EBRD 2010 Regional Assessment

– Scope, Focus & Main Findings on the Public Procurement Law and Practice

in the EBRD region

Eliza NiewiadomskaLegal Transition Programme

European Bank for Reconstruction and Development

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Assessment Concept

First assessment of the public procurement sector covering all EBRD countries of operations (29 countries) Specially designed benchmark reflecting critical elements of the public procurement process (the EBRD Core Principles) Research analysis structured around the Legal Efficiency Approach concept – a tool developed for evaluating commercial laws

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Core Principles are based on recognised international standards:

– WTO GPA– UNCITRAL Model

Law– EU Directives– IFIs’ procurement

policies

Core Principles apply to the procurement process as a whole:

– pre-tendering– tendering– post-tendering phase

Public Procurement Legal Framework

Core Principles

Accountability

Integrity

Transparency

Fair competition

Economy

Efficiency

Proportionality

Reasonable exemptions

Enforceability

Stability

Assessment benchmark: EBRD Core Principles

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Benchmarks & indicators (1)

1. Accountability of public sector spending. The legal framework should promote accountability across all stages of the procurement process, balancing public and business dimensions of the process.

2. Integrity of the procurement process. The legal framework should promote integrity between the procurement function, transparency in delivering government policy and value for money.

3. Adequate level of transparency. For public procurement to be acceptable to all stakeholders it should be seen to be transparent and objective.

Integrity Safeguards

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Benchmarks & indicators (2)

EfficiencyInstruments

1. Competition. The legal framework should promote fair competition and prevent discrimination. Tenders and tenderers of equivalent status should be given equal treatment. Domestic preferences should not be allowed.

2. Economy. The law should enable public procurement to be accomplished professionally in a reasonable time.

3. Efficiency of the public contract. The legal framework should ensure value for money is achieved.

4. Value of proportionality. The formality of the public procurement procedure should reflect the scope and size of the contract. The contracting entity should align the value and scope of the contract with a choice of the procurement procedure.

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Benchmarks & indicators (3)

Institutional&enforcement measures

Uniformity. The legal framework should be comprehensive and limit derogations to reasonable exemptions. The regulation should be unitary, comprehensive and cover all public contracts.

Stable, but flexible. To make the process efficient, stakeholders must learn their roles, rights and obligations, within a stable legislative framework. At the same time, the framework should be capable of flexible so as to accommodate the changing market.

Enforceability. Public procurement law should be easy to enforce. Regulatory and review and remedies mechanisms should be able to assess the compliance of the contracting entities and employ corrective measures when necessary.

Assessment Research Core Areas

‘law on the books’ - quality of public procurement legal framework

Regulatory Gap - what has been achieved and what remains to be done regarding development of legislation

‘law in practice’ - quality of local public procurement practice

Implementation Gap – a gap between standards and local public procurement practice

Country and sub-region groupings EU Member States in the EBRD Region

(Bulgaria, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia and Slovenia)

Balkan Countries and Turkey (Albania, Bosnia & Herzegovina, Croatia, FYR Macedonia, Montenegro, Serbia and Turkey)

Eastern European Countries and Russia (Belarus, Georgia, Moldova, Russia and Ukraine)

Caucasus and Central Asian Republics (Armenia, Azerbaijan, Kazakhstan, Kyrgyz Republic, Mongolia, Tajikistan, Turkmenistan and Uzbekistan)

Main Findings

EBRD Public Procurement Assessment Results:Total Compliance Rating in the EBRD region*

*Data not available for Azerbaijan, Mongolia, Kazakhstan and Turkmenistan

Uzbekistan

Belarus

Kyrgyz Republic

Bosnia and Herzegovina

Tajikistan

Slovak Republic

FYR Macedonia

Latvia

Lithuania

Poland

Hungary

Montenegro

Turkey

0 10 20 30 40 50 60 70 80 90 100

Total Compliance Rating: Legislation, Practice and Sustainability of Public Procurement

  ‘law on the books’ ‘law in practice’ total sustainabilityAlbania 83 81 82 51Armenia 73 80 76 47Azerbaijan 51 0 0 0Belarus 73 62 67 10Bosnia and Herzegovina 67 72 70 13Bulgaria 77 83 80 80Croatia 75 80 78 32Estonia 71 76 74 11FYR Macedonia 63 84 76 41Georgia 84 78 81 48Hungary 91 78 81 33Kazakhstan 69 0 0 0Kyrgyz Republic 64 73 70 30Latvia 77 80 78 30Lithuania 79 79 79 38Moldova 71 55 62 14Mongolia 71 0 0 0Montenegro 85 79 82 27Poland 69 88 79 22Romania 71 72 72 38Russia 73 79 76 37Serbia 71 67 70 27Slovak Republic 73 77 74 35Slovenia 75 81 79 0Tajikistan 61 80 72 56Turkey 81 86 83 55Turkmenistan 26 0 0 0Ukraine 59 73 67 22Uzbekistan 49 70 60 71

EBRD Public Procurement Assessment Results:Total Compliance of the National PP Legislation

