47615 PROCUREMENTUNDERWORLDBANK-FINANCED PROJECTS: FY07ANNUALREPORT November 2008 Operations Policy and Country Services 11 I. 111 ... Contents Abbreviations and Acronyms ........................................................................................... v Executive Summary .......................................................................................................... ix I Introduction 1 I1 Fiduciary Oversightand Compliance .................................................................. 1 I11 ... ........................................................................................................... Country Work ...................................................................................................... 13 I V Harmonization ..................................................................................................... 20 V Procurement Policy, Tools, and Institutional Initiatives ................................. 24 VI Staffing and Capacity Development .................................................................. 28 VI1 31 VI11 Regional Summaries. ..... New Initiatives/Future Challenges ..................................................................... ........................................................................................... A AFR . ......................................................................................................................... -35 34 u B. EAP.......................................................................................................................... 36 C ECA D LCR .. .......................................................................................................................... 37 .......................................................................................................................... E. MNA ........................................................................................................................ 41 39 F. SAR.......................................................................................................................... 42 Annex A Additional Data on Procurement 45 Annex B Current CPAR and Other ESW Reports .. .................................................................. ..................................................... 51 Boxes. Figures. & Tables Box 1 Tools for Better GAC Implementation inProjects 12 Box 2 ECA Albania: Procurement and PFMCountry Diagnostics .. .......................................... - ...................... 16 Box 3 EAP. Box 4 Institutional Development Fund (IDF) Grants for Procurement Box 5 GAC Initiatives at the Country Level 20 Box 6 SAR - Bangladesh: Harmonization and Donor Collaboration .... Philippines:ProcurementReform Initiatives ....................................... 17 ...................18 ............................................................... ...................... 23 Figure 1 FY07 Prior Review Contract Value and DisbursementAmount Figure2 Trend of Procurement Prior ReviewContracts by Number and Value of .. ................5 Contracts ............................................................................................................................ 5 Figure3 Trend of OPRC Review by Number of Contracts. FY03-07 Figure 4 Major Nature of Complaints inFY07 .. ....................... 7 .......................................................... 10 iv FigureA1 FY07LendingCommitment Amount by Region ....................................... 45 FigureA2 Trends of Procurement Post Review Coverage(FYO3-07) .. ....................... 47 FigureA3 Major Resoulutionof ComplaintsinFY07 . ................................................ 50 Table 1 ProcurementDecentralizationTrends. FY04-07 Table 2 Top 10Supplier Countries by Major Bank-FinancedContract Amount 6 Table 3 ProcurementPost ReviewsConductedinFY07by Regions .......................... 8 Table 4 MisprocurementDeclaredinFY07 ................................................................... 9 Table 5 ComparisonofNumbersof Complaints, FY03-07 10 Table 6 ProcurementBusinessResponseTime Indicators(FY07) 11 Table 7 ProcurementESW ReportsDeliveredto ClientsinFY07 ....... ........................................... 4 .... ....................................... ........................... ............................ 14 Table 8 ManagementResponseto IEGReport 15 Table 9 FY07ProcurementStaffingby Gradeand RegionNnit .............................. 29 Table 10 FY07ProcurementStaffingby Grade and Station 30 Table A1 Ten LargestIBRD/IDA BorrowersinFY2007 45 Table A2 Table A2 FY07Prior Review Contracts by Regionand Procurement ..... .......................................................... .................................... ........................................... . Category 46 Table A3 Top Ten Supplier Countries of Major Bank-FinancedContracts ............................................................................................................................ - Goods andEquipment ..................................................................................................... 46 Table A4 Top Ten Supplier CountriesofMajor Bank-FinancedContracts- . Civil Works ...................................................................................................................... 47 Table A5 Top Ten Supplier Countries of Major Bank-FinancedContracts . Consultant Services ......................................................................................................... . 47 TableA6 Summary of IndependentProcurementReviewsinFY07 . ......................... 48 Table A7 Trend of MisprocurementinFY05-07 . ......................................................... 48 Table A8 Natureof Complaints in FY07 49 Table A9 FY07 Complaints by Resolution .. ...................................................................... ................................................................... 49 Table B1 Current CPAR and Other ESWReports . .................................................... 51 V ABBREVIATIONS ANDACRONYMS ADB Asian DevelopmentBank AfDB African DevelopmentBank AFR AfricaRegion AMWCFT Anti-money launderingkombatingthe financing ofterrorism AMS Administrative ManualStatement AusAID AustralianAgency for InternationalDevelopment BEEPS BusinessEnvironmentandEnterprisePerformanceSurvey BIMILACI Biennial Meeting of International Lending Agencies and Consulting Industry CD Country Director CFAA CountryFinancialAccountabilityAssessment CICA Confederationof InternationalConsultingAssociations CIDA Canadian InternationalDevelopment Agency CPAR Country ProcurementAssessment Report CPIP Country Procurement Issue Paper CPS Country PartnershipStrategy CSRVP ControllersStrategyResourceManagementVice Presidency cvs CorruptionVulnerability Scan DFID Departmentfor InternationalDevelopment(U.K.) dgMarket DevelopmentGateway DPL Developmentpolicy lendingjloan EAP EastAsia andPacific Region EAP EastAsia andPacific Region EC European Commission ECA EuropeandCentralAsia Region ECSPS Europeand Central Asia' OperationsPolicy & Services Unit e-GP Electronicgovernmentprocurement ESRP Environmentally and sociallyresponsibleprocurement ESW Economicand sector work EU European Union FA0 Foodand Agriculture Organization FIDIC InternationalFederationof ConsultingEngineers FM Financialmanagement FY Fiscalyear GAC Governance and anticorruption GICT Global Information& CommunicationTechnology Department GPM Generic ProcurementManual GSD General ServicesDepartment HOP HeadsofProcurement HR HumanResources IAPSO Inter-AgencyProcurementServiceOrganization IBRD InternationalBank for ReconstructionandDevelopment vi ICB Internationalcompetitivebidding IDA InternationalDevelopmentAssociation IDB Inter-AmericanDevelopmentBank IDF Institutional DevelopmentFund IDF Institutional Development Fund IEG Independent Evaluation Group IFA IntegrativeFiduciaryAssessment IFC International FinanceAgency ILO International Labor Organization IMED Implementation Monitoring and Evaluation Division (Bangladesh) INT Departmentof Institutional Integrity IP Issue Paper IPR IndependentProcurementReview ISG Information Solutions Group IT/IS Information Technology/Information Systems JBIC Japan Bank for International Cooperation JV Joint Venture K&L Knowledge and leaning LCR LatinAmerica and CaribbeanRegion LEGIA Legal Institutional Administration LOA Loan Department MDB Multilateral development bank MNA Middle East andNorthAfrica Region MOHFW Ministry ofHealth and Family Welfare MOU Memorandum of Understanding NCB National competitivebidding NCB National Competitive Bidding NGO Non-governmental Organization OBA Output-BasedAid OBD Output-BasedDisbursement OECD-DAC Organisationfor EconomicCo-operation and Development-Development Assistance Committee OPBP OperationalPolicyBank Procedure OPCPR Procurement Policy and Services Group OPCS Operations Policy andCountry Services (Network) OPR OperationalProcurement Review OPRC Operations Procurement Review Committee OPS Other ProcurementStudy PAD ProjectAppraisal Document PEFA Public Expenditureand FinancialAccountability (initiative) PEIR Public Expenditureand Institutional Review PER Public Expenditure Review PFP Policy FrameworkPaper PPP Private-PublicPartnership vii PPR ProcurementPost Review PPU ProjectPreparationUnit PR Procurement PREM PovertyReductionandEconomicManagement(Network) PSIB ProgrammaticSupport for InstitutionBuilding PSLO PrivateSector LiaisonOfficers QAG QualityAssurance Group QEA Quality-at-EntryAssessment QSA Qualityof SupervisionAssessment RAPMAN- The integratedRiskand PortfolioManagementsystem - PortfolioandRisk PRIMA Managementsystem RFP Requestfor Proposals RPM RegionalProcurementManager RRC RapidResponse Committee RTA ReimbursableTechnical Assistance RVP RegionalVice President SAP Systems,Applications & Productssystem SAR SouthAsia Region SBD Standardbiddingdocument SEPA ProcurementPlanExecutionSystem(Spanish) SONATRACH Societe Nationale pour la Recherche, la Production, le Transport, la Transformation, et la Commercialisationdes Hydrocarburess.p.a. SWAP Sectonvideapproach TOR Termsof Reference TTL Task Team Leader UN UnitedNations UNCITRAL UnitedNationsCommissionon International Trade Law UNDB UnitedNations DevelopmentBusiness UNDP UnitedNations DevelopmentProgramme UNICEF UnitedNationsChildren's Fund USAID UnitedStates Agency for International Development USC Use o f Country Systems WE3 WorldBank WHO World HealthOrganization PROCUREMENT UNDER WORLD BANK-FINANCED PROJECTS: FY07ANNUALREPORT Executive Summary 1. This Annual Report centers on the work undertaken by procurement staff inFY07 to build better performing country procurement systems that contribute to the efficient use o f public funds and improved aid effectiveness, and to ensure appropriate fiduciary oversight and compliance monitoring. It also provides information on new initiatives that will form the strategy and deliverables in the coming years. Compared to previous reporting, the FY07 report provides a greater focus on capacity development activities undertaken at the country level, as highlighted in information boxes on specific Regional procurement contributions to institutional goals and objectives. More emphasis has been placed on country work as well as on work undertaken to improve donor harmonization, with each of these broad topics covered under separate sections. As was the case inthe FY06 Annual Report, Figures and Tables providing statistical information are accompanied by enhanced analysis as to how this information contributes to the management and quality o f work. A final section providing summary information highlightingactivities inthe Regions has been added. Additional data intabular format is provided inthe Annex. 2. Fiduciary Oversight and Compliance. Procurement staff make a major contribution to the design o f projects and to the fiduciary oversight o f their implementation. Most o f this work is focused on compliance, but the contribution o f procurement staff in the project environment i s increasingly on building country procurement capacity and related implementation o f procurement reform. In FY07, 301 new operations (112 IBRDand 189 IDA) in96 borrower countries were approved, with a total commitment o f $24.7 billion. This was a 5 percent increase in new operations over FY06. The supervision portfolio supported by procurement staff increased to 1,599 operations, an 18.9 percent increase injust one fiscal year. 3. Prior Review of Contracts. In FY07, 6,251 contracts, with a value o f $7.65 billion, were subject to prior review by procurement staff. The number o f contracts reviewed declined slightly from FY06, but the value increased. The number o f contracts reviewed by the Operations Procurement Review Committee (OPRC) increased by 55.5 percent compared to FY06. These figures demonstrate that demands on staff time with regard to fiduciary responsibilities have increased with a resulting impact on work/life balance. Despite the challenge, in FY07 procurement staff maintained a high level o f responsiveness to clients, as indicated by the Regional monitoring o f response rates. The Bankwide average turnaround time for procurement staff input was two days, and staff met or exceeded the service standards 94 percent o fthe time. 4. Supervision and Post Review of Contracts. Post review i s a key supervision activity undertaken primarily by procurement staff that complements the prior review X process. Post review involves selecting a sample o f contracts from those not subject to prior review, and conducting a complete review o f the file and procedures used to award the contracts. In FY07, 78 per cent o f projects were subject to post review. Not all projects undergo post review in a given fiscal year as some projects are not in a stage o f implementation where post review would be cost effective (i.e. just starting implementation or in the final stages) and other projects are predominantly handled through prior review. Post review during supervision identifies areas where capacity development o f implementing agency staff may be required, issues that need to be addressed, and potential fraud, corruption, or misprocurement. 5. Risk Assessment and Monitoring Tools. Development o f better assessment tools to identify and mitigate risk associated with implementation o f Bank-supported operations was initiated in FY06. In FY07, based on the successful piloting of a "dynamic risk model" in the South Asia Region, the Procurement Sector committed to move forward with completing the design and roll-out o f this tool as a web-based application. The risk tool will interface with a new reporting template, including a guidance note and database under construction to capture post-review data, which will enable monitoring o f risk and risk-mitigation measures duringthe life o f a project. Both the post-review reporting database and the dynamic risk tool will enhance the quality o f supervision and post review. These new systems will incorporate work underway within the Sector and in cooperation with our colleagues from INT to better identify "red flags" that will help staff focus their attention on issues that should receive greater scrutiny duringpost review. 6. Procurement Decentralization. Decentralization o f procurement staff provides better service and increased client access, and contributes to building both country capacity and Bank knowledge o f the country's procurement and implementation practices, Decentralization o f staff and delegation o f authority to staff are closely monitored by Regional management and the Procurement Sector Board Human Resources Committee, following a risk-based approach to balance staff capacity with the portfolio under implementation in the country. Decentralization levels have stabilized at around 75 percent since FY05. 7. Independent Procurement Review. Independent procurement reviews (IPRs) have been used by the Bank to complement prior/post reviews and supervision activities, and have proved increasingly useful when applied on a risk-based approach. During FY07, IPRs were conducted in 10 countries, covered 42 projects, and entailed the review o f 906 contracts. The Procurement Sector Board recognizes the value o f IPRs and has noted that consistent financing for them should be made available as part o f the Bank's overall focus on providing greater attention to higher-risk projects. IPR financing i s additional to the regular supervision budget; typically, the cost o f IPRs ranges between $60,000-$100,000. 8. Complaints. The Bank has long defined a complaints process to be followed under projects supported by the Bank, and it remains committed to seeing that complaints are handled in a timely and fair manner by the borrower. During FY07, additional xi improvements were made to the complaints handling and monitoring and to enhance functionality of the complaints database to enable better capture o f key data, such as the basis for complaints. One feature added to the complaints database was the ability to track payment issues. A wide range of data on complaints i s included inthis report at the request of the Audit Committee. (Information on the handling of complaints related to payment issues i s includedinAnnex A.) Although complaints are monitored primarily to ensure timely handling, the database i s also a rich source of information on issues with process and procedure in implementing agencies. This informationis used to help Bank staff focus remedial and capacity development activities. 9. Governance and Anticorruption. The Governance and Anticorruption (GAC) Strategy' moved into implementation in FY07. As part of this strategy, sanctions reform was completed in FY07 and requiredthe inclusion of new fraud and corruption language in all projects scheduled for negotiation after October 2006. The Procurement and Consultants Guidelines were updated to incorporate the new language and all standard bidding documents were updatedinFY07. New emphasis was placed on upfront work in the design of projects to address the risk of corruption. Procurement staff were involved in this work as part of project design teams, with many projects incorporating new risk- mitigation measures, especially in the handling of procurement, Governance and anticorruption activities were also stepped up at the country level. This report includes information on GAC work in both the fiduciary oversight and the country work sections, providing specific implementation examples from the Regions. 10. Country Work. The trend in country analytic work and reform initiatives is toward greater coordination of Bank work, both internally and with donor partners at the country level. In most Regions, economic and sector work (ESW) i s undertaken with donor partners on a regular basis and new ESW is also coordinated internally. In FY07, two Country Procurement Assessment Reports (CPARs) were completed and 10 integrated assessments were completed. Integrated assessments included a range of products, from Public Expenditure and Financial Accountability (PEFA) assessments to integrated fiduciary assessments-which are a combined CPAR and Country Financial Accountability Assessment (CFAA), often with PEFA and Organisation for Economic Co-operation and Development-Development Assistance Committee (OECD/DAC) indicators included. This trend in handling o f country analytic work demonstrates that the recommendations of the Independent Evaluation Group (IEG) Report Country Financial Accountability Assessment and Country Procurement Assessment Reports: How Effective are the WorldBank Fiduciary Diagnostics are being implemented.* 11. Harmonization Work under the Heads of Procurement. The Heads of Procurement (HOP) of the multilateral development banks (MDBs) meet every nine months as a group to further the harmonization agenda. In addition, various working groups under the HOP meet regularly to prepare harmonized bidding documents and Strengthening World Bank Group Engagementon Governance andAnticorruption (R2007-0036), March 20,2007. CountryFinancialAccountability Assessment and Country ProcurementAssessment Reports: How Effective are the World Bank Fiduciary Diagnostic(CODE2007-0010) February 26,2007. xii agree on harmonization of policy and guidance. During FY07, the final version of the Procurement of Small Works was agreed; use of the document will begin inFY08. Work i s ongoing to complete the harmonization of bidding documents for use in information technology/infonnation systems (IT/IS) procurement, and work i s starting on developing guidance materials on Public-Private Partnership options. In the area of electronic government procurement (e-GP), the working group updated several documents and beganwork on developing an interactive web-basedstandard bidding document for IT. 12. Joint Venturefor Procurement. The Joint Venture for Procurement i s one of the subgroups under the OECD Working Party on Aid Effectiveness. It is cochaired by the World Bank, along with a bilateral donor Canadian International Development Agency (CIDA) and a client country (South Africa). The Joint Venture (JV) oversaw a number of initiatives inFY07, includingthe issuance of an internationally agreed set of benchmarks for assessment of public procurement systems. The JV and its members are supporting pilot testing of the benchmarking tool in22 countries that volunteered to participate inthe piloting program. In addition, donors working with the 22 countries have agreed to cooperate in providing needed capacity development to support procurement reform activities in the countries. Several workshops have been sponsored by the World Bank, other MDBs, and the JV for Procurement to help countries share experiences and learn how to apply the benchmarking tool and how to move forward in addressing systemic weaknesses through capacity development. The JV for Procurement also has sponsored special meetings with the Business Industry Advisory Council, an advisory group to the OECD, to discuss procurement issues. 13. Procurement Policies, Tools, and Institutional Initiatives. A key aspect of the Procurement Sector's work program carried out by the Procurement Anchor is the development of new policy and the maintenance and updating of existing policy and documents. Inaddition, the Anchor i s responsible for the development, maintenance, and upgrading of systems and tools that help integrate business processes and support staff and other clients. Highlights from FY07 includethe following: 0 OP/BP 8.0 on Rapid Response were issued to improve the Bank's ability to respondto crises and emergencies. A guidance note and handbook are under development for issuanceinFY08. 0 Sample bidding documents and a technical note on Procurement of Management Services were completed. 0 As noted, sanctions reform introduced changes that required updating of the Guidelines and the full library of standardbidding documents. 