procurement system., focused on (a) analysis of the supply chain for the Vaso de Leche program (the Vaso de Leche program is valued at $100 million and accounts for almost half of all spending on food programs, reaching almost three million people, or 11 percent of the population), and procurement of school books; (b) an evaluation of the consulting industry and the government's role in its development; and (c) application of the OECD­DAC procurement indicators. 94. Analytic Work. In FY08, the Region carried out the (a) Guyana Integrated Fiduciary Assessment (CFAA/CPAR, prepared jointly with IDB), and (b) Mexico CPAR. 95. Post Reviews and Independent Procurement Reviews. The Region achieved its 100 percent post-review target and carried out six IPRs. The reviews point to improvement in process management in the projects that are using SEPA. E. MNA 96. During FY08, follow-up on the implementation of action plans of CPAR and Operational Procurement Review (OPR) continued. Through the use of IDF grants, MNA continued working on public procurement reforms in seven countries. · In Djibouti, progress was made in updating of the existing Procurement Code with inputs from the Bank's Legal Department on the draft version, which facilitated the dialogue between the authorities and the consultants financed by the IDF grant on best practice outcomes. The preparation of the National Procurement Manual and SBDs were completed to facilitate harmonization of donor and government procedures. · In Iraq, the Bank assisted the Iraqi government in the drafting of a unified public procurement law, regulations, and standard bidding documents. Through the Third Iraq Capacity Building Project, the new procurement law has been drafted, discussed, and agreed on by the Bank and the Iraqi inter- ministerial committee. The new draft is based on sound international practices which would help Iraq address efficiency and fight corruption. A set of national bidding documents has been drafted in conformity with the new draft law. 42 · In Morocco, IDF financing (a) provided support to the improvement of a web- based portal which has been effective since 2007 and (b) helped fund initial development of the public procurement management information system. · The Palestinian Authority (PA) adopted in December 2007 a three-year Palestinian Reform and Development Plan (PRDP) for 2008-2010 envisioning a process of reforms centering on control of expenditures. The Bank has continued to provide assistance to the PA. A Country Procurement Issues Paper (CPIP) was prepared by the country procurement team to address the need for an updated assessment of the current state of public procurement since the last CPAR completed in 2004. o The CPIP concluded that substantial efforts are still needed to complete implementation of the procurement reform begun in 2004. The changes in the government since 2006 have delayed the ratification and enactment of the law and regulations and prevented progress and successful completion of the other reform activities. o Many of the recommendations of the 2004 CPAR Action Plan have not been considered. The drafting of national bidding and contracting documents were not done under an IDF grant. The current government has reaffirmed its commitment to move forward with the enactment of the new law and regulations. The West Bank-Gaza's overall country fiduciary risk will remain high until the PA achieves tangible progress in public procurement reform and related institutional improvements. · In Tunisia, four workshops were organized around four main themes: (a) the update of CPPR action plan, (b) Bank procurement guidelines, (c) reducing the number of rejections or inconsistencies observed with Bank-financed operations, and (d) selection of consultants. · In Yemen, a new public procurement law was ratified by Parliament. The Bank's support contributed to the procurement law, which has