5 things to know about World Bank procurement reform

Greater flexibility. More thoughtful contract decisions. More efficient tools. A new complaint mechanism. More hands-on support. These are what contractors and government officials can expect from the World Bank’s procurement if reforms are approved later this year. Changes in World Bank procurement have the potential to alter the way the institution’s borrowers purchase goods and services for development projects. They could change the way developing countries manage procurement demands from multiple donors. And they could shift the way the world’s largest multilateral donor awards contracts. Currently, the World Bank’s procurement reform process is in full swing following an extensive global consultation that ended in January. Reforms are expected to go live this summer following a review of the reform proposal by the World Bank’s boards of directors, and the team of reformers is gearing up to provide an update on their work during the bank’s spring meetings later this week. So what are the key aspects of the reform, and what do recipient countries and aid implementers need to know going into the spring meetings? In an exclusive interview with Christopher Browne, the World Bank’s chief procurement officer, Devex gleaned five key procurement changes that could take effect later this year if the bank’s board approves the reform proposal. 1. Openness to alternative procurement policies. The World Bank bills itself as the “gold standard” when it comes to development finance policy, but sometimes what’s needed is greater flexibility. The institution is looking for more flexibility to accommodate its partners’ procurement approaches, so that when the bank co-finances a development project with another multilateral or bilateral donor — and when the bank is not providing the bulk of the financing — that co-financier can take the lead on procurement, according to its own policies. The proposed reform would make it easier for client countries that normally struggle to comply with multiple procurement policies and hurdles when multiple donors are involved. Additionally, the World Bank would recognize the procurement policies of countries that are members of the Government Procurement Agreement run by the World Trade Organization. Membership in the GPA already requires an extensive procurement review, and recognition of these procurement policies would allow the bank to make faster assessments. Assessments would still be made for GPA member countries, but instead of looking at their laws or legislative frameworks, the bank would focus its assessment on people and resources. Currently GPA member countries make up a limited number of World Bank borrowers. Romania, Bulgaria, Armenia and other European Union accession states are among them. But according to Browne, other countries are at various stages of joining the GPA including China, India and Vietnam. 2. Contract award decisions based off more than just price. In the current World Bank procurement system, goods and services for development projects are chosen based on what’s called the “lowest evaluated, substantially compliant bid.” This means that the bank looks carefully at characteristics that can be assigned a monetary value such as maintenance or energy consumption, and awards contracts based on the lowest cost bid that complies with the standards laid out by the project. Under this method of procurement, characteristics that can’t be assigned a monetary value such as sustainability or the quality of material used are not considered. The exception to this rule applies to information technology or consultancy services where other nonmonetary factors can be taken into consideration. If the proposed procurement reform takes effect, goods and services for development projects will be evaluated based off a more extensive list of factors that cover more than just price. This includes quality, warrantee, design aspects, service and other factors. Bidders will now have to demonstrate more than just low price to win a contract. 3. New complaint mechanisms. If the reform proposal goes into action, bidders who feel a contract was awarded unfairly will find a “one-stop shop” at the bank to voice their complaints. This centrally located complaint center would provide advice, track complaints, monitor them and attempt to resolve them. Browne said his team is also introducing a 10-day standstill period for unsuccessful bidders to raise any complaints about a particular contract award before a formal and legal contract is signed. Complaints submitted during the standstill period would be easier for the bank to address since there would be fewer legal ramifications to consider. 4. New tools for procurement. In an effort to make procurement faster and more efficient, the World Bank’s procurement team is proposing the institution make use of new tools, including frameworks, e-procurement mechanisms and e-auctions. A framework is an agreement with a goods or service provider establishing that a particular good or service will be provided by that provider if the need arises and an order is placed. Such an agreement is not necessarily a contract and is generally only used when an order is made — in this case by a borrower of the bank. Several frameworks may be put in place for one product, allowing for choice when a particular need does arise. Currently the World Bank only implements framework agreements with other U.N. institutions — for example, in emergency response situations. Yet no frameworks are implemented for goods such as cars, computers or phones. According to the procurement reform proposal, the World Bank will be able to implement more frameworks for goods and services and will allow borrowers to use their own framework agreements. This change is designed to allow the bank’s borrowers to make purchases faster and secure better deals. Procurement reformers also hope e-procurement can help them make better use of the Internet and computer-based systems to run their procurement process. Reformers are currently in the process of developing a new system called Systematic Tracking of Exchanges in Procurements that will track World Bank procurements from beginning to end in order to clarify how long the procurements are taking, who the bidders are, and where problems arise. This initiative accompanies a new procurement app that is available now, yet will be enhanced next year with the new data from STEP. Finally, the World Bank procurement team is proposing the use of e-auctions, which allow companies to submit bids online aimed at achieving the lowest price. According to Browne, e-auctions are used only when the need is very specific and clear and when the specific provider is not important. 5. More hands-on support. Finally, Browne and his team are making a push for the bank to provide more hands-on procurement support both for borrower countries and the private sector to implement development projects. Greater support is particularly needed in environments that pose high procurement risk or have low capacity, according to Browne, who added that in some cases bidders would be able to engage in a dialogue with the bank during the bidding process to impart their knowledge and expertise. What do you think about the World Bank’s procurement reform? In what ways can it be improved and how impactful will the proposed changes be? Let us know by leaving a comment below. 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