0 In addition to work on the complaints database and on creating a database to capture post-review data, the Operations Policy and Country Services Vice Presidency/Procurement Policy and Services Group (OPCPR) systems team introduced a system to cross-reference and check suppliers against the UN Security Council Resolution 1267 and other available antimoney-laundering lists before "no objections" are provided for contract awards. xiii 14. Staffing and Capacity Development. Staffing levels increased in FY07 by 12 additional staff, but the Sector Board remains concerned about capacity development to improve knowledge and skills of new staff and ensure that experienced staff are available to replace senior procurement staff leaving the Bank. The increased focus on governance, anticorruption and procurement reform initiatives at the country level has stepped up the demand on staff to develop better skills to analyze country systems and develop and support the implementation of capacity-building initiatives for improving public procurement systems. A new knowledge and learning strategy is being developed and will be closely coordinated within the fiduciary family to build better cross- knowledge between the procurement and financial management functions and increase the quality of fiduciary work. A longstanding and successful procurement training program for task team members was updated in FY07; the new strategy will identify ways to expand available training for procurement specialists, both incore skill areas and inemerging areas ofwork. 15. New Initiatives and Future Challenges. Following a successful year of implementing initiatives identified inthe FY06 Annual Report, the Procurement Sector is looking forward to a very challenging future. As a result of the reorganization within Operations Policy and Country Services (OPCS), both the Procurement (PR) and the Financial Management (FM) Anchors were placed under the directorship of an Operations Services Director. Defining a joint strategy will increase the contributions that both sectors make to the realization of the Bank's objectives. Accordingly, a joint strategy will be introduced in FY08 that identifies ways in which the two sectors can work together and work more closely with other internal and external partners to build on the synergies that already exist. The Procurement Sector is also lookingspecifically at its own key initiatives to be pursued during the coming years. The following are some of the newinitiatives. 0 Use of country procurement systems. Followingthe approval by the Board of the Bank's proposal to expand the use of country procurement, financial management, and safeguards systems in late FY07, work began in FY08 on the requested proposed methodology for piloting an increased use o f country procurement systems. The focus and challenge in FY08 and beyond will be to move to implementing the methodology at the country and project levels. The methodology will bring many new challenges for the Procurement Sector; from introducing the use of new tools, to carefully monitoring pilots to gather lessons and feed them back into the process. 0 Impact of trade regimes. Many countries are aligned under broad trade treaties that have an impact on competition and defining the procurement marketplace. The Procurement Sector intends to conduct a broad study in FY08/09 of this relationship so as to identify good practices that may have an impact on the Bank's procurement policies and provide information useful to our work in supporting client countries. 0 Study on consulting services. Studies conducted during FY07 on the Bank's guidelines for selection o f consultants indicated that our policies are complex and are not reflective of the procedures used in most countries. The Procurement xiv Sector intends to look at practices worldwide to see what changes might improve the efficiency and effectiveness o fthe Bank's policies. 0 Trustfund and UN agency agreements. The Procurement Sector will work on three key initiatives intended to provide better solutions to handling procurement under such agreements: a Fiduciary Principles Accord, which will provide an umbrella agreement; a Memorandum o f Understanding (MOU) initially with UnitedNations Children's Fund (UNICEF) to be expanded to other UNagencies that act as suppliers; and a Consultant Service Agreement when the UN i s retained by the government. Use offramework agreements. Framework agreements are being used in most countries and by most organizations worldwide. The use of such agreements will become part o f the revised United Nations Commission on International Trade Law (UNCITRAL) Model Law on Procurement. The Procurement Sector will look at how such agreements might facilitate our operational work, especially with regard to e-GP. 0 Operational PolicyBank Procedure (OPBP) 11.00, These key procurement policy documents for staff have been revised on a piecemeal basis over the past several years. It was recognized that a major revision was needed to clean up inconsistencies that developed over time and to incorporate some major changes that affect the way we do business inthe Bank. A key piece o f this work is a clear decision matrix that defines roles and responsibilities. 0Private-Public Partnerships (PPP). The Procurement Sector is developing new guidance and documents as part o f the customization o f products and business relationships emerging in the Bank to address differences between client countries. This effort will include a focus on PPP, with the work undertaken in a harmonized manner under one o f HOPworking groups that i s ledby the Bank. PROCUREMENT UNDERWORLD BANK-FINANCED PROJECTS: FY07ANNUALREPORT I. INTRODUCTION 1. The FY07 environment for procurement work was set by several key factors. The Bank's investment portfolio reached record levels in FY07, resulting in a high demand for fiduciary oversight and compliance monitoring by Regional procurement staff. The Governance and Anti-Corruption (GAC) strategy approved in FY06l and its focus on implementation in FY07 requiredprocurement staff to contribute at all phases of project design and implementation, and it has increased responsibilities and the demand for country work to build client capacity and better performing procurement systems. At the end of FY07, the Board of Executive Directors expressed their support for the proposals contained in the Use of Country Systems in Bank-Supported Operations: Status Report. The common thread that links these activities is that of building better performing country procurement systems that contribute to the efficient use of public funds and improved aid effectiveness. 2. Organization of the FY07 Annual Report. Following this introduction, Section I1 discusses FY07 fiduciary oversight and compliance across the Regions, including analysis of data and implications for future work. Section I11 covers country work and provides additional insight on procurement reform activities as was requested following the review of the FY06 Annual Report. Section IV has been added this year to provide more focus on the growing work of harmonization and partnership activities. Section V discusses procurement policies, tools, and institutional initiatives to monitor and capture key data resulting from design and implementation of procurement work. Section VI covers staffing and capacity development, includingdata, trends, and initiatives related to addressing staffing issues. Section VI1 outlines initiatives for the coming years, including a forward look at the emerging Procurement and Financial Management Joint Strategy. Section VI11 provides Regional summaries and is being reinstated at the request of the Audit Committee following its review ofthe FY06 Annual Report. 11. FIDUCIARYOVERSIGHT ANDCOMPLIANCE 3. The core work of Regional procurement teams remainsthat of contributing to the design of projects and to fiduciary oversight of their implementation. For the most part, this work is focused on compliance, but the contribution of this work to building country capacity in the area of procurement is becoming increasingly apparent as the traditional boundaries between compliance work and country capacity development no longer exist. Section I1 provides statistical information on this work, which entails the review of ' StrengtheningBank Group Engagementin GovernanceandAnticorruption,(R2007-0036) March21, 2007. Use of Country Systems in Bank-SupportedOperations:Status Report, (R2007-0079/4) October 15, 2007. 2 documents, including specialized reviews and high-risk project review; post review; the provision of technical advice to the operations teams on project design and implementation; supervision and advice to client countries on their project procurement activities; and the handling of complaints andthe application of remedies. 4. Lending Portfolio. InFY07, 301 new operations (112 IBRDand 189 IDA) in 96 borrower countries were approved, with a total commitment of $24.7 billion. This represented an increase of 5 percent in new operations and $1 billion over the record levels set inFY06. The supervision portfolio supportedby procurement staff increasedto 1,599 operations, an 18.9 percent increase injust one fiscal year. This increase was also reflected inthe number of high value or complex procurement cleared by the Operations Procurement Review Committee (OPRC),3 which rose 55 percent over the FY06 figure. (The distribution of FY07 lending by Region, and of the lending portfolio by leading borrowers, are depicted inFigure A1 and Table Al, respectively, inAnnex A,) 5. Work Program Impact. The increase in new projects and projects under supervision continues to drive the high demand for procurement staff services. Quality demands on staff have also increasedwith the growing emphasis on mitigation of risks in the design of projects and the focus on increasing the quality of supervision (both are key elements of implementation of the GAC strategy at the project level). The growing involvement of Institutional Integrity (INT) not only in investigation of fraud and corruption, but inthe proactive identification of risk factors across a range of projects ina country or sector, is also having an impact on the work of procurement staff. 6. Project Preparation. Regional procurement staff participated as members of operational teams for the 301 new lending operations in FY07, providing advice on project design; conducting required procurement capacity assessments; preparing the required procurement information, annexes, and schedules in the Project Appraisal Documents (PAD) and Loadcredit agreements; and participating in final Loadcredit negotiations. The high-risk review procedures introduced inFY06 and the GAC strategy approved in FY07 have intensifiedthe focus on procurement risk-mitigation measures in the design of projects and for increased monitoring of their effectiveness to reduce the potential for fraud and corruption. High-risk projects are subject to special reviews within the Regions and within Operations Policy and Country Services (OPCS), includingthe review o f the quality and adequacy of the risk-mitigation measures included inthe PAD. 7. Supervision. Each investment project supported by the Bank involves project oversight and supervision once the project becomes active and implementation begins. The risk level assignedto the project will also form the basis for the proposed supervision level defined for the project. Higher-risk projects generally require supervision of procurement twice a year. As the budget for supervision is limited and has to be allocated across a range of supervision activities, the participation of procurement staff in The OPRC is chaired by the Chief Procurement Policy Officer, with membership fiom Legal Institutional and Corporate Administration(LEGIA) and the Regional Procurement Manager for the presentingRegion. 3 supervision missions does not always meet the desired level. During supervision, procurement staff participate in resolution o f procurement issues, support the update of the procurement plan, conduct post reviews, and follow up on actions that may have been mandated from a previous supervision mission. Training o f project implementation staff i s also provided during supervision missions, frequently to address capacity issues noted during earlier missions. Supervision also occurs throughout the implementation o f procurement under the project through prior review. 8. Risk Assessment and Monitoring Tools. Development o f better risk assessment tools to identify and mitigate risks associated with the design and implementation o f Bank-supported projects was initiated in FY06. In Europe and Central Asia (ECA), procurement staff worked with the financial management staff using the Risk and Portfolio Management-Portfolio and Risk Management (RAPMAN-PRIMA) management information system to define the risk associated with new project^.^ In South Asia Region (SAR), a "dynamic risk model" was introduced and tested in several projects. The dynamic risk model i s designed to be used during the procurement capacity assessment o f the implementing agency that i s mandatory for all new projects. InFY07, based on the successful piloting o f this tool, the Procurement Sector committed to move forward with completing the design and roll-out o f the dynamic risk model as a web- based application that will interface with other procurement databases. The application will enable monitoring o f risk andrisk-mitigation measures duringthe life of aproject. 9. Procurement Decentralization. The focus o f procurement decentralization remains on providing better service, increasing client access, building capacity, and maintaining country-based knowledge, including o f the country's procurement system and implementation practices. Overall, the level o f decentralization of procurement authority remained stable in FY07 (see Table l), with increases noted in East Asia and Pacific (EAP), ECA, and Middle East and North Africa (MNA) and modest reductions in Africa (AFR) and Latin America and Caribbean (LCR). Levels in SAR remained unchanged. Decentralizationdelegations are closely monitored by Regional Management Teams and the Procurement Sector Board and are based on staff capacity, experience levels, and changes in the make-up of the country's portfolio (which affects the number, type, and complexity o f procurement in Bank-supported operations). A key concern is continuing to balance the level o f decentralization o f authority with risk, both at the country level and that associated with the portfolio o f projects being implemented in the country. The current levels o f decentralization, which have stabilized at around 75 percent overall since FY05, will likely not increase significantly in the future. Staffing issues associated with decentralization relating to mobility, career development, and costs are emerging and will be considered in reviewing the decentralization strategy in FY08. These issues are addressed ingreater detail inSectionV o fthis report. RAPMAN-PRIMA i s a management information system first introduced in ECA in FY06. The Financial Management Sector (FM) is linking this tool with other data resources and expanding it to include monitoring with regard to the F M Practices Manual. This tool will remain a source of information for procurementstaff as well. 4 , Table 1. Procurement Decentralization Trends, FY04-07 om 350/388projects. I 10. Prior Reviews. The high level o f active investment projects, 1503 in FY07, continues to drive the work program o f most Regional procurement staff. A key function performed by procurement staff i s that o f prior review' o f contract activities financed by Bank-supported investment operations. While prior review i s a key fiduciary compliance function, it also serves as a means to build client capacity. Decentralization o f staff to country offices allows work previously seen as purely compliance to contribute more broadly in helping borrower staff understand procurement documents and procedures. Approximately 6,251 contracts, with a total value o f $7.7 billion, were subject to procurement prior review in FY07. The number o f contracts subject to prior review declined by 7 percent from FY06, continuing a trend toward less prior review. The value o f contracts reviewed as a percentage o f the Bank's disbursement remained consistent with that of FY06, at approximately 40 percent. Figure 1 shows FY07 Regional data on prior review o f contracts in relation to disbursements. Variations among Regions relates both to the capacity of countries in the Region and to the types o f projects under implementation inthe Regions. ' Per the Loadcredit Agreement, certain procurement actions taken by the borrower-for example, issuingbidding documents, evaluating bids, and recommending contract awards-must be reviewed by the Bank and a written "no-objection'' provided before the borrower may proceed to the next stage of the procurement process. This "prior review" usually applies to procurement actions for contracts involving international competitive bidding, those above defined monetary thresholds, and the first one-to-three procurement procedures using national competitive bidding. It is also required for all consulting service selections using single source and those above specified monetary thresholds. Prior review thresholds are set on the basis of assignedrisk for a given country and for projects within the country, based on the assessment ofthe capacity ofthe executing agency. 5 Figure 1. FY07 Prior Review Contract Value and DisbursementAmount US$ mllion rn Dsb in FY07 value % reviewed contract value I disbursemnt 11. Prior Review ContractAward 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 o f awarded contracts by country, Region, and sector as well as by contract type (goods, works, and consulting services). As noted, this database only captures prior reviewed contracts and it therefore provides a limited view o f the number, type, and value o f contracts financed under Bank-supported investment operations. Figure 2 presents trends on value and number of contracts subject to prior review between FY02-07. The number o f contracts subject to prior review has continued to decline, but the value has remained more stable. This i s consistent with the sector's objective o f reducing the number o f contracts subject to prior review by focusing prior review on higher-value transactions. Figure2. Trend of Procurement Prior Review Contracts by Number and Value of Contracts 9,500 9 000 9,000 8,000 cI 7,000 8,500 6,00022 5 8,000 5,000 4,000 7,500 3,0002 7,000 2,000 1,000=5 6,500 cal Yea 2002 2003 12004 12005 I 2006 I2007 I 0 I-*. - ,A I Anaunt (US$ MI 7,548 7,578 1 1 18,481I 6.964 17,478I7,655 1 +Nurrber 8,025 8,233 8,301 8,145 6,757 6,251 12. LeadingSuppliers. Table 2 depicts the top 10 supplier countries for FY05-07 and provides the percentage o f the Bank's portfolio represented by contracts awarded to these 6 countries. China has led this list for several years, followed closely by India. China and India also led the list of top 10 Bank borrowers during this period. The data indicate the growing success of firms from borrowing countries in competing effectively for Bank- financed contracts and demonstratethat there is an opportunity under large infrastructure- type projects for qualified firms in borrowing country to win such contracts. Additional data drawn from the Form-384 database is provided inAnnex A. Table 2. Top 10 Supplier Countries by Major Bank-Financed Contract Amount Note: "UN Agency" is a grouping of all UN agencies that receive supply contracts, which primarily cover vaccines and other drugs and orders from the Inter-Agency Procurement Service Organization (IAPSO) catalogue. 13, Operations Procuremefit Review Committee. The Operations Procurement Review Committee (OPRC) provides a key oversight role with regard to procurement by reviewing and clearing the highest value and most complex contracts financed under Bank-supported operatiom6 During FY07, the OPRC reviewed 138 cases (a 55.5 percent increase from FY06), valued at $8.8 billion. The trend of increasing numbers of high-value contracts began in FY05 with the Bank's renewed financing of large infrastructure projects. The rising trend (see Figure 3) also reflects an increase in complex procurement, below the mandatory thresholds, brought to the OPRC at the request of the Regional Procurement Managers (RPMs). This trend will be analyzed to determine if the current rules for the OPRC and monetary thresholds for review need to be updated. The current rules andthresholds have beeninplace for more than 10years. 6 This includes (a) contracts for procurement of goods, works, and nonconsultingservices costing $25 million or more; (b) consulting services contracts costing $10 million or more; and (c) single-source consultingservice contracts costing$5 million or more. Other cases may be considered at the request o f the RPMs. 7 Figure 3. Trend of OPRC Review by Number of Contracts, FY03-07 TrendofOPRCReviews (FY03-FY07) Number of 150 Contracts 138 100 50 I 0 FY03 FY04 FY05 FY06 FY07 14. OPRC Contributions. While the OPRC operates as an internal Bank control, it also contributes to country capacity development through the rulings and advice it offers on the cases presented. Through the task team leader (TTL), borrowers are provided with information on process and procedural issues and they are given guidance on corrective actions that need to be taken. The information generated by the OPRC is also a rich source o f training material for Bank procurement and procurement accredited staff. The outcome o f cases presented to the OPRC are documented and shared on a quarterly basis with all WMs, which provides a unique opportunity to view how complex procurement issues are resolved. Case studies drawn from OPRC cases are now regularly being used as part o f procurement staff training programs. 15. Procurement Post Review. During FY07, procurement post reviews (PPRs) were conducted on 619 projects, representing 77 percent o f the projects subject to post review. This level i s the same as the 78 percent post reviewedinFY06. Table 3 shows the FY07 numbers for post-review monitoring by Region. Procurement post review i s carried out by procurement staff during supervision o f projects. The frequency and degree o f post review i s based on the procurement risk assigned to the project. For example, a project with a highprocurement risk, assigned on the basis o f country risk and executing agency capacity, will normally require supervisiodpost review every six months and will require a high percentage o f contracts to be sampled and reviewed. It should be noted that the budget for procurement participation in supervision and post review is controlled by the TTL and financing is not always available to meet the recommended levels o f post review. Post-review guidance i s provided to all staffe7 PPR i s an integral part o f Regional procurement staff work and has a significant impact on client capacity building through follow-up work with clients to address issues noted. Indications o f misprocurement under Bank-supported operations are usually found during PPRs. (Information on trends inpost review over the past five fiscal years is provided in Annex A; see Figure A2.) It should be noted that the percentage of projects subject to post "Procurement Post Reviews and Independent Procurement Reviews: Processes and Procedures," Armando Araujo, Director, ProcurementPolicy and Services Group, July 2001. 8 reviewhas risen from 46 percent inFY03 to 78 percent inFY07. The rise inpost review i s consistent with the decrease in prior review o f contracts. Both are monitored to maintainthe overall balance neededto meet fiduciary oversight responsibilities. Item\Region AFR EAP ECA LCR M N A SAR Bankwide Number of Projects Subject to Post Review' 158 122 165 152 78 99 774 Number of Projects Post Reviewedb 139 85 114 152 42 87 619 Percentage of Projects Post Reviewed 88% 70% 69% 100% 54% 87% 78% I a. All investmentprojects (IBRDADA) in FY07 portfolio, excludingprojectsrequiring 100% Bank prior review and projects with insufficient contracts for post reviews. I l b. Datainclude projects under independent procurementreviews. 