UNICTRAL model law provisions at its core. 97. Governance and Anticorruption (GAC) Agenda. MNAPR and INT have continued to collaborate toward a productive exchange of information regarding specific operations where issues of fraud and corruption had represented a challenge in managing the Bank's projects. INT has made efforts to ensure continuous and timely flow of information to task managers to assist them in conducting fiduciary duties. INT delivered a presentation in Yemen to Bank staff to help demystify INT activities and demonstrate how both INT and Operations can learn from each other. 98. Harmonization. In Djibouti, the reform of the country's procurement system is well coordinated with the community of donors. There is mutual agreement to adopt the country's new procurement law, procurement manual, guidelines, and Standard Bidding Documents. In Yemen, MNAPR staff have made contributed to the preparation phase of the first sectorwide approach in the region--the Water Sector Support Program--to 43 increase absorptive capacity and strengthen the momentum for sector reforms and efficiency in public expenditures through reducing managerial and financial transaction costs to Yemen. 99. E-Government Procurement. In the GCC countries, and mainly in Saudi Arabia and Kuwait, the Bank offered to provide technical assistance in e-GP for ambitious projects. 100. Capacity Development. In Iran, a Procurement and Financial Management workshop for 82 participants was conducted. In Yemen, the Bank organized a three-day workshop in Sana'a on Bank-financed procurement and contract management for procurement staff in project management units (PMUs) and their managers. In Jordan, two procurement/financial management workshops were organized with the participation of staff from line ministries. In Egypt, a number of capacity-building activities were carried out for line ministries and local authorities in procurement of newly launched projects. For Design Build and Operate (DBO) approaches, MNAPR provided guidance on procurement issues to Jordan and to the Egypt for West Delta Conservation and Irrigation Rehab Project, and organized a workshop inviting the latter PMU personnel and the line ministries to build their capacities on this particular procurement. 101. Independent Procurement Reviews. The Region carried out IPRs in Yemen and Egypt, each of which covered four ongoing projects. No major issues were detected. F. SAR 102. The SAR Procurement Team continued providing a wide range of services in FY08, focusing specifically on quality assurance in its fiduciary work. Two of the major achievements in FY08 were the approval of Procurement Reform and Capacity Building projects in Bangladesh and Bhutan. 103. Quality. The results of the Detailed Implementation Review in India shaped much of the work of the SAR Procurement Team during FY08. It raised critical issues concerning the quality and adequacy of procurement and implementation supervision work, beyond the specific deficiencies that were identified in the health sector in India. A Procurement Action Plan was developed and put into effect to address vulnerabilities in Bank-financed procurement in India. This Action Plan is directed at the following areas: · Enhancing Fiduciary Instruments and Processes in Procurement: (a) refining process/methodology for post reviews, (b) improving fraud and corruption identification, (c) revaluating procurement thresholds, (d) revising standard bidding documents used in India for Bank-financed operations to be in line with the Bank's SBDs, and (e) improving the monitoring of procurement complaints. · Enhance Procurement Capacity and Staffing: Improve procurement skills by providing training workshops to TTLs and other sector staff at HQ and in COs. 44 · Restructuring the SAR Procurement Function: (a) providing opportunities for procurement staff to upgrade their skills and benefit from mentoring, (b) streamlining procedures for reviewing and clearing the borrower procurement transactions, (c) delegating supervision of CO-based procurement staff to a new Lead Procurement Specialist, and (d) increasing collaboration between the SAR Procurement Team and the sector and country teams. 