1 Fiduciary Forum - 2010 Afghanistan Procurement Team PROCUREMENT REFORMS AND IMPLEMENTATION SUPPORT IN A FRAGILE STATE: CASE OF AFGHANISTAN FRAGILE STATE Fragile states is the term used for countries which are characterized by political instability, frequently on-going violence or the legacy effects of past severe conflict Afghanistan Procurement Team What is a Fragile State The above lead to particularly severe challenges to development due to weak institutional capacity, weak governance ………. Few Countries – Afghanistan, Bosnia & Herzegovina, Cambodia, Kosovo, Sudan, Somalia, Timor-Leste, West Bank and Gaza, Yemen …………… 2 FRAGILE STATE Afghanistan Procurement Team Countries at the end of conflict often need help to build an effective state. Such assistance needs to be comprehensive and requires the integration of security, diplomatic and development efforts While the risk of failure in these countries is high, the risk of non- action is even higher. As Robert B. Zoellick stated “Only by securing development can we put down roots deep enough to break the cycle of fragility and violence” The cost of development including project preparation and implementation costs in a fragile state is relatively high in comparing with normal state. Bank has developed Operational policy 3 OPERATIONAL POLICIES FOR FRAGILE STATES The new policy sets out a framework for a more rapid and effective response to crises and emergencies that is better aligned with Recipient/Borrower needs and the Bank’s experience and current engagement. Afghanistan Procurement Team New Framework for Rapid Response to Crises and Emergencies: OP/BP 8.00 The note identifies various procurement issues that may arise during the preparation and implementation of emergency response projects. Guidance note available Rapid Capacity Assessment Management and use of UN agencies under Bank Projects Simplification on certain procurement policies and procedures. Bank maintains a long list of procurement agents that clients/ borrowers can consult when needed PPF facility for project preparation – 5 million USD Retroactive financing limit – 40% of loan/ credit / loan amount 4 5 Afghanistan Procurement Team PROCUREMENT REFORMS IN A FRAGILE STATE---ISSUES AND MOVING FORWARD- EXPERIENCE FROM AFGHANISTAN Afghanistan Procurement Team 6 BACKGROUND Afghanistan Afghanistan Procurement Team Fully fits the characteristics of Fragile state has suffered from more than 30 years Conflict Destroyed all institutions, and any Governance No development works was done when the county was in war Nearly all infrastructure were destroyed, and no maintenance was effected during this period Development work started after 2002 when funds were available from World Bank and other donors Multi Donor Trust Fund - ARTF 7 BACKGROUND … Brief history 1979 Subsequent Afghanistan Procurement Team to1989 – Soviet Occupation 1989 to 1994 – Civil War 1994 to 2001 – Taliban Rule 2002 to 2003 – Afghan Interim Authority to 2004 - country convened a Constitutional Loya Jirga in 2003 and a new constitution was ratified in January 2004. 8 BACKGROUND … 2002 – Status o o Reconstruction and Development of Afghanistan Flow of Large Donor Aid Afghanistan Procurement Team Brief of Public Procurement System in Afghanistan Had series of provisions regulating procurement • • • A law on procurement of 1987 Rules and Regulations for procurement of works 1989 – replaced the procurement law but very few amendments, mostly of religious nature Purchase regulation adopted as a decree in 2001 – Applicable to goods, routine works and maintenance Issues with the provisions / rules regulations 9 BACKGROUND … Issues with the provisions / rules regulations Failed to meet the standards of International Procurement Procurement of works – mostly based on 1989 rules – Procurement of Goods – mostly based on 1987 rules – ↓ ↓ Core problem with the provisions of the goods procurement was lack of detail and clarity in the qualification; specifications; drafting of bidding documents and award criteria Smaller contracts – Direct under which 1, 2 or 3 officials could purchased Afghanistan Procurement Team ↓ resembled more like a set of bid and contract preparation guidelines rather than a regulation to ensure competitive bidding Minimum time limits, qualification criteria, processes …… ↓ No reference to Services contracts 10 NEED FOR PROCUREMENT REFORMS was to put in place emergency procurement capacity to facilitate rapid, transparent utilization of donor resources for reconstruction and development – act as a facilitating purchasing by the Government - under different financing - nearly 100% of procurement Carry out training needs analysis Develop framework for training Afghanistan Procurement Team Cope with the urgent task of reconstruction, the Transitional Government of Afghanistan with the help of Donors Capacity to plan and implement reconstruction projects in line ministries is very weak – Establishment of Afghan Assistance Coordination Authority (AACA) – So centralized technical assistance in critical areas – Financial management, procurement and auditing AACA – dissolved and the department responsible for procurement was renamed as ARDS and was put under the Ministry of Economy Crown Agents was contracted as the Country’s Central Procurement Agent – Role New PA – RITES India Ltd Challenge to Carry out Procurement Reforms and Procurement implementation in such conditions and environment. 