16. Quality of Supervision. The seventh Quality o f Supervision review (QSA7), which looked at 127 investment projects, noted a lack o f consistency inpost review and a failure o f staff to properly document post review. In response, the Procurement Sector created a working group to review post-review procedures, offer recommendations to improve the process, and suggest ways that the information generated by post review mightbe better captured and usedby the Bank to improve supervision o f Bank-supported operations. A comprehensive discussion o f the post-review template is contained in SectionV o f this report. 17. Independent Procurement Review (IPR). An IPR i s a review financed by the Bank to supplement and complement the work done by staff during post review. Such reviews also inform Regional management on the quality o f fiduciary work undertaken. Financing is provided through the Regional budgetingprocedures and varies from year to year. Projects are typically selected for IPRs on the basis o f risk, since such reviews can be costly and are additional to the normal financing provided for Bank supervision. During FY07, IPRs were conducted in 10 countries,' covered 42 projects, and entailed review o f 906 contracts. The number o f IPRs decreased substantially inFY07 because o f funding constraints, especially in EAP and MNA, where no projects were covered by such reviews. The Procurement Sector Board fully recognizes the value o f the IPR as one o f the fiduciary oversight tools that contribute to the quality o f Bank supervision (IPR findings help identify generic issues inthe portfolio, provide advice to task teams on implementation arrangements and risk mitigation measures, and provide feedback to their respective counterparts in implementing agencies). During the IDA14 control re vie^,^ management noted that IPRs add value to the Bank's control framework and ' These included Argentina, Brazil, Colombia, Croatia, Georgia, Guinea-Bissau, India, Lesotho, Paraguay, and South Africa. The IDA14 control review was initiated in FY06 and is continuing in a phasedapproach. This review i s examining financial management and procurement controls, including adherence to controls, procedures,and guidance. 9 recommended that consistent financing be made available to conduct IPRs following a risk-based approach. (Annex A provides information on IPRs conducted in FY07, including their cost; see Table A6.) 18. Misprocurement. The Bank's Procurement and Selection o f Consultants Guidelines state that the Bank does not finance expenditures that have not been procured inaccordance with the agreed provisions inthe LoanAgreement. Insuch cases, the Bank declares misprocurement, and cancels that portion o f the loan allocated to the goods, works, or consulting services that have been misprocured. The number o f contracts and value o f declared misprocurement vary widely from year to year and are a function o f many factors, including the performance and level o f experience o f implementing agencies under the many projects supported by the Bank. PPRs and IPRs are the main sources for the identification o f misprocurement, although some misprocurement is discovered during prior review and the contracts are not awarded. Some additional misprocurement i s identified on the basis o f complaints received from bidders and consultants, including complaints that are referred to INT for investigation o f allegations of fraud and corruption. Based on information maintained by RPM offices, 74 cases involving projects o f 25 countries were sent to INT for investigation in FY07. Data on misprocurement declared in FY07 are shown in Table 4. (Some additional comparative data on misprocurement declared inFY05-FY07i s included inAnnex A.) Although data are maintained on misprocurement declared each fiscal year, no particular trends have beennoted. Table 4. MisprocurementDeclared in FY07 Contract Region Number of Number of Countries Contracts Amount ($ `000) Bankwide 9 130 36,818 19. Complaints. An effective and competitive procurement process depends in part on the willingness o f bidders, suppliers, and consultants to participate in the process. A complaints mechanism that enables participants to submit complaints and have them addressed in a timely and fair manner contributes to the willingness o f participants to engage in the procurement process and helps to ensure compliance with procurement procedures. The Bank has long defined a complaints process to be followed under projects supported by the Bank and it remains committed to seeing that complaints are handled in a timely and fair manner by the borrower. A Bankwide Complaints Database was rolled out in FY06. In FY07, several new enhancements were added to the Complaints Database to improve the capture o f data and the ability to analyze the basis for complaints and to track the timely resolution o f complaints. Inaddition, a facility was added to the database in FY07 to capture and track issues related to payments for contracts awarded under Bank-financed projects. As a result, the Procurement Sector was able to prepare the first report to the Audit Committee on payment issues in 2007IO and will continue to monitor and provide reporting on this important area. DuringFY07, lo "Payment Issueswith Bank-Financed Contracts: Status Report," Procurement Policy and Services Group, September 2007. 10 346 complaints were registered, involving 213 projects in 63 borrower countries (60 projects received more than one complaint). Table 5 provides information on the number o f complaints received and handled in implementation o f Bank-financed projects in the past five years. The number o f complaints ina particular Region varies from year to year and the data are monitored to enable each Region to determine if the number o f complaints indicates a need for corrective action or training. Table 5. Comparison of Numbers of Complaints, FY03-07 FY AFR EAP ECA LCR MNA SAR Total 03 43 119 49 15 16 222 464 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 20. Complaint Trends. One o f the major benefits o f tracking data on complaints i s the ability to determine the nature of complaints submitted by participants. This information can help focus advice and assistance to borrowers on how to improve their implementation o f procurement and contributes to overall capacity development in client countries. Figure 4 provides information on the most frequent bases for complaints submitted in FY07. (Annex A provides a significant amount o f additional data drawn from the Complaints Database.) Figure 4. Major Nature of Complaints in FY07 Contract administration 13% Qualification of corruption 6% 21. Payment Issues. Over the past few years, interest has grown on the issue o f timely payment for contracts awarded under Bank-supported operations. As noted above, a new facility added to the Complaints Database now enables the Bank to monitor and report on the handling o f complaints and disputes regarding payment under contracts. (Annex A provides detailed information on FY07 payment issues as captured by the Complaints Database.) The aforementionedAugust 2007 status report on payments made several recommendations that are in the process o f implementation. These include continued monitoring o f resolution to help ensure timely resolution o f payment issues and 11 preparation o f guidance for staff to build greater consistency in handling o f such issues. This guidance will be incorporated into the guidance for conducting the capacity assessment o f the implementing agency for Bank-supported operations, which will be updated inFY08. 22. Responsivenessto Clients. The FY06 Annual Report included information on the responsiveness o f procurement staff to clients, tracked against the Bank standard response time (seven days) on procurement-related documents. This information i s 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 they serve within the Bank. Information was incomplete in FY06 as several Regions had yet to develop monitoring systems. In FY07, all six Regions completed development o f monitoring systems and reported on their performance in this area. Table 6 shows a consistently quick response time across all Regions, with the Bankwide average beingtwo days. Table 6. Procurement Business Response Time Indicators (FY07) Region Average responsetime Percent of Meeting Standard (Day) Service Time Bankwide Average 2.3 94 23. Quality Assessment. The Quality Assurance Group (QAG) conducts annual reviews o f Bank performance in a number o f areas. Two o f particular relevance to the Procurement Sector are the Quality at Entry (QAE) and the Quality o f Supervision Assessment (QSA). Each year a sampling o f contracts i s taken from the previous year's active projects and evaluated against a number o f criteria, including the handling o f procurement. The findings of the QAE7 and QSA7 reviews were reported inthe FY06 Annual Report, with procurement achieving overall ratings o f satisfactory or better on more than 97 percent o f projects reviewed. The ratings for the QAE8 are not yet finalized (but preliminary results show the same highlevel o f satisfactory ratings) and the QSA8 review has not yet been initiated. QSA7 provided the basis for recommendations on improving procurement supervision, as follows: 0 improve documentation on supervision 0 update 2002 guidance on post review 0 develop new tools to improve consistency o f post review and to capture data from supervision, especially on effectiveness o f risk-mitigation measures 0 initiate a study on procurement plans to review quality and adherence to the published plans. These recommendations formed the basis for the new post reviewhupervision template designedinFY07, which will be introduced for staff use inFY08. 24. Governance and Anticorruption in Projects. The GAC strategy was approved in the latter part of FY06 and much o f FY07 was focused on developing its implementation methodology. Procurement staff participated as members o f a series o f specialized working groups formed to define the elements o f the GAC strategy and provide guidance on how the strategy could be implemented. O f particular importance to procurement 12 work i s the implementation o f the GAC strategy in projects, which i s intended to contribute to the better design o f projects, including strengthening o f risk-identification and risk-mitigation measures and monitoring o f such measures for effectiveness. 25, GAG` Implementation. As noted earlier, the Procurement Sector is introducing the use o f the new dynamic risk model to help improve identification and mitigation of risk. Another area under development during FY07 was the strengthening o f guidance on supervision and provision o f tools to better capture data generated on project performance through supervision and post review. In addition to these measures, a key aspect o f implementation o f the GAC strategy in the project environment will be a focus on strengthening systems, building capacity, and working on prevention rather than on policing and sanctions. Box 1 provides examples o f some o f the good work being done in countries to support better handling of procurement in projects as a contribution to GAC implementation. Box 1. Tools for Better GAC Implementation in Projects With respect to fiduciary risk within Bank projects, LCR developedtwo important tools during FY07. Procurement Plan Execution System. The ProcurementPlan Execution System (SEPA in Spanish) is an innovative, web-based system that reports on all Bank-financed contracts over a calendar year, including all contracts plannedor under implementation. The systemis highly versatile and enables the public to search for individual contracts or groups of contracts clusteredby project, sector, or territory. Information can be aggregatedand reorganizedto provide abroad analytical view of the portfolio's performance. Groundwork was laid during FY07 for implementation of SEPA inseveral client countries(Honduras, Mexico, Paraguay, and Uruguay). Corruption WarningSigns. LCR prepareda good practicenote and operationaltoolkit on corruption red flags inprocurementand FM. The document andtoolkit provide identification of the most common corruption warning signs that may appear throughout the project cycle; it is intendedas a quick reference for task teams and fiduciary staff to help them identify issues that require further review and when to seek appropriateguidance on follow-up. 26. SanctionsReform. Reform o f the Bank's policy on sanctions was completed and approved early in FY07." This policy required revision of the Bank's Procurement and Consultants Guidelines, including (a) expansion o f the sanctions regime beyond fraudulent, collusive, and coercive practices; and (b) adoption o f "obstructive practices" as a separate sanction offense, covering both noncompliance with the Bank's third-party audit rights (rights o f access to information) and deliberate obstruction o f Bank investigations into fraud and corruption. Following the revision to the Guidelines, OPCPR oversaw the updating o f all Bank standard bidding documents and the standard request for proposals. Projects taken to the Board for approval after October 2006 are required to comply with the new policies and to use the standard bidding documents containing the expanded provisions required by the sanctions reform. The sanctions reform initiative also expanded application o f the Bank's remedies. In particular, the Bank now has the ability to issue a temporary suspension o f award to a firm or individual Sanctions Reform: Expansion of Sanctions beyond Procurement and Sanctioning of Obstructive Practices(R2006-0149/4) July 28,2006. 13 while the due diligence process for debarment is being completed. The Bank is also working more closely with INT to ensure that projects supported by the Bank benefit from the lessons learned by INT from their investigations o f fraud and corruption under projects. 111, COUNTRYWORK 27. This section has been restructured from previous years by separating it from coverage o f harmonization, most o f which focuses on products and coordination at the country level. Duringa discussion o f the Independent Evaluation Group (IEG) report on Country Financial Accountability Assessments (CFAAs) and Country Procurement Assessment Reports (CPARS)'~with the Committee on Development Effectiveness in June 2007, OPCS management agreed to provide more focus on procurement reform and capacity-development initiatives in the FY07 Procurement Annual Report. This section focuses on specific country-based activities and tools and includes country examples. 28. Assessment Tools. The July 2005 memorandum jointly issued by the Vice Presidents o f OPCS and PREMI3had a major impact on how the Bank engaged in the planning and implementation o f assessments o f public sector financial management systems in client countries. This note, coupled with the removal o f the mandated requirement to conduct fiduciary economic and sector work (ESW) on all active borrowers, furthered the already significant moves toward conducting integrated ESW and toward a strengthened approach on how the Bank should engage at the country level to improve the overall effectiveness o f work on public sector management systems. While the CPAR still provides the core o f information available on country procurement systems, the number o f new CPARs conducted had already dropped dramatically in FY06 (only one CPAR was delivered in FY06 versus 14 in FY05). The tendency toward separate fiduciary ESW being superseded by integrated reviews-through use o f either the PEFA indicators and strengthened approach, or customized approaches to ESW, including a new review, the Integrative Fiduciary Assessment (1FA)-was further consolidated in FY07. Table 7 shows the ESW completed in FY07 and indicates the nature o f this work, which has now become highly integrated (with internal and external partners) and more demand driven. Many Regions increased their focus on follow-up activities to enhance the effectiveness o f implementation o f the recommendations from existing CPARs. '' "Country Financial Accountability Assessments and Country Procurement Assessment Reviews: How Effective Are World Bank Fiduciary Diagnostics?" (CODE2007-0010) February26, 2007 l3 "Strengthening the Bank's Public Financial Management Work," issued July 25, 2005 by James W. Adams, OPCS, and Danny Leipziger, PREM. 14 Region Country Report Name 29. Country Procurement Assessment Reports. In May 2007, the IEG report Country Financial Accountability Assessments and Country Procurement Assessment Reports: How Effective are the World Bank Fiduciary Diagno~tic'~ was discussed with the Committee on Development Effectiveness (CODE). During this discussion, OPCS presented the joint management response from the Procurement and Financial Management Sectors to the three sets of recommendationsput forwardinthe IEGreview. Table 8 summarizesthe recommendationsandthe responseprovided. l4 "Country Financial Accountability Assessments and Country ProcurementAssessment Reviews: How Effective Are World Bank Fiduciary Diagnostics?" (CODE2007-00 IO) February26,2007 15 Table 8. Management Responseto IEG Report Recommendation Management Response Gear CFAAs and CPARs more Mostly agreed. directly to the fiduciary goal 0 Common definition of 0 Inthe case ofprocurementandthe CPAR, risk fiduciary risk in all must be defined with regard to the risk factors diagnostics relevantto procurement. A common definition Standardizedframework would not be useful or practical. and methodology for Aggregating risk under a standardizedframework aggregatingcountry level i s not seen as usefbl, as risk factors play a different PFMrisk role inindividual country environments Guide staff on risk New risk tools and guidance for staff are under assessment and how it development and will contribute to betterproject influences project design design Enhance the quality of the Agreed diagnostics July 25,2005 memojointly issuedby 0 Issue revisedjoint guidelines OPCSPREM VPs provided staff guidance PFM training initiated in2005 with PEFA 0 Develop and implement training for staff Programand is ongoing on aregular basis Improve outcome and impact of Agreed fiduciary work 0 Support clients inpreparing Key to the strengthenedapproachintroduced in a single, integrated, July 2005 is the preparation of an integrated, prioritized, and costedset of prioritizedstrategy for PFM reform actions for PFM reform 30. Result of IEG Report Discussion, The discussions with the Committee resulted ina commitment by Management to focus more attention on quality, joint and integrated products, and results at the country level. It was noted by some members of the Committee that there i s an issue with the publication o f ESW products, many o f which are not available to external parties. As a result, both Procurement and Financial Management agreed to make all disclosable products available on external websites and through the Bank's ImageBank, and to follow up with countries that have not yet agreed to disclosure. A second discussion concerning effectiveness o f ESW resulted in a commitment to provide more information on reform initiatives in upcoming Annual Reports. 31. OECDDAC Benchmarking Tool. In July 2006, the Joint Venture for Procurement, a working group o f the OECD/DAC's Working Party on Aid Effectiveness that i s cochaired by the World Bank, introduced a new tool for assessing aspects o f a public procurement system against agreed international benchmarks." Application o f this tool, "Methodology for Assessment of National Procurement Systems," has become a growing feature o f procurement country assessment work since early versions o f the tool surfaced in 2005. By the end o f FY07, more than 20 countries had applied the l5 Membership of the Joint Venture for Procurement includes all OECD-DAC member countries, all of the MDBs, the United Nations Development Programme (UNDP), the European Commission, and more than 20 partner countries. 16 benchmarking tool as an element o f country work, using this tool as a complement to a CPAR or a customized update. The tool enables a more precise identification o f the strengths and weaknesses o f a country procurement system and in doing so, it creates a better basis for dialogue with country counterparts, including other donors active in the country, to create and implement a prioritized strategy for addressing weaknesses. The OECD benchmarking methodology identifies critical elements of sound procurement for scoring under several o f the Public Expenditure and Financial Accountability (PEFA) indicators and facilitates the Bank's commitment to approaching public sector financial management and governance work on a more coordinated and structured basis. Box 2. ECA Albania: Procurement and P F M Country Diagnostics - Task/Objective. The main objectives o fthe combined fiduciary assessment (CFA) were to assess the strengths and weaknesses ofthe public financialmanagement(PFM) system in Albania, and support the borrower's initiative to prioritize PFM actions and measureprogress on PFMreforms, with an emphasison procurement. The CFA appliedthe OECD/DAC-World Bank Indicatorstool for assessingthe public procurement system andthe PEFA indicatorsfor the overall public financialmanagementsystem. Impact and Statusof Reform. The CFA identifiedpolicy recommendationsto strengthenPFMreform in Albania, including enhancingthe autonomy o fthe Public ProcurementAgency, creating an independent complaintreview mechanism, and regulatingthe use of direct contracting. A new Public Procurement Law, enacted inNovember 2006, addressedkey problemsnotedinthe CFA. 32. Use of Country Systems. InJune 2007, OPCS submitted Use ofcountry Systems in Bank-Supported Operations: Status Report to the Board.16 This report covered initial lessons emerging from the piloting o f the use o f country systems in Safeguards, and on the basis o f emerging lessons proposed to scale up the pilot program from project-based to full country-based pilots. It further defined a plan to address the use o f country procurement systems and to continue to build on the use o f country financial management systems, which was already a default position for the Bank. The Status Report stated that a full and detailed procurement methodology would be prepared, subject to the Board's agreement to proceed, and that the detailed methodology would be the basis for full and complete consultations with stakeholders, including the private sector, partner organizations, civil society, and, most importantly, client countries. The Board expressed its general support for the Bank's intention to expand its reliance on country systems that have been determined to be effectively equivalent to the Bank's system and asked staff to prepare the detailed procurement methodology and conduct a wide and substantial process o f external consultation on this proposedmethodology. The Board's direction, received at the end o f FY07, set the stage for the work carried out thus far in FY08. It should be noted that the proposed detailed methodology was drafted and posted on a dedicated external website in September 2007. The formal consultation period opened September 17,2007." 