104. Procurement Reform. The Region continues to be involved in procurement reform in most countries. Procurement reforms are systematically reflected in CASs, PRSCs, and policy papers, which broadens the reform constituency. · In June 2008, together with the EAP Region, SAR organized the first Asian Regional Workshop on Implementing Procurement Reform, which was sponsored by the World Bank, ADB, DFID, and the government of Bangladesh. The workshop brought together officials from 13 countries for discussion on core issues of implementing procurement reforms. · In Afghanistan, the ongoing reform program is showing progress in procurement practices as evidenced by improved ratings in the Second Public Financial Management Performance Assessment. A procurement monitoring system is being used by the Central Procurement Policy Unit. Currently, all bidding opportunities and contract awards are published in the country's online procurement website, which has contributed to better participation by bidders. · In Bangladesh, the government is now using the Bank's TA provided under the second procurement reform project (PPRP-II) to focus on procurement performance monitoring, institutionalizing procurement management capacity, introducing electronic procurement, and social accountability. · Bhutan has been working on five main areas of reform: (i) updating the legal framework for procurement; (ii) addressing the need for capacity building; (iii) establishing a public procurement policy division; (iv) addressing the need for a complaints mechanism; and (v) adopting electronic forms of procurement. · In India, the Bank engaged at the national, state, and sub-state levels. At the national level, the Bank's discourse focused on agreement on a revised set of SBDs for Bank-financed operations, and on the creation of a national strategy for e-procurement. At the state level, procurement reform has been supported through countrywide DPL operations. Reform components included in these initiatives are: development of ancillary procurement documents, promotion of procurement policy agencies, creation of monitoring frameworks, and the introduction of e-procurement. These activities have helped to improve state- level procurement regulations, which are now approaching par with regulations at the national level. 45 · In the Maldives, following the preparation of an Issues and Policy Options paper, the government set up a working group to follow up on the reform actions, led by the Corporate Affairs Division of the Ministry of Finance and Treasury. · Nepal's Public Procurement Monitoring Office was established in August 2007 with a mandate to ensure effective implementation of the public procurement law. Procurement performance monitoring benchmarks were established as part of the procurement reform. · In Pakistan, reform initiatives have begun to attract the focus of the new federal and provincial governments. Some States have adopted the federal procurement rules, which will facilitate the creation of procurement regulatory bodies. · In Sri Lanka, while much had been achieved in FY08 in respect of streamlining and improving public procurement, the disbanding of the National Procurement Agency in early 2008 has led to a slowdown in reform activities. 