11 PROCUREMENT REFORMS ….. May 2003 – Holistic procurement review carried out and a number of serious constraints were identified • • • The need for adequate standards in procurement Procurement Law 2005 reflecting the current international best practice and suitable to the local requirements Three main pillars of new law • • • Creation of a regulatory body Procurement function in all ministries and government departments Capacity building thru formalised training and certification program Afghanistan Procurement Team • Limited procurement capacity at all levels Lack of ownership of procurement Obstacles to such ownership No consistency in the structures of the line ministries The law requires creation of units at National Level • Procurement Policy Unit (PPU) • Contract Management Office (CMO) • Special Procurement Commission (SPC) 12 PROCUREMENT REFORMS - ORG President Special Procurement Commission Ministry of Finance Proc Capacity Building Officers Procurement Policy Unit (PPU) Procurement Controllers Line Ministry Line Ministry Proc Capacity Building Officers Proc Capacity Building Officers Contract Management Office Ministry of Economy ARDS Afghanistan Procurement Team Ministry of Justice Procurement Liaison Officers Administrative Review Committee 13 PROCUREMENT REFORMS ….. Procurement Policy Unit (PPU) – Functions • • • • • Afghanistan Procurement Team • Policy and professional development Performance monitoring organ Not involved in contract award or review of Procurement process What has been done / achieved – Rules of Procedure, SBDs, Dissemination of Information, Capacity Building, Capacity Building – How it has been done, Impact evaluation of the Capacity building, Exit strategy Future vision / Steps - why 14 PROCUREMENT REFORMS ….. Contract Management Office (CMO) • • • • Afghanistan Procurement Team • Serves as the office of the SPC Provides secretariat support to SPC in conducting business To regulate and coordinate the Management of State’s contract’s including procurement contracts It has the overall responsibility for planning, executing the work of SPC, as well as record keeping Liaise with the procuring entity 15 PROCUREMENT REFORMS ….. Special Procurement Commission (SPC) • • All high value procurement contract awards- thresholds are in Annex of the Law The SPC membership consists of • Minister of Finance – Member and Chairman • Minister of Justice – Member • Minister of Economy – Member Afghanistan Procurement Team • Highest authority under the Law to grant approval for procurement contracts 16 APPEAL AND REVIEW MECHANISM Administrative Review Committee – Provide the PPU with a mechanism to ensure expert and independent decisions in respect of applications of complaints or Representations. Head of PPU – nominate suitably qualified members of Committee, from both public and private sector; nominated members not more than 7 for a period of max 3 years at a time Other members competitive – open, every three years, new Experts Afghanistan Procurement Team 21 members – ensure sufficient choice and breadth of experience, various fields Head of PPU appoints the Chairman from one of the Members 17 APPEAL AND REVIEW MECHANISM Review Board – each time a complaint or representation is received; 3 independent experts chosen from administrative review committee No hearing requested by the Applicant – then order issued based on documentation without hearing the parties Order by Review Board – within 7 days of its appointment and receipt of application Afghanistan Procurement Team Secretariat will register the commencement of the review procedure PPU will confirm the order 18 CAPACITY BUILDING Carried out by a Consultancy Firm Three year capacity building program – including Training of Trainers Multiple types of programs Shattered education system due to 30 years of war Capacity of civil servants and functioning of public offices – adversely affected Language and translation, Knowledge of IT High level of mobility Lack of technical support Afghanistan Procurement Team Challenges Results Trained nearly 1750 trainees (1100 Basic; 250 Intermediate; 200 advanced; 160 short term and 125 Special) 19 CAPACITY BUILDING What was missed out Allocation of a Dedicated PCBO - Trainer for each of the Ministry Introduction of a Special Short Term Procurement Course in University - Diploma Afghanistan Procurement Team Technical Help Desk for dealing with the queries on the Procurement, SBDs, Procurement Law etc – This will provide a means of ensuring consistency of interpretation, application and removal of uncertainty in the use of documents 20 21 Afghanistan Procurement Team Afghanistan Procurement Team PROCUREMENT IMPLEMENTATION SUPPORT IN A FRAGILE STATE: CASE OF AFGHANISTAN PROCUREMENT IMPROVEMENTS – WHY? Same Size does not fit all or The Same prescription cannot cure even if the symptoms are the same i.e. yield results For Fragile Countries - The need for doing things differently, creative, out of the Box Procurement Solutions – is all the more important in such fragile countries than other Countries due to many reasons but need to be within the Boundaries of the Bank GL Afghanistan Procurement Team To do the same old thing the same old way And to expect some new outcome….. That is madness - Einstein 22 PROCUREMENT OF WORKS AND GOODS Analysis of the Country situation, and Market Study – Customization of the SBD’s Afghanistan Procurement Team Encourage bid securing declaration – Poor or no Banking Facilities Post qualification Criteria – Similar experience, Annual turnover, liquid Assets? To increase Competition and Development of Construction industry - Increasing the NCB threshold and use slice and package Allow Procuring Entity to conduct pre-bid meeting for