16 Use of Country Systems in Bank-Supported Operations: Status Report, (R2007-0079/4) October 15, 2007 " Following the conclusion of one of the most extensive and wide-ranging global consultations conductedby the Bank, which closed inJanuary 2008, OPCS prepared a reviseddetailed methodology 17 33. Procurement Reform. The remainder o f this section draws on Regional information on specific reform initiatives in client countries that demonstrate the types o f activities that are being undertaken to strengthen country capacity and procurement systems performance. The Regional summaries in Section VI11 provide additional information. Box 3. EAP-Philippines:ProcurementReformInitiatives Procurement Reform Initiatives. The Philippines2007 CPARestablishedthat the Government o f Philippines(GoP) haddeveloped(a) LegalandRegulatoryFramework,(b) InstitutionalandManagement Capacity, (c) ProcurementOperationsand Market Practices,andhadstrengthened(d)the Integrityand Transparencyofthe Public ProcurementSystem. The GoP and its developmentpartnersagreedto pursue coordinatedefforts inthe followingkey areas relevantto implementationandenforcemento fprocurement reform: (a) further development of phases2-5 ofthe PhilGEPS(e-GP system) and steps ensure that the quality of e-GP systems makes their use acceptablefor MDB-fundedprojects, (b) implementationof a strategic communicationplan, and (c) professionalizationof the procurementfunction. Impact of Reform Initiatives 0 Increasedforeign investment: Created opportunities for foreign biddersto participate when (a) items are not locally available, (b) there are parity or reciprocityrights betweencountries, as a consequence of internationalor executive agreements, or (c) a local branchoffice is registeredinthe Philippines. To date, a number of Chinese, Korean, Japanese, U.S.,and other foreign companies have beenissued special licensesor permitsto conduct business inthe country andparticipate inbothgovernment- funded and foreign-assistedprojects. 0 Economic and efficientcontracting: With issuanceof harmonizedPhilippineBiddingDocumentsand Generic ProcurementManuals andtrainingbeingconductedto improve capacity ofprocurement practitioners nationwide, a numberof savings were realized inthe past year. 0 Transparency: The ProcurementReformLaw mandated(a) the biddingprocess be observedby civil society and professionalorganizations, (b) development anduse ofPhilGEPS as the single portalfor procurementinformation, and (c) use of standardbiddingdocuments andprocurementmanuals. 34. Institutional Development Fund (IDF). Each year the Bank makes approximately $25 million in grant financing available through the IDF, which finances quick, action-oriented, upstream capacity-building activities that are closely linkedto the country assistance strategy (CAS). Allocation o f IDF grants i s competitively awarded on a Regional basis and focuses on financing in several key areas: legal; monitoring and evaluation; public financial management; and procurement. In FY07, four new IDF grants were awarded for procurement activities, for a total amount of $1.6 million. (IDF grants are limited in size to no more than $500,000.) Inaddition to new grants, there are several ongoing activities financed by IDF. Box 4 provides examples of how the IDF grants are contributing to procurement reform initiatives. for a piloting program. Use of Country Systems in Bank-Supported Operations: Proposed Piloting Program (R2008-0036l3) was sent to the Audit Committee on March3,2008. 18 Box 4. InstitutionalDevelopmentFund (IDF) Grantsfor Procurement Brazil: A new IDF is beingused inthe Minas Gerais state inBrazilto continue improvementsto the procurementsystems andenhancegovernance andtransparency. China: A new IDF is beingused in Chinato support the preparationanddisseminationof implementation regulationsissuedunderthe China Tenderingand BiddingLaws. The projectwill review and consolidate existingregulations,which currently are issuedunderthe two laws. An existing IDF grant is beingusedto promoteimplementationofe-GP in China and is financingthe formulation ofa strategy, including standards, systemrequirements,andtraining. Morocco: An existing IDF grant on modernizationo f publicprocurementinMorocco is financing an e- procurementportalthat provides access to complete information on procurement,includingregulations, trainingprograms,documents,andopportunitiesfor contracts. Biddingdocumentscan be downloadedfor free. Access and use ofthe portalis available to all levels of government. Bidders can receivebidrequests by email accordingto their geographical, sectoral, or ministerialinterests. Vietnam: An existingIDF grant is beingusedto support an assessmentofthe publicprocurement frameworkusingthe OECD/DAC benchmarkingtool. The findings were discussedinJanuary 2007 at a stakeholdersworkshop. Five donorsjointly workedwith the governmentto discuss the specific improvementsrequiredinthe legalframework to bringit in line with internationally agreedpractices. The grant will help finance some ofthe initial activities once the government has set its prioritizedstrategy. 35. E-Procurement. Electronic government procurement (e-GP) continued to play an instrumental role in the Bank's country work agenda. Given its high potential for increased transparency and compliance, e-GP has been promoted as part of the Bank's procurement reform and GAC agenda, to strengthencountry procurement systems. Under the leadership of the Procurement Anchor, a core team of committed e-GP champions from the Regions and the Global Information and Communication Technologies department (GICT) has contributed to building e-GP capacity in client countries and within the Bank. Examples of knowledge-sharing activities and learning events include the following: 0 the International Public Procurement Conference "Advancing Public Procurement: Practices, Innovation, and Knowledge Sharing," held in Rome, Italy, September2006 0 the United Nations Commission on International Trade Law (UNCITRAL) Congress "Modern Law for Global Commerce," held in Vienna, Austria, July 2007 0 two public procurement courses at the International Labor Organization (ILO) International Training Centre, held in Turin, Italy, September 2006 and April 2007 0 the Seminar on "E-Government for Development: Strategies and Policies" heldat the United States Telecommunications Training Institute in Washington, DC, June 2007. 36. E-GP Assistance. Procurement staff assisted numerous countries in developing systematic e-GP programs. IDF grants (e.g., Armenia, Azerbaijan, China) or other grants (e.g., Afghanistan, Bhutan, Maldives, Nepal) helped governments design strategic e-GP plans and start their implementation. The terms o f reference (TORS) followed the 19 approach suggested by the MDB e-GP Working Group. Based on an initial e-GP readiness assessment, a strategic e-GP implementation plan is suggested and discussed among all stakeholders before being approved and implemented. Other Bank projects that includede-GP components were undertakeninBangladesh, India, and Vietnam. 37. Challenges. The biggest challenge and lesson learned in this context is that the introduction of e-GP must be seen as a program with critical foundations, among which technology is the least problematic one. The most critical success factor i s government leadership and support. InArmenia, for example, the e-GP strategy was approved by the Parliament, providing the e-GP implementation program with high-level endorsement. The strategy is being implemented through an e-GP component in the Public Sector Modernization Project, among other initiatives. 38. Assessment of E-GP. Under its fiduciary mandate, the Procurement Sector leads the review and assessment of country e-GP systems for their use under Bank-funded operations. E-GP systems in Brazil, Chile, and Mexico were approved under a piloting program for use for specific procurement transactions (off-the-shelf goods under the national competitive bidding [NCB] threshold) under Bank operations and new assessments were started in EAP (Indonesia, Philippines) and SAR (India). As a result, specific action plans were established to modify the e-GP systems in line with the "E- Tendering Requirements for MDB-Financed Procurement." Issues to be addressed in partner countries typically relate to security andprocedures for e-tendering. 39. GAC at the Country Level. The GAC Implementation Plan states that "country strategies that effectively and systematically address GAC impediments to development and poverty reduction" are at the heart of the implementation plan. Box 5 provides examples on how procurement is supporting the GAC Implementation Plan at the country level. 20 Box 5. GAC Initiatives at the Country Level ~~~~ Yemen GAC/ZNT Workshop. At the invitation of the Yemeni Minister of Planningand InternationalCooperation, the Yemen Country Office, inconjunctionwith INT, presentedthe Bank's anticorruptionstrategy and introducedINT to the invited officials. This meeting ledto a continued dialogue amongthe Government of Yemen, the CountryOffice, and INT onthe importanceoftransparencyand the needto ensure the proper use of funds. It providedthe Minister with the opportunityto present Yemen's newly introducedmultifacetedanticorruption agenda. The Bank is continuingto support Yemen in advancing these importantinitiatives. Part of this work, which has beencoordinatedwith United States Agency for International Development (USAID), involves support to the development of aprocurement management informationsystem for trackingof, and providing access to informationon, government tenders and contract awards through a publicly accessible web portal. ZDF Grant in Maldives. An IDFgrant providedto the Maldiveshas a componentthat focuses on public awareness of corruption and the impact that strengtheningthe procurementfunction can have with regardto anticorruptionefforts. The main elements of the grant involve (i) conductingworkshops to raise awareness on financial regulations(coveringprocurement), (ii)creatingawebsitetoprovideonlineinformationonprocurement,(iii)conductingan advertisingcampaign on the fight against corruption, and (iv) conducting a public perception survey on corruption. Corruption Vulnerability Scan (CVS). The CVS is an instrument developed inECA that provides informationon the Bank's vulnerability when providing assistance to countries. The CVS builds on work already done, such as the CFAA, PEFA, CPAR, portfolio review, and BusinessEnvironmentandEnterprise Performance Survey (BEEPS). The CVS processwas used inBelarus and Ukraine and will be consideredfor use ina number of other countries. The findings contributeto preparation of the GAC sections ofthe CAS and analysis o fthe active projects in a portfolio to identify high-riskareas and proposemitigation measures. Data Mining System in Brazil. The State of Minas Gerais in Brazil implemented a data mining system, called "Tamandua." Deployment to all line secretariatsand controllerswill be financed by a multisectorSectorwideApproach (SWAP)operation. The applicationaims at consolidating all informationon government procurement and contracts from various databases and preparing managementreports and statisticalanalyses. The systemcan be usedas an input to audits andto identify trends for potentiallycollusive practices. IV. HARMONIZATION 40. There is a strong relationship between country work and work done to further harmonization, which affects how things are done at the country level. The FY07 Annual Report separates coverage of harmonization from country work to provide more clarity on the activities that contribute to harmonization. Most of the following activities are led by OPCPR, but the involvement and contribution of staff from across the Regions, including the participation of RPMs, is key to implementation. 41. 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 HOPthat also meet on a regular basis to prepare the documents that are agreed as part of the HOP'S harmonization work program. The following is a summary of the activities of the HOP during FY07. 21 The Harmonization Working Group designated by the Heads of Procurement of the MDBs produced the final version of the Master Procurement Document for Procurement of Small Works. Its implementation will begin in FY08, after the approval of the document by the HOP. This document is addedto the list of harmonized procurement documents for Prequalification for Procurement of Works, Procurement of Goods, Procurement of Plant Design, Supply & Installation, and an Request for Proposals (RFP) for Consultant Services. 0 In line with the two areas declared as priorities by the HOP, a new working group was created to develop guidance material on procurement of Public- Private Partnership (PPP) options, and it is expected that the existing working group (WG) on information technology/information systems (IT/IS) procurement will complete the harmonization of bidding documents in2008. 0 In the area of harmonization, the Bank's Procurement Anchor chaired the MDB e-GP Working Group, which met inRome, Italy, and Washington, DC in September 2006 and March 2007, respectively, to discuss the joint e-GP agenda and resulting deliverables, including an update of the E-Tendering Requirements for MDB-Financed Procurement, an International e-GP Study and papers on "Corruption and Technology in Public Procurement" and "E- GP Specifications."" (These documents have been posted on the OPCS/Procurement website.) In addition, the MDB e-GP Working Group started to develop a harmonized I T Standard Bidding Document to be made available to client countries as an interactive web-based application. 42. OECD-DAC Joint Venture. Following the Paris Declaration issued in March 2005, the 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 specifically to support donor coordinated and harmonized work in the area of procurement reform at the country level. Several key activities have taken place under the JV for Procurement. 43. Joint Venture Pilots. In December 2006, the Africa Region's Procurement Management team, the United Nations Development Program, and the JV for Procurementjointly sponsored a regional procurement workshop in Uganda that brought together participants from more than 40 countries to share experiences and foster capacity development. During this workshop, the JV for Procurement announced a new pilot program, involving 22 countries,lg to test the use of the JV benchmarking tool and its impact on facilitating the development and implementation of a well-formed strategy for addressing identifiedweaknesses in a procurement system. The results from the 22 pilot ~~ 18 Bilateral Development Bank International Survey of e-Procurement Systems, MBD e-GP Working Group, May 2007; Corruption and Technology in Public Procurement, MBD e-GP Working Group, April 2007; andE-GP Functional Specifications, MBD e-GP WorkingGroup, April 2007 The JV for Procurement pilot countries include Afghanistan, Bangladesh, Botswana, Burkina Faso, Cameroon,Cape Verde, Indonesia,Kenya, Lao PDR, Malawi,Mongolia, Niger,Paraguay,Philippines, Rwanda, Sierra Leone, Sri Lanka, Tanzania, Togo, Uganda,Vietnam, andZambia. 22 countries (as well as other countries that may choose to apply the benchmarkingtool) will form the basis for reporting on the procurement targets included in the Paris Declaration.20 To become a JV pilot country, each country expressed its interest and identified a group of donors at the country level willing to support the country as a pilot. The World Bank, through its country offices, is supporting all of the pilots inconducting the benchmarking exercises, invalidating the results of the benchmarking exercise and in developing a procurement capacity development strategy. This pilot program i s intended to continue into 2010. 44. Procurement Workshops. Following the announcement of the JV for Procurement pilots, a series of "kick-off' workshops sponsoredby the JV, the Bank, and other donors were held to provide each pilot country with training on applying the benchmarking tool, validating results, and developing a strategy to address weaknesses in the system. Workshops were held in Nairobi, Kenya and Yaounde, Cameroon for African pilot countries, and in Jakarta, Indonesia for South Asian and East Asian pilot countries. In addition, a workshop in Lima, Peru in May 2007 jointly sponsored by the JV, the World Bank, and the Inter-American Development Bank attracted participants from 15 countries from Latin America and the Caribbean. Although Paraguay is the only JV pilot country in LCR, the workshop was used an opportunity for countries to share experiences and to expand the use of the benchmarking tool. Participants in the workshop uniformly expressed their interest in applying the OECD/DAC benchmarking as part of designing and implementing more effective programs to improve national procurement systems. 45. JVfor Procurement Meeting. The second meeting of the JV for Procurement, held in Copenhagen, Denmark in September 2007, provided the opportunity for participants from 24 partner countries to share experiences and raise key issues for further consideration by the JV. The World Bank provided abriefingto the Joint Venture on its proposal for piloting the use of country procurement systems and how the Bank saw this proposal as complementing the work of the JV and supporting harmonization of donors around using acceptable country procurement systems. Key participants of the JV for Procurement also met with industry representativesthat participate as part of OECD's Business Industry Advisory Council (BIAC) to hear their comments regarding the procurement benchmarking tool. It was agreed that the dialogue with BIAC would continue and that the JV for Procurement would work with BIAC to broaden representationof private sector organizations to participants from partner countries. 2o The Paris Declaration was the result of the High-Level Forum on Aid Effectiveness held in Paris in February 2005. The Declarationcontains two target indicatorsthat involve procurement: indicator 2b tracks the improvementof procurement systems and indicator 5b commits donors to increase the flow o f aid funds relying on country procurement systems as those systems demonstratethe achievement o f agreed standards. 23 Box 6. SAR -Bangladesh: Harmonization and Donor Collaboration Bangladeshis one of the pilot countriesfor the OECD-DACprocurementinitiative, andit is starting its process for pilotingthe updatedbenchmarkingfor key implementingagencies, includinguse of the procurementperformancemeasurement system. Other key efforts inBangladeshincluded(i) preparation by the Bank and DFID of ajoint strategicnote on procurementfor the CAS, (ii)preparationofa detailed Public ExpenditureandInstitutionalReview(PEIR) assessment, ledby PREM, includingprocurement,in collaborationwith the Departmentfor InternationalDevelopment(DFID) andthe Asian DevelopmentBank (ADB), (iii)Bank coordinationwith DFIDon capacity buildingand voice accountability issues for the follow-onprocurementreformprojectthat is starting implementation,(iv) ADB provisionof some $1 million TA to the Governmentfor strengtheningthe projectmanagement andmonitoringcapabilities ofthe ImplementationMonitoringandEvaluationDivision(IMED) ofthe Governmentof Bangladesh(withthe Bank complementingthis throughprovisions of infrastructure and logistic supportto IMEDinthe follow- on reformproject). 46. Environmentally and Socially ResponsibleProcurement (ESRP). Inthe field o f Environmentally and Socially Responsible Procurement (ESRP), an Information Note on Asbestos was drafted and the former Sample Bidding Document for Procurement o f Pest Management Goods and Services was updated to include recent best practice derived from the Food and Agriculture Organization (FAO) and the World Health Organization (WHO) guidelines. Both documents will be issued in FY08 following internal consultations. 47. Core Labor Standards. In addition to the two core labor standards prohibiting forced or compulsory labor and harmful child labor included in the harmonized general conditions o f contract that form part o f the StandardBiddingDocuments for Works, two other core labor standards were included as part o f the particular conditions. The newly included standards address workers organizations and nondiscrimination and equal opportunity and are identical to those applied by InternationalFinance Corporation (IFC). 48. Trust Fund Partnerships. The Bank is continuing to participate with other donors in the use o f multidonor trust funds to provide services, especially in countries with difficult working environments. Often the Bank i s asked to manage the implementation o f the trust fund on behalf o f the participating donors. Inother cases, the Bank will use the implementation capacity o f specialized organizations, including United Nations organizations and non-government organizations (NGOs). These multidonor trust funds often require individual negotiation o f terms and conditions, including those used for procurement and financial management. In FY06, a financial management umbrella agreement was put into place, but this agreement did not include procurement. Work on developing a procurement umbrella agreement to simplify the process o f entering into such agreements began in FY06 and is still continuing as a few key issues remain unresolved, including use o f the Bank's fraud and corruption provisions and the right to audit. These issues are particularly important to ensure that the Bank properly fulfills its fiduciary responsibilities entrusted under the agreements and specified in the Bank's own policies. 24 49. 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. Inthe past, the Bank has sought comments from industry groups on proposedchanges to its guidelines and has often relied on industry good practice in developing standard bidding documents (SBDs) for use under Bank-financed projects. The work with the associations has contributed to the harmonization agenda by expanding discussions to key stakeholders involved in procurement and issues surrounding procurement, such as ethics, quality control, and environmentally responsible procurement. InFY07, the Bank and other MDBs met with the International Federation of Consulting Engineers (FIDIC) and Confederation of International Consulting Associations (CICA) on topics including integrity; use of country systems in procurement; consulting services studies; and updatedchanges proposed to SBDs. In May 2007, the Bank and the Inter-American Development Bank jointly hosted the Biennial Meeting of International Lending Agencies and Consulting Industry (BIMILACI), a gathering of consulting industry representatives. Agenda items included discussions on policy for selection o f consultants; professional integrity; and red flags in procurement. These associations provide important insight on issues affecting procurement and have become increasingly important sources of development, often working closely with the emerging private sector inour partner countries. v. PROCUREMENT POLICY, TOOLS, AND INSTITUTIONAL INITIATIVES 50. A key aspect ofthe work program for the Procurement Anchor continues to bethe development of new policy and the maintenance and update of existing policy. This includes the maintenance o f the library of standard and sample bidding documents to ensure they are fully consistent and incorporate new and updatedpolicies. Policy work i s coordinated through the Policy Subcommittee of the Sector Board. In addition, the Procurement Anchor is responsible for the development, maintenance, and upgrading of system tools and other institutional initiatives to provide integrated business solutions and support services to staff and clients. Through a team-based approach that includes Information Solutions Group (ISG) and Regional staff, the Procurement Anchor delivered products and services, such as the post procurement module in Operations Portal and the contract awards website for the business community, during FY07 that further integrated policy with business processes while strengthening key fiduciary controls. The institutional capacity to capture, monitor, and report against procurement data has increasedby leveraging process integration with available technologies. 