105. E-Government Procurement. To improve its existing MIS, the government of Bangladesh is designing a nationwide e-GP system which is expected to be implemented in several key implementing agencies by the end of FY09. In Afghanistan, an e- Procurement Country Readiness Assessment was disseminated in July 2007. Following this, the government developed a strategy to develop e-procurement in three stages. In FY08, the government made substantial progress by developing a country procurement portal through which all bidding opportunities and contract awards are published and electronic bidding documents are made available. In India, the Bank is focusing on the creation of a national strategy for e-procurement. An e-GP readiness capacity assessment was conducted in Nepal, with the final report published in October 2007. Following this, an e-procurement pilot was carried out under a Bank-funded project. 106. Capacity Development. Regional developments on this front include: · Afghanistan's capacity development efforts have resulted in advanced level training using the material of Charted Institute of Purchasing and Supply from the UK. An institutional arrangement has been made for delivering procurement training to public and private sectors on a sustainable basis. · Bangladesh's Central Procurement Technical Unit developed a critical mass of 25 national trainers and provided three-week procurement training to over 2,000 staff from 300 organizations. To institutionalize capacity development, the unit also began developing a procurement faculty at a local institute and began training staff. · The Royal Government of Bhutan is working with the Bank under the recently approved Procurement Institution and Capacity Building Project, which aims 46 to enable national training institutions to deliver certified procurement training at various levels of expertise to all stakeholders. · In Sri-Lanka, a procurement performance assessment was successfully piloted using the OECD-DAC tools. An IDF grant supported 193 short-term training programs and two diploma programs in public procurement and contract management. 107. Governance and Anticorruption. Regional developments on this front include: · Bangladesh has reconstituted its Anti-Corruption Commission (ACC), which the Bank is actively supporting. · The Bank is supporting Bhutan's Anti-Corruption Commission, which drafted the Integrity Pacts and Debarment Rules. · In India, the Bank, DFID, and the Government continue to collaborate on the monitoring of the DIR Joint Action Plan for health sector projects in India. In addition, a program designed by procurement, World Bank Institute (WBI), and Human Development Network (HDN) to improve procurement outcomes and enhance social responsibility in rural and local governments was recognized with the 2008 SDN Governance and Anti-Corruption Prize. · In Nepal, as a follow-up to allegations of fraud, collusion, and physical obstruction as reported in the local media, the government constituted a joint Donor/Government Task Force to assess the causes of such occurrences and submit recommendations for mitigation. · In Pakistan, the Public Procurement Regulatory Authority formed sub- committees assigned to frame implementing regulations to the new procurement rules and consider options for an independent complaints process. ANNEX A ADDITIONAL DATA ON PROCUREMENT 1. Figure A1 depicts the Regional IBRD/IDA lending commitments ($127 billion for 1,612 operations) for FY08. Figure A1. FY08 Lending Commitment Amount by Region SAR MNA 12% AFR 7% 27% LCR 19% EAP ECA 15% 20% 2. Table A1 shows the top 10 borrowers for new FY08 IBRD/IDA lending operations. There were 298 new operations in FY08, at a total commitment of $24.7 billion. Table A1. Ten Largest IBRD/IDA Borrowers Commitments Borrower Number of % of Projects $ Millions Total Amount India 7 2,154 8.7 Brazil 9 1,914 7.7 China 12 1,513 6.1 Indonesia 5 1,295 5.2 Azerbaijan 11 1,267 5.1 Turkey 3 1,203 4.9 Vietnam 9 1,193 4.8 Colombia 5 940 3.8 Egypt 4 835 3.4 Bangladesh 8 753 3.1 Total 73 13,067 52.9 Lending Total 298 24,702 48 3. Table A2 details the major Bank-financed contracts in FY08 by number and value of contracts distributed, in procurement categories and Regions. This information