World Bank procurement reform to rationalize prior review of contracts

A construction worker at the World Bank-financed Panama Canal expansion project. The bank’s procurement team is debating whether or not to raise the dollar threshold that warrants prior reviews of contracts, which could result in speedy procurement times on low-risk projects. Photo by: Gerardo Pesantez / World Bank / CC BY-NC-ND

As part of an ongoing policy review, the World Bank’s procurement team is discussing adjustments to the thresholds at which the bank conducts a prior review of contracts.

The move is intended to better use the Washington, D.C.-based institution’s resources by focusing on higher-risk, higher-value contracts, according to Christopher Browne, the bank’s chief procurement officer.

During a panel discussion on the sidelines of the World Bank’s spring meetings on Thursday, Browne presented the evidence driving the discussions: Data collected by the internal audit division shows that 50 percent of the prior reviews conducted each year amount to only 1 percent of the total value of bank contracts. Half of those contracts are for less than $100,000, and a quarter are for individual consultants.

READ: 'New norm' key to World Bank procurement reform

In other words, the institution is spending considerable time and effort to prior review contracts that make up just a tiny fraction of the total money it loans.

Browne and his team think those resources could be better used elsewhere, and have been debating whether or not to raise the dollar threshold that warrants prior reviews of contracts. The contracts would still be subject to post-review auditing, which in the worst-case scenario could find a “misprocurement” had occurred resulting in the withdrawal of bank funds. But by abandoning the “stop-go” process of prior review for small-value contracts — which puts a project on pause to review the details of the bidding process — the institution would better balance its oversight resources with real procurement risks.

Browne said that if the bank for instance adopted the same thresholds implemented by the Manila-based Asian Development Bank, it would eliminate approximately 84 percent of prior reviews for contracts for goods and 89 percent for civil works, potentially speeding up procurement times on low-risk projects.

“There will be some risk tradeoff,” Browne said about moving toward more reliance on post-review. “But we don’t think it’s an unreasonable debate to have about balance.”

READ: World Bank working to define 'value for money' in procurement

The panel addressed other hot-button procurement issues, like using client country procurement systems for bank projects. Browne said that they were considering using the Government Procurement Agreement — overseen by the World Trade Organization — as a first step toward approval of country systems. Client countries that are currently members of that agreement regulating procurement laws and practices are Armenia, Bulgaria, Croatia, Poland and Romania.

Devex will continue covering the debate over World Bank procurement reform as the institution moves toward presenting the new policies to the board in July, for approval and implementation in fall of 2015.

For the most comprehensive coverage of the World Bank’s spring meetings, check out daily updates via Storify, and be sure to follow Devex on Twitter and Facebook. You may tweet questions and comments to our reporters Paul Stephens @pauldstephens, Michael Igoe @twigoe, Rolf Rosenkranz @devexrolf and Adva Saldinger @deveximpact.

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    Paul Stephens

    Paul Stephens is a Devex staff writer based in Washington, D.C. His coverage focuses on Latin America and World Bank affairs, as well as Washington's global development scene. As a multimedia journalist, editor and producer, Paul has contributed to the Los Angeles Times, Washington Monthly, CBS Evening News, GlobalPost and the United Nations magazine, among other outlets. He's won a grant from the Pulitzer Center on Crisis Reporting for a 5-month, in-depth reporting project in Yemen after two stints in Georgia - one as a Peace Corps volunteer and another as a communications coordinator for the U.S. Agency for International Development.