5 1. Rapid Response. Operational Policy (OP) and Bank Procedure (BP) 8.00, issued in March2007, was the culmination of the work of a broad team that studiedthe Bank's ability to respond to crises and emergencies and set out to define a more flexible and responsive set of policies based on what was learned. Having to balance fiduciary requirements with the risk of not achieving the desired objectives of the emergency operation, greater weight is given to considerations of speed o f processing and timeliness 25 o f the delivery o f critically needed goods, works, and services. This expedited approach i s allowed by controls and risk-mitigation measures from ex anti to ex post. Additionally, to facilitate decisionmaking, procurement specialists inthe field may be delegated higher review authority withintheir task teams. 52. Regional Support. Regional experiences played a critical role inthe development o f OP/BP 8.00. For example, MNA staff have considerable experience inemergencies as many o f their operations in West Bank/Gaza and in Lebanon have been in response to emergencies and/or ina post-conflict environment. With this background, the Regionhas simplified documents and procedures and prepared documentation in Arabic, to use shopping procedures in the most efficient way and more effectively meet the needs o f target beneficiaries. MNAPR, in coordination with OPCPR, has developed a Regional Rapid Response Handbook for Procurement that reflects the lessons learned and provides samples o f simplified documents and other good practices. In FY08, OPCPR will work with other rapid response partners to prepare a handbook that builds on the lessons and experiences from all the Regions. 53. Rapid Response Committee. For projects that are designed under OP 8.00, the Regional Vice President (RVP), with the Country Director (CD), establish a Rapid Response Committee (RRC), in which a procurement specialist i s a key member. This approach provides more speed from the emergency occurrence to Board presentation, by allowing one-stop review chaired by the RVP. Regional procurement staff have been designated to be focal points for emergency projects, and all sectors and Networks have established a callable roster. On the corporate level, quarterly meetings on fragile and conflict-affected countries are chaired by the Managing Director. The main objectives o f these meetings are to keep track o f implementation progress and record the lessons learned inimplementation inthis challenging area o f Bank involvement. 54. PPP/OBMOBD/%fanagement Contracts. A final version o f Sample Prequalification Documents, Sample Bidding Documents, and a Technical Note for Procurement o f Management Services were produced; these documents were made available for use on a trial basis in FY08. OPCPR collaborated inthe development o f an operational/technical guidance note to staff titled "Implementing Output-Based Disbursement Mechanisms for Investment Operations," issued by OPCS on April 2, 2007. Additionally, OPCPR staff provided training to client countries on performance- or output-based procurement and on procurement o f services under performance-based road contracts, and contributed to the dissemination of information regarding procurement under PPP contracts among professional and trade organizations with a stake inBank-financed operational procurement inborrower countries. 5 5 . Procurement Tools and Initiatives. Duringthe fiscal year, several quality control initiatives were implemented to assess (a) data quality and corrective action plans, (b) improved compliance with businessprocessing standards, and (c) alignment o f system solutions with underlying policies and procedures. In addition, the following products and services were developed or improved inline with ongoing simplification efforts. 26 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 functionality was enhanced by developing (a) an alert system to direct users to seek RPM clearance before closing complaint cases, and (b) reports for analyzing late payments and distribution o f complaints across prior-review and post-review categories. Report templates were improved by adding additional data attributes to optimize data analysis and improve overall case management. An HTML text editing function was also built to facilitate capture and logging o f complaint documents and improve document retention and extraction procedures. The system has been undergoing continual improvements; the Board has approved a series o f new features that will be developed during the next fiscal year, including (a) updating pick lists with new attributes (e.g., "nature o f complaint" and "resolution o f complaint"), (b) an alert feature for pending complaint cases, and (c) automated case management reports for RPMs. 0 Dynamic risk model application. OPCPR continued development o f the dynamic risk model, a web-based system that measures risk levels inprojects based on a combination o f factors. In cooperation with SAR and drawing on methods that are being employed in several Regions, including ECA and SAR, the application i s nearing completion and should be launched by the last quarter o f FY08. A preliminary analysis for linking the application to other Bank systems has been completed. The risk model will be linked with the Project Portal, Procurement Complaints System, Department o f Institutional Integrity cases, Country Procurement Assessment Reports, and the web-based Post Review Module. These associations will allow for a more comprehensive integration o f key measures o f procurement risk assessments for new projects, incorporating better mitigation procedures in project design. The system has also been incorporated into the process for the procurement country systems piloting program to help assess fiduciary risks in pilot projects. 0 Post-review module. Business analysis and system requirements for the web- based Post Review Module were completed this fiscal year. OPCPR led a focus group composed o f lead procurement specialists and procurement staff across all Regions to develop the business requirements. The application addresses the need for a central repository for post review reports by automating the capture and electronic profiling (IRIS) o f PPR documents; it also improves the risk assessment and reporting function o f post reviews by adding a rating feature that assigns an overall risk score based on a set o f three risk indicators. Procurement staff can also enter recommendations for each indicator and produce recommendation reports that become part o f the overall PPR exercise. DuringPhase Io f implementation (FYOS), the PPR system will be piloted in all Regions; Phase I1will beginthereafter and link the system to other Bank applications, including the dynamic risk model, the complaints system, and the Implementation Status Report in the Operations Portal. As 27 with the dynamic risk model, the PPR system will further strengthen risk mitigation measures in project design, improve systems integration, and streamline proceduresthrough the use of technology. Contract Awards Publication Facility. During the last quarter of this fiscal year, OPCPR deployed in Client Connection the Contract Awards Publication Facility. This module provides clients secure online tools for publishing contract awards automatically to United Nations Development Business (UNDB) and Development Gateway (dg-Market). Having completed a roll- out pilot phase during FY07, OPCPR plans to market the application to borrowers during FY08. 0 Private Sector Liaison Officers (PSLO) website. OPCPR continued to provide avariety of country-specific procurement reports to the PSLO through a dedicated websitea2'Launched inEurope in 1999, the PSLO is a network of business intermediary organizations (chambers of commerce and industry, business and trade associations, investment promotion agencies) working to foster trade and investment among countries, with the support of the Bank's products and services.22 During FY07, the Procurement Anchor participated inthe PSLO retreat inWashington, DC, where it presentedthe PSLO website and delivered a one-day procurement contract and trend analysis workshop. 0 Simplification of Form-384, In an effort to streamline internal processes, OPCPR simplified Form-384 by removing 60 percent of previously mandatory fields. This was a result of a year-long study to determine which data fields were no longer requiredfor processing contract award information in line with the changes in Loan Department's (LOA) disbursement After lengthy consultations with the Regions, system "super-users," and ISG developers, OPCPR launched the new Form-384 module. Preliminary analyses have shown a sharp decrease in Form-384 delays and the near eliminationof procedural errors that have plagued the Form-384 process since it was created in Systems, Applications & Products system (SAP). OPCPR is also working on further simplification of the form as well as an online version for the Operations Portal, planned for release during FY08. 0 Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) functionality in SAP. In reference to sanction control for operational procurement, in FY06 OPCS was asked by the Controllers, Strategy, and Resource Management Vice Presidency (CSRVP) to develop a screening system for task teams to cross-reference check the supplier list in the SAP 384 module against UN Security Council Resolution 1267 and other available AML lists before issuing their no-objections to contract awards. ~ The site is also available to the public inthe Bank's Extranet. 22 The network facilitates local companies' access to Bank business opportunities, services, and knowledge, and acts as the voice o f their national private sector in advising the Bank on how to better engage companies on development issues. 23 Because the Form-384 process and the first disbursement against prior review contracts are interlinked, careful consideration was given to the relaxation o f the mandatory fields in the Form-384. Some aspects o f the simplification effort were made possible because o f the decision by the Loan Department to discontinue contract accounting as o f FY08. 28 After extensive discussions with all stakeholders and consultations with the Regions, the system was fully developed during FY07 as a back-door process in the Form-384 module in SAP. A due diligence standard and procedural framework for processing AML cases were also developed duringthis time to ensure proper alignment with AML case management requirements, transactional reporting needs, and quality control procedures. The system will be deployed Bankwide during the second quarter o f FY08. Other AML initiatives include developing an online version for use in the Operations Portal and the online Form-384 system. Integration of reporting and monitoring data in Business Warehouse. Business Warehouse (BW) is an SAP data reporting facility that allows the Bank to extract data from its systems and collate a series o f reports at various levels (Region, country, sector, project, and contract) and across various functions (Financial Management, Procurement, Operations, Resource Management, Loans). During FY07, OPCPR completed a Bankwide review o f its current procurement systems and those in development to identify possibilities for integrating existing applications with the new generation o f BW report for procurement. During FY08, OPCPR will be working with the BW team in ISG to develop a series o f new data collection systems that will stream information from the entire suite o f procurement systems into one electronic repository. Staff will be able to compile procurement reports through a user-friendly query-builder interface that fully automates the data collection, monitoring, and reporting functions at various levels o f the organization; it will also provide for real-time data reporting at any point in time rather than relying on the typical quarterly reporting practice. VI. STAFFING AND CAPACITY DEVELOPMENT 56. Staffing and capacity development remain core issues in the Procurement Sector. In FY07, the overall level o f staffing increased but issues remain with regard to experience, rotation and capacity development. 57. Staffing Resources. Staffing resources for the Procurement Sector increased in FY07 by 12 additional staff to a total o f 207 staff. Table 9 displays the current distribution o f procurement staff by Region. 24 ISG will launch a Business Intelligence focus group to work with stakeholders on the new reporting interface that will be developedduring FY08. The BW study done by OPCPR was in preparation for this initiative. 29 Table 9. FY07 Procurement Staffing by RegioniUnit AFR I EAP I ECA I LCR IM N A I SAR I OPC IBankwide 51 I 40 I 35 I 30 I 15 I 26 I 10 I 207 58 Staffing Concerns. Although the overall number o f staff has increased, the increases have not kept pace with the increased workload demands on staff inthe sector. The Procurement Sector Board held a retreat late in FY07 to identify key issues and discuss some possible solutions. The following i s a summary o f key issues identified: good pipeline o fjunior staff but insufficiently prepared as yet to replace senior procurement staff leaving the Bank need for rotation o f staff to comply with Bankwide guidelines on length o f stay in units and country offices, considered to be o f particular importance for fiduciary staff difficulties inattracting staff from outside o f sector and from outside the Bank difficulties in finding qualified candidates, especially for "G" and "H' level positions, in terms o f years o f experience, knowledge of public procurement, and requirededucation levels new demands requiringbroader set o f skills for staff. 59 Rotational Assignments. As a result o f the retreat, current staff were assessedby their managers to determine capacity development needs, identify staff who had been in their positions for five to seven years or longer, and identify staff who would benefit from a rotational assignment. Rotational assignments provide staff with the opportunity to gain experience in more than one Region o f the Bank, which has been a requirement recently added for promotion to the "H" level. Staff at the same grade level were then offered the opportunity to volunteer to rotate or "swap" places with staff from other Regions. Initially, this program was only marginally successful, although further implementation i s still being actively pursued. One lessons learned from this initial staff rotation exercise was the need for staff to expand language capacity, as this can be very important to undertaking procurement responsibilities in certain Regions. The rotation exercise was complicated by the high level o f decentralization, which provides limited opportunities at headquarters and often means a major move (country to country) for any participating staff. The Bank's current Human Resources (HR) policies differ for international and local hire and this also complicates movement at some grade levels. (Table 10 shows the percentage o f staff that are local versus international appointments.) The primary movement o f staff among Regions continues to be on the basis o f competitive selection generally involving promotion. Grade level standards for procurement staff are also being reexamined by the Sector Board to determine what might be changed to help resolve recruitment of new staff into the sector and improve promotion opportunities for staff. 30 Table 10. FY07 Procurement Staffing by Grade and Station Grade I COAppt I HQAppt I Total I CO YO GD I 13 I 12 I 25 I 52 GG GH 19 GI I 0 Total I I08 I 100 I 208 I 52 60. Procurement Specialist Staff Development. Development of procurement staff capacity remains an activity largely undertaken on the job and takes place 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 hidher staff travel to the country offices. Inaddition, 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 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 assignmentsof varying lengths. During such assignments, staff also have the opportunity to attendtraining courses that are generally not available inthe country offices. 61. A New Knowledge and Learning (K&L) Strategy. In FY07, the Procurement Sector Board agreed that a more defined program of learning opportunities should be designed specially for procurement specialist staff. Work on a K&L strategy was initiated to identify specific skills needed by staff at different levels to perform their various responsibilities. The strategy will prioritize procurement staff development needs and identify where specialized training will be developed. Work on this strategy is being led by OPCPR and should be finalized in FY08. The K&L strategy will be closely coordinated with the F M Sector as part of the objective of building on synergies between the work of the two sectors. This new strategy will look closely at the joint initiatives that are emerging from the joint procurement and financial management sectors strategy under development, and at areas where a common approach to staff capacity development will benefit both sectors. 62. Procurement Trainingfor Nonspecialist StafJ OPCPR continues to manage the delivery of a series of procurement training courses designed primarily to provide nonspecialist Bank staff with the knowledge and skills they need to carry out their operational responsibilities. All of the courses managed by OPCPR were reviewed and updated in FY07 to include changes driven by updates to policy. InFY07, more than 40 deliveries were provided, reaching more than 1,000 staff across the Bank. The courses 31 are targeted for different needs o f staff, offering basic and advance procurement courses and a range of specialized training on procurement of goods, IT, works, and selection of consultants. In addition, training on application of tools such as the complaints database and the entry of 384 data are offered for staff involved in using these databases, Materials for all training sponsored by OPCPR are made available to other organizations, including MDBs that have used the Bank's materials to support the development of their own internal procurement training programs. 63, Collaboration on Capacity Development. OPCPR works closely with internal and external partners to provide procurement capacity development and content to other ongoing training programs. 0 Internally, procurement modules are delivered as part of the Introduction to Bank Operations courses offered monthly for new Bank staff. Training on Project Management has been jointly designed with investment lending colleagues and is delivered on a regular basis. 0 Asia Learning (thejoint EAP/SAR K&L team) developed a new procurement course incollaboration with EAP, SAR, and OPCPR procurement staff, which will be available inthe learning program inFY08 calendar. 0 Training on the use of PEFA indicators and application of the strengthened approach to public financial management is jointly delivered with the FM sector and the PEFA secretariat, and is offered internally to Bank staff and externally to donor partners and for partner country participants. 0 Externally, the Procurement Sector continued a long-standing collaboration with the ILO International Training Center in Turin, Italy and with many regionally based training centers in Africa, East Asia, and South Asia. These procurement training programs offer a variety of courses focused on training partner country participants in handling procurement under IFI-financed projects. Bank staff support this training and work with the institutes, to maintain the quality of materials. 0 The Procurement Sector participates inbusinessoutreachprograms, providing information to private sector organizations on ways to become involved as suppliers, contractors, and consultants under projects supported by the Bank. In FY07, a number of one-day events were deliveredjointly with the United States Commerce Department for U.S. private sector companies. Outreach seminars were regularly scheduled globally and staff from the Bank supported these seminars on an availability basis. VII. NEWINITIATIVES/FUTURE CHALLENGES 64. Several new Procurement Sector initiatives were introduced in FY06 and discussed in the FY06 Annual Report; reporting on these has been integrated into the FY07 Annual Report. They include introduction of the new policy on rapid response, the development of new risk management and compliance monitoring tools, implementation 32 o f the GAC agenda inprojects and incountry work, the increasing flexibility in economic and sector work, the focus on harmonization and partnerships, and integration and greater reliance on common tools such as the OECD/DAC benchmarking tool and the PEFA framework o f indicators and strengthened approach. All o f these initiatives are well under way and have moved toward being mainstreamed in Procurement Sector approaches as the sector undertakes it responsibilities. 65. OPCS Reorganization. Under the OPCS reorganization introduced in early FY07, a new Operations Services Director position was created and the Procurement and FM sectors (along with investment lending) were organizationally placed under this Director. The Procurement Sector remains under the leadership o f a Chief Procurement Policy Officer, who i s also the head o f the Procurement Sector Board. (A similar organization was established for FM.) 66. Joint Strategy. The new organizational structure reinforced the need for a joint strategy to help guide the sectors' responses to the changing environment in which the Bank works. Inparticular, the PFUFM strategy aims to identify new and better ways for the PR and FM sectors to work closely with internal partners such as PREM and INT, external partners, and with each other. The joint strategy will also enable each sector to identify and address its own unique challenges. Thinking on key components that will influence the work o f the Procurement Sector in the future has been undertaken, and the following paragraphs provide a summary o f some o f the new initiatives and challenges that have beenidentified. 67. Use of Country Procurement Systems (UCS). FY07 closed with the direction received from the Board, inresponse to the UCS Status Report presented inJune 2007, to prepare a detailed methodology for procurement and conduct extensive consultations with a wide range o f stakeholders on the methodology. The four key objectives o f the UCS initiative as presented to the Board are to (a) scale up development impact; (b) increase country ownership; (c) facilitate harmonization; and (iv) simplify procedures and reduce costs. Much o f FY08 has been spent on defining a well-formed methodology to pilot an expanded use o f country procurement systems, conducting consultations, and then revisingthe methodology to address concerns o f the many stakeholders interested in procurement. 