is generated through the Form-384 reporting, which captures those contracts subject to the Bank's prior review. OPCPR monitors this data for accuracy and provides specific information to Executive Directors or other interested stakeholders upon request. Table A2. Prior Review Contracts by Region and Category FY08 Prior Review Contracts by Region and Procurement Category Proc Categ \ Region AFR EAP ECA LCR MNA SAR Bankwide % Amount (US$ Million) Civil Works 814 2,670 954 1,232 208 730 6,609 65 Goods 453 357 651 671 95 186 2,412 24 Consultant Services 388 145 270 163 72 160 1,198 11 Total 1,655 3,172 1,875 2,066 375 1,076 10,219 100 Number of Contracts Civil Works 224 362 190 160 112 333 1,381 23 Goods 392 391 528 280 83 290 1,964 32 Consultant Services 826 331 726 416 188 245 2,732 45 Total 1,442 1,084 1,444 856 383 868 6,077 100 4. Tables A3, A4, and A5 show the top 10 countries of registration awarded for goods, works, and services for FY04-FY08 for contracts subject to prior review. It should be noted that data entered on the basis of country of registration for firms receiving contracts can result in some unexpected outcomes. A single large contract award can affect the order of the top suppliers. For example, a major contract for railway trains was awarded to a Spanish firm in FY08, resulting in placing Spain at the top of the list. It should also be noted that `UN Agencies' is a consolidation of all contracts awarded to such agencies. Table A3. Top Ten Supplier Countries for Goods and Equipment Top Ten Supplier Countries of Major Bank-Financed Contracts (by Amount) Contracts for Goods and Equipment Rank\Fiscal 2004 2005 2006 2007 2008 Year 1 China India Russia Germany China 2 UN Agencies China China China India 3 Germany UN Agencies India India Spain 4 Argentina Russia Germany Russia Brazil 5 India Germany Turkey Turkey Argentina 6 Japan Mexico UN Agencies Egypt Russia 7 Vietnam France Netherlands Korea Vietnam 8 France Turkey France UN Agencies Italy 9 Russia Spain Italy France France 10 Mexico Brazil Iran Ukraine Indonesia % of Total 58 62 57 64 64 Awards 49 Table A4. Top Ten Supplier Countries for Civil Works Top Ten Supplier Countries of Major Bank-Financed Contracts (by Amount) Contracts for Civil Works Rank\Fiscal Year 2004 2005 2006 2007 2008 1 China China India China China 2 Brazil India China Italy India 3 India Argentina Brazil Argentina Brazil 4 Lebanon Egypt France United Kingdom Argentina 5 Argentina France Denmark India Italy 6 Croatia Brazil Pakistan Germany Vietnam 7 France Congo (DRC) Vietnam Japan Indonesia 8 Mexico Croatia Switzerland Vietnam Romania 9 Norway Saudi Arabia Argentina Romania Russia 10 South Africa Yemen Spain Brazil Turkey Percentage of the Total Portfolio 69 72 71 66 78 Table A5. Top Ten Supplier Countries for Consultant Services Top Ten Supplier Countries of Major Bank-Financed Contracts (by Amount) Contracts for Consultant Service Rank\Fiscal Year 2004 2005 2006 2007 2008 1 UN Agency UN Agency Germany United States United States 2 Afghanistan Mexico United States Afghanistan Germany 3 Germany Germany Canada Indonesia United Kingdom 4 United United Kingdom France Russia Kingdom France 5 United States United Kingdom Congo (DRC) Russia Italy 6 Indonesia United States Indonesia France Congo DRC 7 Mexico Congo (DRC) UN Agency UN Agency Canada 8 France Russia Brazil Canada Russia 9 Canada Australia Netherlands Germany Indonesia 10 Australia Canada France Brazil Australia Percentage of the Total 58 51 51 49 49 Portfolio 5. Figure A2 shows that in FY08, the Bank's post reviews covered 695 projects and more than 12,054 contracts, at a total contract amount of $4.7 billion. The review of projects increased 14 percent over that of FY07 and the overall trend shows a cumulative increase of 39 percent from 53 percent in FY03 to 92 percent in FY08. 