PRESENTATION ON PROCUREMENT REFORM IN GHANA

OECD/DAC-WORLD BANK ROUNDATABLE 22ND– 23RD JANUARY 2003

MESSAGE FROM THE PRESIDENT

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Message from the President of Ghana

Introduction

2 years of peaceful & democratic rule

Government elected on a platform of reform, transparency & accountability

Policy of zero tolerance of corruption promulgated

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The Ministry of Finance have fiduciary responsibility mandated by - Financial Administration Regulations, 1979 LI 1234) Part XII, Section 651 ‘Public Supplies and Equipment’ which is to ensure that procurement of public supplies and equipment and their use is an integral part of budgetary management and that purchases are made in the most economical way.

Fiduciary Responsibility for Procurement

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-Need for procurement reform is articulated in

the findings and recommendation of the various World Bank studies on public procurement in Ghana,

- Country Procurement Assessment Reports [CPAR] of 1985

-1986, Gosta Westring’s report of 1997 and

- Country Portfolio Performance Review [ CPPR] of 1998.

Rationale for reform of Public Procurement

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-these reports highlighted the unacceptable features in the Government’s procurement system and advocated a comprehensive reform in Ghana.

-This was also endorsed in the comprehensive Development Framework initiative in Ghana in 1999.

- From the perspective of Ghana’s Development Partners an open and transparent public procurement system is considered an absolute necessity as it is central to the new approach of moving away from project lending to programme lending.

Rationale for reform of Public Procurement (cont.)

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- Under the comprehensive Development Framework (CDF), Donors/Development Partners require a good procurement system to allow their resources to be pooled and controlled by the Government under one basket funding.

Rationale for reform of Public Procurement (cont.)

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-Public procurement accounts for up to 50/70% of

imports, representing between 18.2% to 25.48%

of the country’s Gross Domestic Product (GDP). About 80% of non-staff emoluments Government expenditure pass through the procurement process.

Public entities spend large sums of money through the public procurement process and in viewof mounting budget constraints, it is important that Government introduces efficient public procurementprocedures and systems that would ensure value for money.

SIZE OF GOVERNMENT PROCUREMENT

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CURRENT PROCUREMENT PRACTICIES

Deficiencies Current procurement practices for

acquisition of goods, works and services have various deficiencies, which include:

-lack of a unified system and multiplicity

of practices for procurement services. -procuring entities use World Bank and

other donor procurement guidelines alongside fragmented national procurement practices. -multiplicity of donor procedures stretches the nation’s limited human resource capacity for quality and consistent performance.

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Role of MoF in Reform of Public Procurement

Ministry of Finance exercises oversight responsibility for rational allocation and utilization of the country’s public resources, hence, its obligation for ensuring a well regulated procurement system.

Procurement is considered part of budget and financial management in the national economy.

Improvements in the public procurement system therefore has direct and beneficial effect on the overall economic performance of the economy.

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Role of MoF in reform of Public Procurement –cont’d

To fulfil its mandate, the Ministry of Finance in 1996 embarked on an exercise to reform the government’s Public Procurement System as an integral part of a wider Public Financial Management Reform Programme (PUFMARP).

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Purpose/Goals of Public Procurement reform (PPR)

This is to eliminate the various shortcomings in

the public procurement process through the provision of a comprehensive procurement

lawand standard tender documents supported

by relevant institutional and administrative structures and an oversight body, which

would:(i) Promote the use of public procurement as a

tool for national development;

(ii) Harmonize the application of procurement related

rules in local and international conventions and treaties; (iii) Promote the integrity of the public

procurement system and public confidence in the procurement process, among others.

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Purpose/Goals of Public Procurement reform (PPR) –Cont’d

• streamline the procedures and practices for procurement of :

- goods,- works, - services, as well as- disposal of stores and equipment

• to establish an effective monitoring system to ensure proper utilization of public funds for enhanced economic growth.

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Procurement reform process

Extensive consultation at national and international levels

Reviewed international best practices

Considered how leakages in public expenditure programmes could be mitigated

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Formulation of the Reform Proposal

• Ministry of Finance, in January 2000, established the Public Procurement Oversight Group (PPOG), with mandate to consult broadly and make firm proposals for the fragmented public procurement system and reform the process in its entirety.

• MOF acting through the PPOG commissioned a Team of Consultants, who undertook series of studies, on the current state of public procurement in Ghana.

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Formulation of the Reform Proposal

• Based on the reviews and studies, the PPOG confirmed the following deficiencies in the current system:

- Absence of a comprehensive and well-articulated public procurement policy;

- Lack of a comprehensive legal regime to safeguard the integrity of the public procurement system;

- Absence of a central body with the requisite capability, technical expertise and competence to develop a coherent public procurement policy, rules and regulations to guide, direct, ensure trained manpower, as well as adequately monitor public procurement.

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•Subsequently the Public Procurement Reform Proposals were produced and cover the following:

- Policy - Legal Framework ie (Draft

procurement Bill was produced which has received

stake holders comments and subsequent legal drafting)

- institutional structures,- procurement procedures- arrangements for capacity building.