68. Impact of Trade Regimes. Across the globe, there many trade agreements that affect procurement; some function on an international basis, such as the Government Procurement Agreement (GPA) under the purview o f the World Trade Organization, but many more operate under regional arrangements,the largest o f which being the European Union (EU). These trade agreements address procurement to varying degrees, but they have an impact on pricing through tariffs and on competition through restrictions based on membership and on what is accepted as good practice within the definitions o f the trade agreements. The Procurement Sector intends to look more closely at the practices and procedures that are defined under these trade agreements and analyze their impact on how we now do business, with the objective o f identifying good practices that might be adopted in or adapted to the Bank's own procurement policies. This will facilitate 33 procurement work within projects and will helpthe Bank harmonize its work on building capacity at the country level with other donors. Some of this work has already begun, especially in ECA, where many of the countries still borrowing from the Bank are also participants in agreements with the EU that require alignment of their procurement systemswith the ProcurementDirectives of the EuropeanCommission. 69. Consulting Services. The Procurement Sector has long maintained an open dialogue with various representatives of the private sector, including many associations that represent consultants who do business with the Bank. Two studies on consulting services completed in FY07 documented issues with the Bank's current policies, which are seen as complex, slow to implement, and often leading to a lower quality than that requiredfor the assignment. Inaddition, preparation of the UCS methodology underlined the differences betweenBank policies and those usedinmost other countries worldwide. The voice from our counterparts in the private sector coupled with the need to align our selection of consultant policies with emerging good practice has led to a decision to undertake a major study of procurement practices. This study was initiated in FY08 and involves interviews with government practitioners and private sector representatives from a wide range of countries. Once the study has been completed, a process of further consultations will take place to determine the impact of its findings on Bankpolicies. 70. UN Agencies and Trust Fund Agreements. The World Bank and the United Nations operate under fundamentally different business models for supporting development activities. The Bank's Procurement and Selection of Consultants Guidelinesrecognize that the UNoperates differently, and that in special circumstances, services or goods might be best provided by relevant UN agencies. In the process of contracting with UN agencies, it has been necessary to deal with policy and process differences by: (a) requesting waivers; (b) signing contracts that fail to incorporate key provisions; or (c) conducting time-consuming negotiations that can stall implementation. As none of these are seen as desirable procedures, the Bank and relevant UN agencies have embarkedon discussionsaroundthree key initiatives: 0 When the UN is an implementing agency: a Fiduciary Principles Accord (FPA) will be concluded providing an umbrella agreement between the Bank and the UN applicable to trust funds initiated under OP8.00, Rapid Response to Crisis and Emergencies. 0 When the UN is a Contractor/Supplier/Consultant: a Memorandum o f Understanding will be negotiated with United Nations Children's Fund (UNICEF) (a primary supplier) and presented to the Board by the end of FY08. This will be expandedto cover other UNagencies that act as suppliers. 0 When the UN is retained by the Government (using IDA/IBRD or trust fund grants): a Consultant Service Agreement will be prepared and finalized in early FY09. 71. Framework Agreements. The Bank participates in a working group that is looking at types o f framework agreements for inclusion under the UNCITRAL Model Law for Procurement, which is being updated and revised. Framework agreements are being used in most countries worldwide, and even within the Bank by General Services 34 Department's (GSD) institutional procurement unit. There has already been some limited use o f framework contracts with regard to the use o f e-GP systems in Chile. Such systems often employ online catalogues that facilitate mini-competitions and the placement o f quick orders. As part o f OPCPR's review o f its own procurement and selection o f consultants policies, the use of framework contracts will be studied for possible use under Bank-supported operations. 72. Update of OPBP 11.00. OP/BP 11.OO cover the operational policies and Bank procedures for the handling o f procurement by Bank staff. These policies were last updated in 2004, but the updates were undertaken on a piecemeal basis. A thorough review of these important policy documents will be undertaken and they will be updated from beginning to end. In particular, BP 11.OO has an important decision matrix that defines the authority and responsibilities o f staff and Management and provides the procedures to be followed when differences of opinion occur at different levels in the decision process. New language will be added to cover the piloting program o f use o f country procurement systems and some o f the emerging approaches and lendingproducts that require customization o f procurement input. The new OP/BP should be completed by the end o f FY08. 73. Private-Public Partnerships. Although the Bank has been involved in financing o f PPPs inthe past, there i s little guidance for, or commonality in, the way these projects are handled, resulting in staff learning by doing. OPCPR i s preparing a concept note jointly with colleagues from the infrastructure sector that will look at the various options for handling PPP operations; thereafter work will begin with other MDBs to agree on common guidance for handling such operations. This work will start inFY08. 74. Staff Guidance Notes. As an alternative to developing extensive policy and procedural documents, the Procurement Sector will continue to facilitate the introduction o f new policy through the use o f guidance notes that provide staff with a range o f adaptable implementation practices that can be tailored to country- and project-specific situations. Guidance notes currently under development include guidance for implementing OP 8.00 on rapid response to emergency; updated guidance on sectonvide approaches (SWAPS);and guidance to staff on implementation o f GAC in projects, in particular with regard to preparation o f the procurement annex and GAC annex required for high-riskprojects. VIII. REGIONAL SUMMARIES 75. This section includes Regional summaries covering major thematic areas, including procurement reform, governance and anticorruption, harmonization and simplification, e-government procurement, independent procurement reviews and post- review activities, and capacity development. Some o f the Regional summaries cover a wide range o f countries while others focus on specific country programs. Some information has been removed from the Regional summaries and included in the main body o f the report to provide country- or Region-specific examples o f procurement 35 activities undertaken during the fiscal year as they relate to the specific topics covered by the Annual Report. A. AFR 76. The objectives o f the partnership initiatives between the World Bank and the African Development Bank (AfDB) included (a) strengtheningcollaboration between the institutions, harmonizing actions, reducing transaction costs, and increasing the impact o f development initiatives, and (b) ensuring a common approach in the discharge o f fiduciary responsibilities, supporting the development o f the national procurement systems in our member countries (with added focus on regional organizations), and developingjoint procurement capacity. Highlights and results. Highlights and results o f these initiatives include (i)theemergenceoffocalpointsforbettercoordination, (ii)pilotingofjoint procurement capacity assessments o f implementing agencies in selected projects, (iii) decentralization o f procurement functions, (iv) establishment o f a common approach to building capacity in procurement, and (v) a joint CPAR and other assessment tools. e Lessons learned. Lessons learned included (i)the importance o f having a structured approach endorsed at the highest level, and (ii) the importance of "keeping the flame alive" through continual interactionand coordination. 77. Nigeria: Survey of Private Sector's Perception of Public Sector Procurement Reforms. One o f the major deficiencies identified in the Nigeria Country Procurement Assessment Report was the low level o f private sector participation in public procurement, resulting in low competition and higher prices. Private sector practitioners had little confidence in public procurement processes in Nigeria. To address key elements o f the current PFM reform agenda-such as making public procurement transparent, efficient, open, and competitive-a comprehensive survey was usedto assess the perceptions of the private sector. The survey covered 442 private firms involved in the supply of civil works, goods, and services in a range o f sectors: agriculture, communication, education, health, power and steel, water resources, and works. The main findings o f the survey were: 60 percent o f respondents had not submitted recent expressions o f interest because they did not trust the process most survey participants indicated present policies and procedures favored mediumand large firms f i r m s pointed to delays in payments o f more than six months 75 percent were satisfied with policy reform initiatives, procedures/guidelines, and access to information firms remain hopeful about using the Internet to increase transparency and process efficiency government leadership i s necessary to ensure ownership and long-term sustainability 36 0 government involvement in the conduct o f the survey led to a fear o f retaliation. B. EAP 78. The procurement function is heavily decentralized in EAP; 94 percent of Procurement Staff/Procurement Accredited Staff (PSIPAS) are based in six different procurement hubs: Beijing, Hanoi, Jakarta, Manila, Phnom Penh, and Sydney. Each hub i s overseen by the Procurement Hub Leader. 79. Procurement Reform Initiatives. A series o f procurement reform initiatives took place across all regional hubs. Inthe Hanoi hub, applications of performance measuring tools based on the OECD/DAC methodology were piloted in selected agencies. In the Sydney hub, a CPAR for Papa New Guinea has been completed; the Bank plans to assist the government in implementing recommendations through new investment lending programs that focus on governance issues. Inthe Jakarta hub, the Bank collaboratedwith the Australian Agency for International Development (AusAid)and ADB to help assess the government's public procurement system, piloting the use o f the OECD/DAC Baseline Indicator (BLI) Benchmarking Methodology. In the Phnom Penh hub, procurement reform activities were focused on Cambodia, Lao-PDR, and Thailand and included work on harmonization o f SBDs, review o f country-level legislation, and the piloting o f performance measurement tools in selected government agencies. In the Beijing hub, an IDF grant is being used to support a project for the preparation and dissemination o f implementation regulations under China's Tendering and Bidding Laws. 80. Governanceand Anticorruption Agenda. The Hanoi hub strengthened measures for reducing fiduciary risks to the Bank's portfolio through increased attention to procurement-related governance issues; the measures were incorporated into project design and supervision. In the Jakarta hub, the Bank continued to include governance and anticorruption measures in project design. Inthe Phnom Penh hub, GAC initiatives included Good Governance Frameworks mandated for all Bank-financed projects in Cambodia (which include the establishment by the Government o f an Anticorruption Working Group for all Bank-financed projects). In Lao-PDR, measures are being developed for strengthening transparency and accountability across the project portfolio. In the Beijing hub, GAC initiatives were focused on reviewing the functionality of Mongolia's public procurement system. 81. Harmonization. In the Hanoi hub, the team provided leading support to the efforts for harmonizing donor-government procurement procedures and systems, with notable success. In the Sydney hub, the Bank i s actively involved with bilateral and multilateral donors in the preparation o f CPARs and operational procurement reviews (OPRs). The team in the Jakarta hub i s working closely with ADB, AusAID, and Japan Bank for International Cooperation (JBIC) in the preparation of CPARs and a benchmarking assessment i s being developed together with ADB and AUSAID. In addition, together with AusAID, the team i s working with the government to design the procurement arrangements and anticorruption measures in the transport sector. In the Manila hub, the harmonized Generic Procurement Manual (GPM), which defines the 37 organizational set up, administrative processes, and roles and accountabilities within the procuring entity, was issuedby the Government Public Procurement Board, with support from the Bank, ADB, and JBIC. In the Phnom Penh hub, a harmonized Standard Procurement Manual for externally financed projects in Cambodia i s being applied to N C B procurement under Bank-financed projects. In Lao-PDR, opportunity for common application o f agreed SBDs i s being pursuedwith other development partners. Through the Beijing hub, the Bank and ADB procurement teams discussed the common procurement and regulatory issues affecting local project implementation in China and Mongolia. The objective o f this initiative i s to establish a harmonized position between the two institutions on how best to addressthese issues. 82. Capacity-Building Efforts. In the Hanoi hub, the Bank provided training to borrower and Bank staff and conducted 20 workshops and clinics for 678 participants. In addition, the Bank supported the government in conducting dissemination workshops on the new Procurement Legislation and conducted training for the Inspectorates on dealing with fraud and corruption in procurement. Through the procurement accreditation scheme started in early 2007, thousands o f procurement personnel were trained on procurement regulations and skills by public and private training institutions. 83. Other New Initiatives. In the Manila hub, the following new initiatives were implemented: a Strengthening the internal audit units o f implementing agencies for procurement monitoring and enforcement. This initiative will be funded by an IDF grant and will produce a generic internal audit manual, including procurement audit. a Institutionalizing the procurement professionalization program. The implementation will be funded by an IDF grant. a Development o f PhilGEPS Phases 2 to 5, featuring virtual store, e-payment, charges and fees, and e-bidding. a Strengthening monitoring and data collection through the adoption o f OECD's compliance and performance indicators. 0 Implementation o f the Strategic Communication Action Plan. C. ECA 84. In FY07, ECA delivered seven procurement-related PFM core country diagnostics, for Albania, Bosnia and Herzegovina, Georgia, Kyrgyz Republic, Moldova, Russia, and Ukraine. These analytic works, several o f which were conducted jointly by Procurement and Financial Management units, were strategically linked with other Bank operations, including public sector modernization projects, IDFs, and public expenditure reviews (PERs). The studies measured and monitored the performance o f borrowers' PFM systems, applying instruments developed by the Public Financial Management Performance Measurement Framework (PEFA) and the OECD-DAC/World Bank Joint Venture on Procurement. CPARdCFAAs promoted ownership o f reforms by client countries and other stakeholders, by conducting an in-depthlook into areas o f the clients' particular concern, such as the inefficiency o f public sector, blurred lines o f responsibility and accountability, and traditional transaction-based approach to controls; and by 38 conducting consultations with a diverse group of stakeholders, such as the private sector, leading NGOs, and academia. 85. Governance and Anticorruption. The Region took early action in hiring and placement of procurement staff to address and implement the GAC agenda. Europe and Central Asia's Operations Policy and Services Unit (ECSPS) is developing a procurement action plan by articulating concrete activities for the implementation of the GAC agenda. Innovative products such as the Corruption Vulnerability Scan (CVS) were applied in Belarus and Ukraine. (CVS is an instrument developed in ECA that provides better understanding of Bank's vulnerability in providing assistance to country borrowers; and identifies mitigating actions to reduce risks, while improving results on the ground.) The findings of the CVS directly contributed to (a) preparation of governance and anticorruption sections of the Country Assistance Strategy, and (b) analysis of the active project portfolio to identify high-risk areas and proposemitigationmeasures. 86. Harmonization. External harmonization efforts included (a) conducting the Third Central Asia Procurement Forumjointly with other donors, fostering improvements and cross-country dialogue for public procurement reform, (b) completing all planned Procurement Outreach Programs for borrowers and business communities (21 events reaching over 1,000 participants), and (c) continuing collaboration and harmonization efforts with the European Commission (EC). 87 E-Government Procurement. The Bank has been actively involved in providing technical assistant to ECA countries interested in development of e-GP. E-GP development components were included in new projects, providing, for example, financial and technical support to the e-GP development in Armenia (Public Sector Modernization Project) and Azerbaijan development policy lending/loan (DPL). 0 Armenia. E-GP in Armenia is in the preparation phase. During FY07, two key actions were completed: the design and approval of a strategic e-GP plan, and the adoption of e-commerce legislation that i s adequate for the current level of e-GP. It has been agreed that in 2008, under the Public State Modernization Project, the borrower will carry out other key activities relating to the development of e-GP systems. 0 Azerbaijan. InAzerbaijan, the e -GP program i s also in an early stage and i s being applied in a limited way, to the identification of needs and a preparation phase, with calls for bids and quotes for goods, works, and services being made available through a website. However, as in the case of Armenia, the borrower and the Bank have agreed on a comprehensive action plan that will cover key activities for the implementation of e-GP for 2008. 88. IPRs and PPRs. The Region conducted a number of IPRs and Post Reviews during FY07. 0 IPRs. Two IPRs of Croatia and Georgia portfolios were completed. About 140 contracts under 17 projects were covered (five projects in Croatia and 12 in Georgia). IPRs were conducted by a consulting firm selected on a competitive 39 basis. IPR findings were analyzed to identify portfolio generic issues, including corruption risks. This was then used for review o f pipeline projects and to advise task teams on implementationarrangements and risk-mitigation measures. 0 IPR Lessons. The TORSfor IPRs planned for FY08 were revised on the basis of lessons learned from the Croatia and Georgia reviews, to cover in greater detail contracts' administration stage, provide more focus on review and assessment o f the quality o f procurement management, transparency and efficiency with which procurement transactions are handled, and ensure selection o f contracts based on a "red flag" principle, rather than a randomchoice. 0 Post Reviews. Post reviews on all active projects under supervision are scheduled and monitored at the RPMoffice level. The RPMoffice has a depository o f post- review reports. In FY07, post reviewswere conducted by PAS, normally as part o f supervision missions. Post-review reports were discussed with the task leaders for respective operations and then shared with the implementing agencies. Results o f the post reviews were used for on-the-job training o f counterparts' procurement staff. D. LCR 89. In addition to the joint analytic work discussed below, the Regional team cooperated with the Inter-American Development Bank and other development partners on a number o f important activities, including: 0 joint initiatives with the governments o f Colombia and Peru to develop country SBDs based on the Bank's standard documents 0 a Regional OECD workshop in Lima cosponsored with the Government o f Peru was attended by more than 60 procurement policymakers and experts from 24 countries inthe Region and OECD 0 country workshops on the OECD indicators in Bolivia, Chile, Guyana, Mexico, and Paraguay. 90. Innovation: Efficiency of Expenditure. The Regional procurement team implemented innovative approaches to measure the effectiveness of client public procurement systems. This work included a high-level assessment of the purchasing and contracting strategy in government procurement and a cost/benefit analysis o f streamlining it to make it more efficient. This assessment identifies opportunities for achieving better efficiencies and economies o f scale, the current regulatory framework, and potential implementation vehicles/methodologies, such as e-procurement and/or framework contracts. In FY07, these studies were carried out in Brazil, Costa Rica, and Honduras. 91. Electronic Government Procurement. The Region continues to work actively with most countries on e-GP. All of the Bank's Latin American clients have implemented e-procurement, ranging from systems that simply publish procurement information to systems that are fully transactional. The Region will continue to work jointly with the IDB in assisting the countries to adopt international standards (for 40 example, the introduction of an international catalogue for goods and services) and adapt the systemto their specific needs. 92. GAC Agenda. The Region implements the GAC agenda with a holistic and integrated approach through 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 and Bank teams. Two tools for better GAC implementation in projects were developed and implemented (see Box 1 above). 93. Procurement Reform. LCR procurement team has been actively involved in procurement reform activities in most countries in the region. Country highlights include: e Colombia. Major improvements were introduced in the procurement law, and work started with the Bank's assistance to prepare sound implementing regulations. e Bolivia. An in-depthinstitutional review of the Productive and Social Investment Fund, an agency managing decentralizedpublic investments, includingmost Bank projects, led to the adoption by the institution of a comprehensive plan to strengthenits fiduciary capacity and controls. e Honduras. The Regional procurement team actively participated in the GAC implementation strategy (which included, for example, the review of a decentralized social investment fund). e Panama. Key contributions were made to the Country Partnership Strategy (CPS) and a single-tranche DPL, largely drawing from the joint CPAWCFAA (delivered during the previous fiscal year). Additional financing was applied to the procurement reform component of a technical assistance (TA) loan that is supporting several aspects of reform. In addition, a new procurement law was developed with the Bank's assistance and adoptedby Congress. e Peru. The procurement team participated jointly with the IDB in a fast-response mission requested by the President of Peru to advise the Government on short- term strategy to implement an emergency investment program as well as medium- term reforms based on the recent CPAR action plan. 94. Analytic Work. In addition to the analytic work mentioned above, in FY07, the Region carried out the (a) Paraguay Integrated Fiduciary Assessment (CFANCPAR, including FM and PR), and (b) Haiti Public Expenditure Management and Financial Accountability Review (with F M and PR fully integrated as part of the PER). It also followed-up extensively on the Organization o f Eastern Caribbean States OECS Integrated Fiduciary Review delivered inFY06. 