50 Figure A2. Post Review Coverage Trends of Procurement Post ReviewCoverage (FY03-FY08) 100% 92% 78% 80% 53% 60% 78% 60% 63% 40% 20% 0% FY03 FY04 FY05 FY06 FY07 FY08 6. Table A6 provides a summary of independent procurement reviews (IPRs) conducted in FY08. The number IPRs increased by 60 percent compared to FY07. The value of reviewed contracts was more than double of that in FY07. Table A6. Independent Procurement Review Summary of Independent Procurement Review in FY08 Item \ Region AFR EAP ECA LCR MNA Bankwide Cameroon, Cape Verde, Colombia, Reviewed Borrower DRC, Lao PDR, Uruguay, Egypt, Country Gambia, Philippines Turkey Honduras, Yemen 16 Rwanda, Mexico, Zambia Bolivia Number of reviewed projects 14 7 6 6 8 41 Number of reviewed contracts 255 133 122 167 130 807 Value of reviewed contracts (US$ '000) 74,241 5,397 4,398 236,891 364,725 685,651 Total cost of IPRs (US$ '000) 133 152 71 288 101 745 7. Table A7 shows data on misprocurement for FY06-08. It also provides information on the main activities that contribute to identification of misprocurement. The dollar amount of declared misprocurement varies widely from year to year. 51 Table A7. Misprocurement Declared in FY06-08 Misprocurement Declared in FY06 - FY08 Number Number Number Contract FY of of of Amount (US$ How Identified Country Project Contract Equivelant) Prior review, PPR, IPR, 2006 10 25 150 76,410,673 complaints, supervision, INT investigation, government audit 2007 9 9 130 36,830,385 PPR, IPR, complaints, supervision, INT investigation 2008 6 8 40 7,108,403 PPR, Prior review, complaints, supervision 8. Table A8 provides the nature of complaints received by the Bank in FY08. This information is used to determine areas where the Guidelines or bidding documents may not be well understood by borrowers and to design appropriate capacity development responses where needed. Table A8. Nature of Complaints Nature of Complaints in FY08 Nature of Complaints Number Allegation of fraud and corruption 28 Application of evaluation criteria 36 Bid security 7 Bid/Proposal submission 10 Combined financial and technical rating 15 Conflict of interest 3 Contract administration 12 Contract award 8 Disqualification of bid 26 Eligibility 3 Irregularity in bid/financial proposal evaluation 4 Irregularity in bid/financial proposals 6 Own qualification issue 15 Payment 24 Prequalification 3 Qualification of other firm 46 Quality of bidding document/RFP 13 Short list 6 Technical evaluation 20 Technical Specifications 15 Terms of reference 3 Transparency issue 3 Other 26 Total 332 52 9. Table A9 summarizes how complaint cases received in FY08 were resolved. The Bank monitors resolution by the borrower. For the most part, the Bank has upheld the decision of the Borrower. Table A9. Complaints by Resolution FY08 Complaints by Resolution Resolution Number Borrower invalidated the complaint; Bank upheld Borrower's decision 124 Bank validated complaint - Borrower agreed 24 Complaint invalidated 22 Complaint dropped by complainant 13 Complaint settled between contract parties 12 Case inactivated 5 Case forwarded to INT 4 Re-bidding 3 Bid cancelled 2 Bank validated complaint - Borrower disagreed 1 Other 52 Total 262 53 10. The Table A10 provides a summary of payment issues in FY08. The Regions and task teams follow up on pending cases. Table A10. Summary of FY08 Payment Issues Region Borrower Project Complainant Country ID Project Name Country Status AFR Cape Verde P040990 CV-Energy & Water SIL (FY99) United Kingdom Closed AFR Nigeria P070290 NG- Health System Dev. II (FY02) Nigeria Pending AFR Nigeria P070290 NG- Health System Dev. II (FY02) Nigeria Closed AFR Madagascar P083351 MG-Integ Growth Poles Canada Closed AFR Nigeria P083082 MSME Nigeria Closed AFR Nigeria P071075 NG-Urb Water Sec Reform 1 SIL (FY04) Nigeria Pending AFR Nigeria P088109 NG-IFAD Com Based NRMP (FY12) Nigeria Closed AFR Nigeria P070293 NG-Privatization Supt SIL (FY01) Canada Closed EAP Indonesia P074290 ID-Eastern Indonesia Region Transp. 