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15

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Very high High

Satisfactory Low

Very low

MontenegroGeorgiaAlbaniaTurkeyLithuaniaBulgariaLatviaCroatiaSlovenia

UkraineAzerbaijan

UzbekistanTurkmenistan

Hungary

Slovak RepublicArmeniaRussiaBelarusMongoliaMoldovaSerbiaRomaniaEstoniaKazakhstanPolandBosnia and HerzegovinaKyrgyz RepublicFYR MacedoniaTajikistan

EBRD Public Procurement Assessment Results:Total Compliance of the Local PP Practice

Very high HighSatisfactoryLowVery lowNo data

PolandTurkeyFYR MacedoniaBulgariaSloveniaAlbaniaArmeniaTajikistanCroatiaLatviaMontenegroLithuaniaRussiaGeorgiaHungarySlovak RepublicEstonia

UkraineKyrgyz RepublicBosnia and HerzegovinaRomaniaUzbekistanSerbiaBelarus

Moldova

AzerbaijanKazakhstanMongoliaTurkmenistan

15

41

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EU countries - Summary of Results

Average high to very high compliance with the benchmark

PP legislation ensures competition, transparency, legal and institutional PP framework is comprehensive

Good procurement capacity, in practice local contracting entities adopt internal procurement rules to increase economy and efficiency of procurement

Room for further improvement – procurement planning, methods of contract valuation, eProcurement solutions, public contract management, openness to other than national currencies and languages

EU countries: the case of Hungary

Very high compliance in ‘law on the book’ assessment

High compliance in local practice assessment

Implementation Gap:– transparency– enforceability – proportionality

1. Accountability, 2. Integrity, 3. Transparency, 4. Competition, 5. Economy of the process, 6. Efficiency of public contract, 7.

Proportionality, 8. Uniformity, 9. Stability, 10. Flexibility, 11. Enforceability.

‘law on the books’practice

Balkan Countries & Turkey - Summary of Results Average medium to high compliance with the

benchmark PP legislation promotes competition and

transparency High scores in the enforceability indicators due to

dedicated mechanisms (simple and fit to context) Medium procurement capacity but widely

standardised tendering documents, notices and reports

Room for further improvement: economy and efficiency of procurements, eProcurement solutions, procurement capacity

Balkan Countries & Turkey: the case of Turkey

High compliance in legislation and local practice assessment

Implementation Gap in integrity indicators

Strengths in practice:– Stability of the process– Focus on economy and

efficiency of procurements‘law on the books’

practice

1. Accountability, 2. Integrity, 3. Transparency, 4. Competition, 5. Economy of the process, 6. Efficiency of public contract, 7.

Proportionality, 8. Uniformity, 9. Stability, 10. Flexibility, 11. Enforceability.

Eastern European Countries & Russia - Summary of Results Average medium to high compliance with the

benchmark PP legislation promotes competition and

transparency Inadequate, complicated or expensive enforcement ‘Combating corruption, ignoring efficiency’ Room for further improvement – economy and

efficiency of procurements, eProcurement solutions, procurement capacity, removing barriers to foreign tenderers

Eastern European Countries & Russia: the case of Georgia

High compliance in legislation and local practice assessment

Strengths in practice:– Appropriate balance

between integrity safeguards and efficiency instruments

– Focus on economy and efficiency of procurements

– Proportionality‘law on the books’practice

1. Accountability, 2. Integrity, 3. Transparency, 4. Competition, 5. Economy of the process, 6. Efficiency of public contract, 7.

Proportionality, 8. Uniformity, 9. Stability, 10. Flexibility, 11. Enforceability.

Caucasus & Central Asian Republics - Summary of Results Average low to medium compliance with the

benchmark PP legislation based on outdated standards is now

incomprehensive Inadequate, complicated or expensive enforcement Room for further improvement – implementing both

integrity safeguards and efficiency instruments, eProcurement solutions, procurement capacity, removing barriers to foreign tenderers

CIS & Mongolia: the case of Armenia

Medium compliance in legislation assessment

High compliance in practice assessment

Regulatory Gap: Institutional framework

Strengths in practice: Focus on economy and efficiency of procurements

‘law on the books’practice

1. Accountability, 2. Integrity, 3. Transparency, 4. Competition, 5. Economy of the process, 6. Efficiency of public contract, 7.

Proportionality, 8. Uniformity, 9. Stability, 10. Flexibility, 11. Enforceability.

Summary of Results

Several regulatory gaps in most of the countries in the EBRD region

Substantial implementation gaps or the opposite, where practice is driven by the market

Frequently unbalanced legal frameworks; significant gaps in both integrity safeguards and efficiency instruments

Outdated legislation regarding communication: no electronic communication enabled and usually no access to tender documentation on the Internet, eProcurement is uncommon

Insufficient attention to the procurement capacity and qualification of public procurement staff

Review mechanism available, but frequently only administrative Low fees for tender documents but still high participation costs

due to the formal requirements

Trends in the EBRD Region PP Legislation: low to medium compliance Local PP Practice: medium to high compliance Regulatory Institutions: frequently lacking capacity Sustainability: a new concept, not implemented in

many countries Adequacy of policy-making: frequently unbalanced or

irresponsive to local business culture and market requirements

eProcurement: generally unavailable, some countries are advanced (Albania, Armenia, Lithuania, Turkey)

Thank you for your attention.