95. Post Reviews and Independent Procurement Reviews. In FY07, the Region achievedits 100percent post-review target, and carried out 19IPRs. 41 E. MNA 96. A number of activities were undertaken in the region to improve quality of procurement in the client countries. These activities included conducting procurement training for public officials from a number o f countries, as well as undertaking the following country-based activities. 97. Iran Independent Procurement Post Reviews. In view o f the extensive transactions under some Bank-financed projects, MNAPR introduced an outsourcing initiative to complete the PPR o f Iran. O f the nine projects in the portfolio, eight had contracts that were subject to post review. 98. E-GPin Morocco. InMorocco, thanks to a strongwillingness o fthe Government and appropriate support from an IDF grant on modernization o f public procurement, an effective e-procurement portal was implemented inearly 2008. 99. Morocco: Assessment of the Performance in the Education Sector. In April 2007, further to the assessment o f the performance o f the procurement system in the education sector in Morocco, a workshop was held in Rabat to share the data generated by the review o f some 300 contracts around the country. The assessment was carried out per the OECD/DAC performance assessment indicators. 100. Emergency Situations in West Bank/Gaza and Lebanon. Nearly every operation in the last few years has been in response to emergencies and post-conflict conditions. Consequently, an effort has been made to simplify procurement procedures and documents; requests for quotations and simple contracts, for example, were developed in Arabic, in order to use Shopping procedures in the most efficient way. Similarly, simplified bidding documents for works and goods and letters o f invitation and simplified contracts for consulting services in Arabic were drafted for use under emergency conditions. On-the-job training by Arabic-speaking Bank procurement specialists from the country offices reinforced the introduction o f these simplified procedures and documents. In coordination with OPCPR, MNAPR has also developed a "Rapid Response Handbook for Procurement," which will soon be distributed and shared with others outside the Region who have expressed an interest. 101. Reimbursable Technical Assistance (RTA) Program. Under a previous RTA contract in Algeria (in 2003/2004), the Bank's services were retained to assist SociCtC Nationale pour la Recherche, la Production, le Transport, la Transformation, et la Commercialisation des Hydrocarbures s.p.a. (SONATRACH) in developing procurement guidelines and procedures, including SBDs for the procurement o f Goods, Works, and Supply & Installation o f Plants and Equipment, in addition to prequalification o f contractors. Under a second RTA contract (in 2006/2007), methodology in preparation o f technical sections o f bidding documents was prepared by the Bank and SONATRACH staff and used to develop a first set o f 20 bidding documents covering different types o f acquisitions. Two validation workshops have been carried out in Algeria to review and finalize those documents and train the different entities in SONATRACH on the specifics and the use o f each technical document. Among a 42 number of RTA for Kuwait and Saudi Arabia, the Bank's services were retained to carry out CPARs as part of its technical assistance to ambitious reform programs, which include modernizingthe procurement system. 102. Other Main Capacity-Building Activities. Another series of capacity-building activities were conductedduring FY07 inIraqand Jordan. As part of the ongoing "training-of-trainers" program, a workshop on "Procurement and Project Management" was held in Baghdad at the National Center for Consultancy and Management Development to strengthen the capacity of 40 Iraqi officials from 15 institutions, including ministries, the SupremeAudit Board, the Central Bank, andNGOs. In coordination with the Iraqi Ministry of Planning and Development Cooperation, the Iraqi Engineering Syndicate, and the Iraqi Contractors' Union, a workshop was designed to strengthen the capacity of Iraqi contractors, vendors, and consultants inprocurement management. More than 40 local private sector individuals attended the workshop in addition to three representatives from JBIC. 0 In coordination with the Jordanian Ministry of Planning, a procurement workshop was sponsoredby the World Bank to strengthenthe capacity of key Jordanian implementing institutions, NGOs, and private sector firms. The workshop was attended by 35 participants from several ministries and the UnitedNations Development Programme(UNDP). F. SAR 103. InAfghanistan, considerable progress was made in FY07 in the implementation of key reform agenda items, such as the establishment of the Procurement Policy Unit in the Ministry of Finance in August 2006. In Bhutan, the Bank is assisting the Royal Government of Bhutan in improving its national systems in five areas: (a) the procurement legal framework, (b) procurement capacity building, (c) establishing a central public procurement policy division to manage procurement policy and performance incountry, (d) procurement grievance mechanisms, and (e) e-GP. 104. Procurement Reform Activities: Maldives. Two components of the IDF grant in the Maldives for "Strengthening of the Procurement Regulatory Framework" showed progress: (a) the Ministry o f Justice work on Contract Dispute Resolution, and (b) efforts by the Anti-Corruption Board to raise public awareness. InBangladesh, a unique reform project has beenpreparedas a stand-alone intervention to address the implementation and monitoring challenges of the government's Procurement Act and Rules. 105. Capacity Development. In Afghanistan, the government carried out a capacity- building exercise focused on training of staff of ministries and other relevant agencies involved in public procurement, and on improving the legal and regulatory framework. The Bank provided training to (a) 35 contractors representing the Afghan Builders Association on SBD for civil works in DadEnglish languages, on the initiative of Afghan Chamber of Commerce and Peace Dividend Trust (PDT) o f Afghanistan; and 43 (b) 48 staff membersofthe Ministry ofPublic Works and Ministry of RuralDevelopment on the use of Bank's SBD for civil works. 106. Training. In India, training initiatives included capacity-building efforts to professionalize urban management (with the support of the World Bank Institute), and training events for health officials on Bank procurement procedures for health sector goods, organized by the Administrative Staff College of India and the Bank team in Delhi. In Bangladesh, the government's systematic approach to capacity development resulted in the training of some 400 public procurement officials and the certification of 30 national procurement trainers. Inaddition, the Bank provided procurement training to 300 public sector officials. 107. DPL, PEIR, PFM Initiatives. In Afghanistan, the Bank has been providing rolling support to Government's development strategy through a series of Programmatic Support for Institution Building (PSIB) operations that focus on enhancement of fiduciary standards. In Bangladesh, a DPL and a PEIR study were completed in FY07. Establishing effective mechanisms to undertakeprocurement also plays a large role inthe Bank's dialogue with the Government of India on support for public-private partnerships. During FY07, the procurement team was involved ina number of pieces of analytic work on public financial management, such as PFM assessments for Rajasthan and Jharkhand and assessments covering the functioning of public financial management systems with urban and local bodies. The procurement team in India is leading the study on PFM in Bihar, and has also contributed to studies on Lagging States, as well as studies on governance inthe transport sector and growth inthe construction sector. Inaddition, the procurement team has been deeply involved in supporting improvements inprocurement in the health sector and in monitoring the implementation of the Health Sector Governance and Accountability Action Plan. The Bank has worked closely with DFIDto enhance the capacity of the already established Empowered Procurement Wing of the Ministry of Healthand Family Welfare (MOHFW). 108. Electronic Government Procurement. Financed through a Japanese trust fund, an external consultant conducted e-GP readiness assessments of Afghanistan, Bhutan, Maldives, and Nepal. Workshops were conducted in each of these countries to disseminate the e-GP readiness assessment report, and a comprehensive e-GP implementation strategy was agreed with each of these governments. In India, after redrafting of the procurement provisions in the Government Financial Rules (in 2005) and the issuance of manuals to guide implementation, the use of e-GP in all central ministries was mandated. Several states in India are in the process of adopting some form of eGP. In Bangladesh, an implementation plan for introducing eGP in four key sectoral government entities was finalized inFY07 and is now under design. 109. Harmonization and Donor Collaboration. Following its endorsement of the Paris Declaration of Aid Effectiveness, Afghanistan is one initiative's pilot countries. The Project Preparation Unit(PPU) has already carried out an assessment of the national procurement system using the OECD/DAC indicators. The legal framework was assessed using the BLI. In Bhutan, procurement reform work is being undertaken in 44 close collaboration and partnership with the entire donor group. In India, DFID and the World Bank actively collaborate on work in the health and education sectors on improving procurement outcomes; and the Bank works closely with the AsDB on issues relating to e-GP. This collaboration reflects a country-specific extension o f the collaboration on this issue that has been forged among the MDBs. 110. Governance and Anticorruption. Governance and anticorruption are critical components o f the Regional agenda. Afghanistan. The procurement team provided cross-support to the "PFM Vulnerability to Corruption Assessment" report led by PREM, by producing the vulnerability assessment of the procurement process. The report is now at the draft stage. 0 Bangladesh. The new caretaker Government is acting to minimize the impact o f corruption (including in procurement) in the political process, and has reconstituted the Anti-Corruption Commission. The Bank i s actively supporting the ACC and Government's initiative and i s in constant dialogue with policy inputs. On the Bank-funded operational front, an Operational RiskMitigation Action PlanTeam (ORMAP) has beenworking inthe last one year or so which i s mainly providing guidance to the task team on operational risk issues. For specific procurement risks, a procurement risk mitigation plan (PRMP) has been designed and i s being piloted with two Bank-financed project (Municipal Services Project and Rural Transport Improvement Project); initial results show considerable improvement through the use o f this tool. All new projects are now including a similar PRMP at the design stage, and the Bank is in consultation with the Government to introduce the PRMP in all existing projects to better monitor procurement risks with appropriate measures for improvement. 0 India. Governance actions in procurement have focused on improving transparency. Improving governance in the health sector has been the area o f greatest concentration, and has encompassed work on building the institutional capacity to monitor procurement, the creation o f software designed to detect possible corruption, and the development o f enhanced information systems for recording procurement data. Other work has included contributing to the development o f project action plans (emphasizing social auditing and greater publication o f information) designed to mitigate procurement risks. 0 Nepal. Measures such as blacklisting o f errant firms, mandatory disclosure o f procurement results, a code o f ethics for civil servants handling procurement, and a complaint review mechanism are now built into the provisions o f the Public Procurement Law, which was drafted with a Bank-funded IDF grant. ANNEX A ADDITIONAL DATA ONPROCUREMENT 1. Figure A1 depicts the Regional disaggregation o f FY07 IBRD/IDA lending commitments ($119.7 billion for 1,599 operations). FigureAl. FY07 Lending Commitment Amount by Region R18% 20% r! 20% 2. Table A1 shows the top 10 borrowers for new FY07 IBRDADA lending operations, There were 301 new operations in FY07, at a total commitment of $24.7 billion. Table Al. I Ten Largest IBRDDDA Borrowers in FY2007 I Africa RegionalProjects 4 707 2.9 Sub-Total 73 13,714 55.5 Total Lending 301 24,696 46 3. Table A2 details the major Bank-financed contracts inFY07 by number and value of contracts distributed, inprocurement categories and Regions. Table A2. Total I1,5351 1,2051 1,4501 970I 378 7131 6,251 I 100 4. Tables A3, A4, and A5 show the top 10 countries of registration awarded for goods, works, and services for FY03-FY07 for contracts subject to prior review. It should be noted that data enteredon the basis of country of registration for firms receiving contracts can result in some unexpected outcomes. For example, Afghanistan is listed as second for receipt of consulting contracts in FY07. This reflects large service providers (e.g., CARE) registered inthe country. Table A3. Percentage of the Total Portfolio 59 58 62 51 64 47 Table A4. Table AS. 8 1Conao(DRC) 1France IRussia 1 Brazil ICanada 9 I Germany I Canada IAustralia I Netherlands I Germany Percentage of theI 56 58 51 51 49 5. InFY07, the Bank's post reviews covered 619 projects and some 8,465 contracts, at a total contract amount o f $2 billion. The overall trend shows an increase in post review from 53 percent inFY03 to 78 percent inFY06 and FY07 (see FigureA2). Figure A2. Trenb of Procurement Post ReviewCoverage (FYO3-FYO7) 100% 80% 78% 60% 40% 20% 0% I FY03 F Y O4 l W 5 FY06 FY07 1 6. Table A6 provides a summary o f independent procurement reviews (IPRs) conducted in FY07. EAP and MNA were unable to conduct such reviews in FY07 because of budget constraints. 48 I Table A6. Summary of IndependentProcurementReview inFY07 I Item \ Region AFR ECA LCR SAR Bankwide Guinea-Bissau Croatia Colombia India Reviewed Borrower Country Lesotho Georgia Brazil South Africa Argentina 10 Paraguay Number of reviewedprojects 5 15 19 3 42 Numbero f reviewedcontracts 82 177 552 95 906 Value o f reviewed contracts (US$ f000) 4,683 127,134 141,111 38,326 311,254 Total cost o f IPRs (US$) 61,770 85,700 159,386 149,000 455,856 7. Table A7 shows data on misprocurement for FY05-07. It also provides information on the main activities that contribute to identification o f misprocurement. The dollar amount o f declared misprocurement varies widely from year to year and does not demonstrate any trends. Table A7. 05 6 nia 22 1,199 PPR, complaint, prior review Prior review, PPR, IPR, complaint, 06 10 25 150 76,4 11 supervision, INT investigation, governmentaudit 07 9 9 130 PPR, IPR, complaint, supervision, 36'830 INT investigation 8. Table A8 provides the basis for complaints received by the Bank inFY07. 49 Table A8. 1 Nature of Complaintsin FY07 1 Theme I # Qualification of other firm I 41 ITechnical evaluation I 39 I Application of evaluationcriteria 37 Disqualification ofbid II29 I i; 1 14 [r;f{dding document Bid securi Technical s ecifications Bid ro osalsubmission Eli ibili Short list 1 6 Irregularity inbidfinancial proposalevaluation 1 4 IPerformancesecuritv 1 3 1 9. Table A9 and Figure A3 summarize how complaint cases received in FY07 were resolved. Of the 283 closed cases, 160 cases, or 57 percent of the total, were clarified by the borrowers. The rest were resolved inother ways. Table A9. FY07 Complaintsby Resolution 1 Region Bankwide Bank UpheldBorrower's Decision 160 Bank Validated Comdaint - Borrower Ameed 24 Case forwarded to Dept. of Institutional Integrity I 19 Complaint Dropped by Complainant 15 -. Re-bidding 9 Case Inactivated 7 Bid Cancelled 4 Bank Validated Complaint Borrower Disagreed - I 2 Contract Terminated 2 Other I 41 Total I 283 50 Figure A3. Major Resolutions of Complaints in FY07 Borrower Agreed ANNEX B Table B1. CURRENTCPARAND OTHERESWREPORTS* Report Country Report Type Delivery Document FY Classification (In SAP) Africa Region Angola CPAR FY03 Official use ................................................................................................................................................................................................................................................................ ................................................................................................................................................................................ only Benin CPAR FY99 Official use ................................................................................................................................................................................................................................................................ª only ................................................................................................................................................................................................................................................................ª Botswana CPAR FY07 Confidential Burkina Faso CPAR FY06 Official use ................................................................................................................................................................................................................................................................( Burundi CPIP FY04 ................................................................................................................................................................................................................................................................1 only ............................................................................................................................................ Cameroon ..CPAR.update.......................................................................................................................................... FY05 Public ................................................................................................................................................................................................................................................................^ Cape Verde CPIP FY04 Public ................................................................................................................................................................................................................................................................j CentralAfrican Republic IP FY06 Confidential Chad CPAR FY04 Official use ................................................................................................................................................................................................................................................................G ............................................. only Congo, DemocraticRep. of CPAR FY04 Official use ................................................................... z ........d......................... onlv Congo, Republicof CPIP FY06 Official use ................................................................................................................................................................................................................................................................{ onlv <........................... ............................................................................................................................... CBte d'Ivoire ................................................................................................................................................................................................................................. CPAR FY04 Public Eritrea CPAR FY03 ................................................................................................................................................................................................................................................................Z nnlv "l.. 2.......................... ................................................................................................................................................................................................................................................................-- Ethiopia CPAR FY03 Public Gabon - PEMFAR FY07 Public Gambia CPIP FY05 Ghana CPAR FY03 Public Guinea CPAR FY02 Confidential Guinea Bissau CPIPiIFA FY06 Public Kenya CPAR FY97 Confidential Under Lesotho CPAR (draft) FY08 Government ................................................................................................................................................................................................................................................................S Review Madagascar CPAR FY03 Official use ................................................................................................................................................................................................................................................................· only ................................................................................................................................................................................................................................................................· Malawi CPAR FY04 Public ................................................................................................................................................................................................................................................................t Mali CPAR Update FY06 Public Mauritania CPAR Update FY02 Official use ................................................................................................................................................................................................................................................................X only Mauritius CPAR FY03 Official use ................................................................................................................................................................................................................................................................