2 Indonesia Pending EAP China P003539 CN-Sustainable Coastal Resources Dev. China Pending EAP Solomon Islands P089297 SB-Rural Development Program United Kingdom Pending ECA Ukraine P044832 KIEV DISTRICT HEAT Ukraine Closed ECA Uzbekistan P009121 RURAL WS & SAN Israel Closed ECA Uzbekistan P049621 BUKHARA/SAMARKAND WS Ukraine Closed ECA Russia P066155 TAX ADM 2 United States Closed ECA Romania P083620 TRANSPORT RESTRUCTURING France Closed ECA Romania P083620 TRANSPORT RESTRUCTURING Spain Closed MNA Morocco P056978 MA-Irrigation Based Community Dev. Morocco Closed MNA Yemen P064981 RY-SANA'A BASIN WATER Yemen, MGMNT Republic of Pending MNA West Bank Emergency Services Support Prog and Gaza P104993 MDTF Pending MNA Yemen P065111 RY-PORT CITIES DEVELOPMENT PROGRAM Denmark Closed SAR Afghanistan P091036 ARTF - Nat. Emergency Employment Pgm Afghanistan Pending SAR India P010408 BIHAR PLATEAU United Kingdom Pending SAR Sri Lanka P086747 Community Livelihoods in Conflict Areas Sri Lanka Pending ANNEX B CURRENT CPAR AND OTHER ESW REPORTS 1. Table B1 provides information on ESW reports that cover procurement (a list of the abbreviations used will be found at the end of this annex). Table B1 Report Delivery Country Report Type Document FY Classification (In SAP) Africa Region Angola CPAR FY03 Official use only Benin CPAR FY99 Official use only Botswana CPAR FY07 Confidential Burkina Faso CPAR FY06 Official use only Burundi CPIP FY04 Official use only Cameroon CPAR update FY05 Public Cape Verde CPIP FY04 Public Central African Republic IP FY06 Confidential Chad CPAR FY04 Official use only Congo, Democratic Rep. of CPAR FY04 Official use only Congo, Republic of CPIP FY06 Official use only Côte d'Ivoire CPAR FY04 Public Eritrea CPAR FY03 Official use only Ethiopia CPAR FY03 Public Gabon PEMFAR FY07 Public Gambia CPIP FY05 Public Ghana CPAR FY03 Public Guinea CPAR FY02 Confidential Guinea Bissau CPIP/IFA FY06 Public Kenya CPAR FY97 Confidential Under Lesotho CPAR (draft) FY08 Government Review 56 Report Delivery Country Report Type Document FY Classification (In SAP) Madagascar CPAR FY03 Official use only Malawi CPAR FY04 Public Mali CPAR Update FY06 Public Mauritania CPAR Update FY02 Official use only Mauritius CPAR FY03 Official use only Under Mozambique CPAR (draft) FY08 Government Review Niger CPAR FY05 Official use only Nigeria CPAR FY00 Official use only Rwanda CPIP FY04 Official use only Sao Tomé and Principe CPAR (joint with AfDB) FY07 Confidential Senegal CPAR FY03 Public Sierra Leone IP FY04 Official use only South Africa CPAR FY02 Public Tanzania CPAR FY03 Public Official use CPAR FY04 only Togo PEMFAR FY07 Official use only Uganda CPAR FY01 Public Zambia PEMFAR FY03 Official use only Regional Total 39 East Asia and Pacific Region Cambodia CPAR FY05 Public China OPR FY03 Official use only East Timor CPAR FY04 Public Indonesia CPAR FY01 Public Kiribati Korea, Rep. Of Lao PDR CPAR FY03 Public 57 Report Delivery Country Report Type Document FY Classification (In SAP) Malaysia CPAR FY95 Internal Use Mongolia CPAR FY04 Public Myanmar Papua New Guinea CPAR FY06 Public Philippines CPAR FY08 Public Samoa OPR FY06 Public Solomon Islands OPR FY08 Public Thailand Tonga OPR FY03 Public Vanuatu Vietnam CPAR FY03 Official use only Regional Total 13 Europe and Central Asia Region Albania IFA FY07 Public Albania CPAR FY01 Public Armenia CPAR FY03 Public Azerbaijan CPAR FY02 Public Azerbaijan CPAR Update FY08 No Decision yet Bosnia-Herzegovina CPAR FY02 Public Bulgaria CPAR FY00 Official use only Bulgaria CPAR FY04 Confidential Bulgaria IFA FY07 Confidential Croatia CPAR FY00 Official use only Croatia CPAR FY04 Public Georgia CPAR FY01 Public Georgia IFA FY07 Confidential Kazakhstan CPAR FY00 Official use only Kosovo OPS FY04 Public Kyrgyz Republic CPAR FY03 Official use only Kyrgyz Republic IFA FY07 Public Kyrgyz Republic Education IFA FY08 No Decision yet Latvia CPAR FY01 