Formulation of the Reform Proposal Cont’d

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Coverage of the Draft Procurement Bill

• covers procurement for goods, works and services, (financed in whole or in part from public funds/ loans taken or guaranteed by the State and foreign aid funds.

• disposal of stores and equipment. • It enacts comprehensive legal

provision on the Institutional Arrangements.

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Coverage of the Draft Procurement Bill -cont’d

•The Law provides basically for two broad categories of Boards:

(i) the Public Procurement Board (PPB) - as the main

policy and regulatory machinery to ensure proper degree of oversight and monitoring.

(ii) The Tender Review Boards (TRB)- consisting of Central,

Regional and District, Ministerial/ Headquarters .

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Functions of the PPB include:(a) Continuous development of public procurement policy, setting standards, and

other regulatory instruments on public procurement(b) Monitoring compliance with requirements

established by legislation,(c) Ensuring dissemination of information

in relation to public procurement, setting ethical standards for all stakeholders,(d) Ensuring adequate capacity building in

public procurement at various levels.

Coverage of the Draft Procurement Bill –cont’d

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Coverage of the Draft Procurement Bill-Cont.d

Functions of the Tender Review Boards (TRB)- include reviewing of the processes and procedures followed by MDAs to give concurrent approval for award of Procurement Contract by the Procurement entity.

The Procurement Bill covers, Processes, description of requirements and invitation of sources, preparation, selection and award of contract and the phases of contract administration;

Practices to administer public procurement nationally.

Adequate provisions for accountability and transparency.

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Applicability of the Procurement Law

all central management agencies;all government ministries, department and

agencies (MDAs),all subvented agencies, governance

institutions, state owned enterprises to the extent that

they utilize public funds,public universities, public schools, colleges

and hospitals,the Bank of Ghana and financial institutions such as public trusts, pension funds, insurance compamies and building societies which are wholly owned by the State or in which the State has majority interest,

institutions established by Government for the general welfare of the public or community.

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Responsibility for the Examination of Technical Details of Procurement

• Responsibility for examination of technical details for contracts, agreements and procurement are provided for under the Law and rests with the Entity Tender Committees.

• The law provides that no contract shall be awarded until the effect the acceptance of the tender will have on the following are ascertained:

The balance of payments position and foreign exchange reserves of the country,

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Responsibility for the Examination of Technical Details of Procurement – Cont’d

the counter-trade arrangements offered by suppliers or contractors,

the extent of local content, including manufacturer, labour and materials, in goods, works or services being offered by suppliers or contractors,

the economic- development potential offered by tenders, including domestic investment or other business activity,

the encouragement of employment, the reservation of certain production

for domestic suppliers,the transfer of technology,

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Challenge Mechanism

• A robust challenge mechanism which supports Key elements of Procurement process ie:

- Transparency, Integrity, Competition, Best Value, Efficiency • The proposed procurement law

provides the private sector and civil society with a legal basis for lodging complaints/appeals against public officials who do not follow the laid down procedures.

• It provides appropriate sanctions for erring public officials.

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THE WAY FORWARD

• Proposals have been finalized after passing through various quality assurance and acceptability processes.

• Having a State of the Art Law is not enough

• Capacity Building Plan will have to be implemented as soon as Bill is enacted

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THE WAY FORWARD (CONT.)

Elements of Capacity Building Proposal

• Human Resource Development-Public Awareness campaign of the

Reformed Public Procurement System-Initial training of Procurement

Practitioners-Dissemination of Information to Heads

of Procurement Entities-Sustainable training & Professional

Development

• Logistics-ICT resources, etc

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THE WAY FORWARD (Cont.)

Capacity to support the new procedures would be built at all levels: Staff of procurement entities; Policy makers and politicians Suppliers, Contractors & Consultants (Existing &

Potential), SMEs and SME Development Institutions

Civil Society at large (the media, NGOs, political parties, etc).

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THE WAY FORWARD (CONT.)

Capacity Building Plan : Modules on procurement courses (course

materials, target groups, staged delivery/ delivery timetable and delivery method)

Detailed budget covering training programmes delivery

Detailed costing of logistics requirements

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REQUIRED BUDGET

YEAR AMOUNT (US$)

1 5,000,000

2 3,000,000

3 2,000,000

4 2,000,000

5 2,000,000

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Summary

We are aware that we are at the beginning of the process.

Ghana is prepared to work with all development partners to ensure a transparent and efficient public procurement system.

We trust that if the results are good development partners will respond.

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Conclusions

BIGGEST CHALLLENGE: Ghana needs to demonstrate seriousness in the

implementation. We cannot do this on our own. We need the support and contribution of our development partners. In this regard we acknowledge the following:

Acknowledgements

OECD/DAC (Invitation for further assistance) World Bank (Lead support for PUFMARP) DFID (VFM Assessment) EU (Audit Service) Swiss Government (Benchmarking and M&E) All others

END OF PRESENTATION

THANK YOU FOR YOUR ATTENTION