~ only Under Mozambique CPAR (draft) FY08 Government ................................................................................................................................................................................................................................................................o Review Niger CPAR FY05 Official use ................................................................................................................................................................................................................................................................s only 52 CURRENT CPARAND OTHER ESW REPORTS" Report Country Report Type Delivery Document FY Classiflcation (In SAP) Nigeria CPAR FYOO Official use ..................................................................................................................... only Rwanda CPIP FY04 Official use ................................................................................................................................................................................................................................................................ .................................................................................................... *......................... onlv ................................................................................................... Sao Tome and Principe ................................................................................................................................................................................................................................................................ CPAR (joint with AfDB) FY07 Confidential ..... Se?%a! ................................................................................................................................................................................................................................................................,, CPAR ' FY03 Public Sierra Leone IP FY04 Official use ............................................................................................... ............................................................................................................................................................... ................................................................................................... *......................... onlv ................................................................................................................................................................................................................................................................S South Africa CPAR FY02 Public ................................................................................................................................................................................................................................................................L Tanzania CPAR FY03 Public Official use Togo CPAR FY04 only PEMFAR FY07 Official use ............................................................................................................................................................................................... C P A R .................................................................................................................................................................................... only ................................................................................................................................................................................................................................................................· Uganda FYOl Public Zambia PEMFAR Officialuse ................................................................. ................................................. ................................................................................................................................................................................................................................................................S China OPR FY03 Official use ................................................................................................................................................................................................................................................................,, only ................................................................................................................................................................................................................................................................o EastTimor CPAR FY04 Public ................................................................................................................................................................................................................................................................-- Indonesia CPAR FYOl Public ........... Kiribati ................................................................................................................................................................................................................................................................" ... Korea, Rep:....Of................................................................................................................................................................................................................................................................T ................................................................................................................................................................................................................................................................¯ Lao PDR CPAR FY03 Public ................................................................................................................................................................................................................................................................T Malaysia CPAR FY95 InternalUse ................................................................................................................................................................................................................................................................{ Mongolia CPAR FY04 P ................................................................................................................................................................................................................................................................¢ Myanmar ................................................................................................................................................................................................................................................................x PapuaNew Guinea CPAR FY06 Public .. ,Phi!ippines ................................................................................................................................................................................................................................................................P CPAR FY08 Public ................................................................................................................................................................................................................................................................§ Samoa OPR FY06 Public ...................................................................................................................................... Solomon Islands ................................................................................................................................................................................................................................................................ OPR FY08 Public ................................................................................................................................................................................................................................................................u Thailand ............................................................................................................................................................................................................................................... Tonga OPR .................................................... FY03 ........................................ ublic Vanuatu Vietnam CPAR FY03 Official use - only Regional Total: - 13 P ................................................................................................................................................................................................................................................................ Europeand CentralAsia Region Albania ................................................................................................................................................................................................................................................................t IFA FYO Albania ................................................................................................................................................................................................................................................................{ CPAR FYO1 Public Armenia ................................................................................................................................................................................................................................................................u CPAR FY03 Public Azerbaijan ................................................................................................................................................................................................................................................................B CPAR FY02 Azerbaijan CPAR Update FY08 vet 53 CURRENTCPARAND OTHERESWREPORTS" Bosnia-Herzegovina CPAR FY02 Public Bulgaria FYOO Official use only Bulgaria CPAR FY04 Confidential Bulgaria IFA FY07 Confidential Croatia CPAR FYOO Official use only Croatia FY04 Public Georgia CPAR FYOl Public Georgia IFA FY07 Confidential Kazakhstan CPAR FYOO Official use only Kosovo OPS F Public Kyrgyz Republic CPAR FY03 Official use only Kyrgyz Republic IFA FY07 Public Kyrgyz Republic EducationIFA FY08 No Decision ........................................................................................... ........................................................................................................................................................................................................................... i..-.:.. VPt .... Latvia CPAR FYOl Official use onlv Macedonia(former Yugoslav CPAR FY02 Official use ............................................................................................................................................................ repub1ic) ........................................................................... .................................................................................................................. only Macedonia(former Yugoslav ................................................................................................................................................................................................................................................................« republic) IFA FY07 Public ............................................................................................................... Mo1dova ................................................................................................................................................................................................................................................................ CPAR FY03 Public Poland CPAR FYOl Official use ................................................................................................................................................................................................................................................................q only Romania CPAR FYOO Official use ................................................................................................................................................................................................................................................................· only Romania CPAR FY0.5 Official use ................................................................................................................................................................................................................................................................f (Joint Reportwith EU) only RussianFederation FYOl Official use ......................................................................................................................................................................... ................................. ................................... .............................. only RussianFederation FY07 Official ................................................................................................................................................................................................................................................................, only Slovak Republic CPAR FYOl Official use ................................................................................................................................................................................................................................................................· only Turkey CPAR FYOl Official use ................................................................................................................................................................................................................................................................ ...................................................................................................................................... only ................................................................................................................................................................................................................................................................> Turkey HealthIFA FY08 Public Tajikistan OPS (EducationSector FiduciaryCapacity FY07 Public ................................................................................................................................................................................................................................................................ Assessment Report) Tajikistan Health IFA FY08 No Decision ................................................................................................................................................................................................................................................................r liet........................... CPAR FY03 Official use ................................................................................................................................................................................................................................................................D only ................................................................................................................................................................................................................................................................b Ukraine CPAR FY07 Public Ukraine CPAR FYOl Official use ................................................................................................................................................................................................................................................................O only ................................................................................................................................................................................................................................................................U Uzbekistan CPAR FY02 Public 54 CURRENTCPARAND OTHERESWREPORTS* Yugoslavia CPAR FY02 Public Argentina CPAR FY02 Official use ................................................................................................................................................................................................................................................................Ø only ................................................................................................................................................................................................................................................................Ý Bahamas ................................................................................................................................................................................................................................................................Ð Barbados 55 CURRENTCPARAND OTHERESWREPORTS* Report Country Report Tjpe Delivery Document FY Classiycation (In SAP) Venezuela CPAR FY91 Officialuse n"lV Regiona1 Total: - - ~~ 28 P Middle East and North Africa Region Algeria CPAR FY03 Internal use .................................................................................................................................................................................................................................................... ................................................................................................................ only Djibouti CPAR FY04 Internal use ......................................................................................................... only Egypt CPAR FY04 Internal use ................................................................................................................................................................................................................................................................s only Iran OPR FY05 Internal use onlv Iraq OPR FY05 Internaluse ................................................................................................................................................................................................................................................................¬ only ................................................................................................................................................................................................................................................................q dan CPAR FY99 Public Lebanon OPR FY06 Internaluse ................................................................................................................................................................................................................................................................R only Public Morocco CPAR FYOO Under CPAR Update FY08 government review Tunisia CPAR FY04 Internal use onlv Internal use WBG CPAR FY05 only Issue Paper FY08 Official use ................................................................................................................................................................................................................................................................Ã only Internalonly/ Yemen CPAR FYO1 shared with ................................................................................................................................................................................................................................................................· donors ................................................................................................................................................................................................................................................................o Kuwait CPAR (Draft) FY08 Kingdom of Saudi Arabia CPAR (Draft) FY08 Regional Total: 15 _=E ............................ South Asia Region " " ........................................................................................................................................................................................................................ " ........................................................ ........................................................................ " " ................................................ FY 02 Bangladesh CPAR (May Public ................................................................................................................................................................................................................................................................M 2002) ................................................................................................. Bhutan ............................................................................................................................................................................................................................................................ FY 04 India CPAR (December Public 2003) Internal Use/ India State - Jharkhand PFP FY 08 Under ................................................................................................................................................................................................................................................................" Finalization Internal Use/ India State Maharashtra - PFP FY 08 Under ................................................................................................................................................................................................................................................................² Finalization 56 CURRENT CPARAND OTHER ESWREPORTS* India State Rajasthan - IDF FY 08 Under Finalization Internal Use/ India State - HimachalPradesh PFP FY 08 Under Finalization India State - Bihar OPR Not yet .............................................................................................................................................................................................................. ........................................................................................ FY Os Finalized ..................................................................................................................... Maldives ....................................................................................................................................................................................................................................... FY 02 Nepal CPAR (April Public 2002) FY 00 Pakistan CPAR (June Public 2000) FY 06 Pakistan CPAR on Consulting Services (March Public ................................................................................................................................................................................................................................................................· 2006) FY 03 Sri Lanka CPAR (June Public ................................................................................................................................................................................................................................................................¡ 2003) ................................................................................................................................................................................................................................................................} Regional Total: 11 Bank-wide Total: 143 * List of acronyms is providedat end AfDB African Development Bank CPAR Country ProcurementAssessment Report CPAWCFAA Country ProcurementAssessment Report/Country Financial Accountability Assessment CPIP Country ProcurementIssue Paper IFA Integrative Fiduciary Assessment IP Issue Paper OPR Operational ProcurementReview OPS Other Procurement Study PEMFAR Public Expenditure and Financial Accountability PFP Policy Framework Paper