Official use only 58 Report Delivery Country Report Type Document FY Classification (In SAP) Macedonia (former Yugoslav Official use republic) CPAR FY02 only Macedonia (former Yugoslav republic) IFA FY07 Public Moldova CPAR FY03 Public Poland CPAR FY01 Official use only Romania CPAR FY00 Official use only CPAR Romania FY05 Official use (Joint Report with EU) only Russian Federation CPAR FY01 Official use only Russian Federation CPAR FY07 Official use only Slovak Republic CPAR FY01 Official use only Turkey CPAR FY01 Official use only Turkey Health IFA FY08 Public Tajikistan OPS (Education Sector Fiduciary Capacity Assessment Report) FY07 Public Tajikistan Health IFA FY08 No Decision yet Tajikistan CPAR FY03 Official use only Ukraine CPAR FY07 Public Ukraine CPAR FY01 Official use only Uzbekistan CPAR FY02 Public Yugoslavia CPAR FY02 Public Regional Total 37 Latin America and the Caribbean Region Argentina CPAR FY02 Official use only Bahamas Barbados Belize Bolivia CPAR FY01 Official use only Brazil CPAR FY04 Public Chile CPAR FY04 Public 59 Report Delivery Country Report Type Document FY Classification (In SAP) Colombia CPAR Update FY05 Public Costa Rica CPAR FY05 Public Dominica CPAR FY03 Public Dominican Republic CPAR Update -(IFA) FY04 Public Ecuador CPAR FY05 Official use only El Salvador CPAR FY04 Public Grenada OECS CPAR (St. Vincent & the Grenadines, Grenada, Dominica; St. Lucia, St. Kitts & Nevis) FY01 Public Guatemala CPAR/CFAA FY05 Public Guyana IFA FY08 Public Haiti CPAR FY00 Official use only IFA (PEMFAR) FY07 Public Honduras CPAR Update FY04 Public Jamaica CPAR/CFAA FY05 Public Mexico (state level) State Lev.-Impr. Fisc.Trnsp.& Adm Perf FY06 Public Mexico (Federal) CPAR Country Level FY02 Official use only Mexico CPAR FY08 Public Neth. Antilles Nicaragua CPAR FY03 Official Use Only OECS Countries (St Lucia, St Vincent) OECS IFA FY07 Public Panama CFAA/CPAR FY06 Public Paraguay IFA FY07 Public Peru CPAR Update FY05 Public Suriname Trinidad & Tobago CPAR FY00 Official use only Uruguay CPAR FY06 Official Use Only Venezuela CPAR FY91 Official use only Regional Total 28 60 Report Delivery Country Report Type Document FY Classification (In SAP) Middle East and North Africa Region Algeria CPAR FY03 Internal use only Djibouti CPAR FY04 Internal use only Egypt CPAR FY04 Internal use only Iran OPR FY05 Internal use only Iraq OPR FY05 Internal use only Jordan CPAR FY99 Public Lebanon OPR FY06 Internal use only Public CPAR FY00 Morocco Under CPAR Update FY08 government review Tunisia CPAR FY04 Internal use only Internal use CPAR FY05 only WBG Issue Paper FY08 Official use only Internal only/ Yemen CPAR FY01 shared with donors Kuwait CPAR (Draft) FY08 Kingdom of Saudi Arabia CPAR (Draft) FY08 Regional Total 15 South Asia Region Afghanistan FY02 Bangladesh CPAR (May Public 2002) Bhutan FY04 India CPAR (December Public 2003) Internal Use/ India State - Jharkhand PFP FY08 Under Finalization 61 Report Delivery Country Report Type Document FY Classification (In SAP) Internal Use/ India State - Maharashtra PFP FY08 Under Finalization Internal Use/ India State - Rajasthan IDF FY08 Under Finalization Internal Use/ India State - Himachal Pradesh PFP FY08 Under Finalization India State - Bihar OPR FY08 Not yet Finalized Maldives FY02 Nepal CPAR (April Public 2002) FY00 Pakistan CPAR (June Public 2000) FY06 Pakistan CPAR on Consulting Services (March Public 2006) FY03 Sri Lanka CPAR (June Public 2003) Regional Total 11 Bankwide Total 143 AfDB African Development Bank CPAR Country Procurement Assessment Report CPAR/CFAA Country Procurement Assessment Report/Country Financial Accountability Assessment CPIP Country Procurement Issue Paper IFA Integrative Fiduciary Assessment IP Issue Paper OECS Organisation of Eastern Caribbean States OPR Operational Procurement Review OPS Other procurement study PEMFAR Public Expenditure and Financial Accountability PFP Policy Framework Paper