all NCBs to explain salient features of bidding document and preparation of bid Conducted training workshops for local bidding community, Afghan Builders Association 23 PROCUREMENT OF WORKS AND GOODS …, Performance Security – Recovery from First Invoice Insurance – Acceptance of Self Insurance Payment terms – Letter of Credit – Supply and Installation Contracts. Requirement of Manufacturer’s Authorization Permitting dealership certificate in procuring standard equipments. Flexible contracting arrangements to address rapidly any additional funds made available by the Government of Afghanistan, ARTF, IDA or any other donor by make changes in IFB, ITB and GCC/SCC Afghanistan Procurement Team 24 PROCUREMENT OF WORKS AND GOODS …., Disseminate information about bidding thru the Radio stations Sell bid documents electronically and free of charge – Poor or no postal service Allow downloading of bid documents from PIU websites Afghanistan Procurement Team 25 PROCUREMENT OF CONSULTANCY SERVICES Single RFP with both forms of Contract Lump Sum and Time based Lump Sum contracts – Modifications incorporated to indicate that equipment purchased would be the property of the Client at the end of the contract Price Adjustment even in lump Sum Contracts which are long term Strengthening of Contract Conditions Monitoring of Inputs in a Lump Sum Contracts Afghanistan Procurement Team 26 CONSULTING SERVICES ….. Health Sector – Service Delivery Contracts - Brief Details of the Services – Decision on What type of contract to be used Opening of Separate and special account for the Contract 100 % verification of financial statements of expenditure (SoE). Payment based on actual eligible expenditure based on SoE and verification of services provided by third party monitoring evaluation team Transfer of assets after contract completion to the client In the beginning Procurement of Pharmaceuticals, Vaccines and Condoms, to be carried out by Service Provider as per the Firms Procurement Guidelines – Third Party Survey carried out to verify and check the Quality of the Goods Procured Afghanistan Procurement Team Use of Lump Sum Consultancy Contract for Delivery of Basic Package of Health Services to Rural Poor with the modifications to standard Contract Conditions of lump-sum contract 27 CONSULTING SERVICES ….. Health Sector – Service Delivery Contracts Now, Procurement of Pharmaceuticals, Vaccines and Condoms following the World Bank Guidelines and specifically related to health sector goods. The Service Provider shall keep copy of GMP, COPP, license to produce drug in the country of manufacturing and test certificate for the batch for the Pharmaceuticals, Vaccines and Condoms dispensed in the health facility to ensure quality of drugs dispensed. Verification by a Third Party M&E Consultant Results Based Financing Implementation Afghanistan Procurement Team 28 CONSULTING SERVICES … Community Driven Development (CDD) – National Solidarity program (NSP) - Brief Details of Services Hiring of Facilitating Partners Challenge to Decide on what type of contract Changing the type of contract from time based to lump sum based on per community based facilitation work defined in the operational manual. Providing price variation as the contract duration was more than two years in lump-sum contract. Providing for adding more communities depending on the performance of the NGOs and availability of funds. Third party performance (Qualitative and Quantitative) and technical evaluation of facilitating partners Afghanistan Procurement Team 29 CONSULTING SERVICES … Third party evaluation / quality of physical works Impact Evaluation of the Project on welfare of community and get feedback on what is required, working or not working … Appointment of Independent Consultant for handling of Financial Transactions, Float account Afghanistan Procurement Team Third party evaluation of large Technical/ Project Support Consultant including financial audit. Introduction of MIS 30 CONSULTING SERVICES … Power Sector Projects - Brief Details of Services Hiring Project Management Consultant Devolving of Powers to Management Consultants Responsible for entire procurement process including the preparation and submission of BERs with Government agreement and technical evaluation of Contractors, etc Afghanistan Procurement Team 31 CONSULTING SERVICES … Education Sector Projects - Brief Details of Services Large University Partnership contracts (around US$2 million) in Higher Education Sector to improve higher education in Afghan universities following CQS procedures. Distribution of girls scholarship and teachers training expenditure as ‘pass through money’ in consultancy contracts and the consultants are responsible for distribution of girls scholarship or teachers training in view of weak government capacity Afghanistan Procurement Team Twinning of Higher University – Curriculum development, Capacity Building, Exchange of Staff, Conduct teaching 32 INNOVATIONS IN SUPERVISION Capturing the GPS coordinates of the community (CDC) in the database Verification of assets, and progress through GPS enabled digital cameras Evaluation of physical Works by Third Party Afghanistan Procurement Team Supervision/ Fiduciary Verification – Issues in Fragile state – Afghanistan 33 INNOVATIONS IN SUPERVISION Impact Evaluation study Appointment of an Independent Consultant to handle Money Third Party survey of quality of Pharmaceuticals procured by NGOs Afghanistan Procurement Team Performance Evaluation of Facilitating Partners by Third Party 34
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