Public Procurement in Fragile States & Situations

How do you apply the Principles for Good International Engagement in Fragile States and Situations to Strengthen and Transform Public Procurement Systems?

A new discussion paper has been produced to consider how to apply good principles of engagement in fragile situations to public procurement.

This takes the 10 principles in the OECD publication "International Engagement in Fragile States: Can't We Do Better?” as a framework and considers the knowledge and learning emerging on how to apply it to the very practical and necessary government function of obtaining goods, works and services to meet the needs of the citizens and fulfill the government's obligation to provide basic services, peace, security and jobs.

The principles are:
1 Take Context as the Starting Point
2 Do No Harm
3 Focus on Statebuilding as the Central Objective
4 Prioritize Prevention
5 Recognize the Links between Political, Security and Development Objectives
6 Promote Non-Discrimination as a Basis for Inclusive and Stable Societies
7 Align with Local Priorities in Different Ways in Different Contexts 8 Agree on Practical Coordination Mechanisms
9 Act Fast...But Stay Engaged Long Enough to Give Success a Chance 10 Avoid Pockets of Exclusion

The principles resonate well with a fragile context and seem relevant to other situations. The paper is helpful in outlining the challenges in applying the principles and provides some valuable lessons learned and case material. The focus is on Public Procurement does it apply to other critical functions of government such planning / programming and financial management? In Afghanistan there were efforts to focus on coordinating strengthening of; Planning; FM; Procurement and HRM, this was challenging but were seen as integrated building blocks of statebuilding and critical for service delivery. It would be interesting to hear of different experiences of applying the principles in procurement and other country systems in different fragile situations and further thoughts on the important topics raised in this paper.

Thank you for sharing the discussion paper on procurement in fragile states, excellent initiative! Allow me to share a few comments based on exchanges with our African partners.

-          Concerning the World Bank’s CPAR and the multi donor MAPS: without wanting to question the quality of the tools as such, I think it is important to take into account in our work that, in terms of perception, these tools are sometimes viewed by NGOs and African governments not so much as “internationally agreed standards”, but rather as “donor imposed standards”. Therefore, we should to be diplomatic and careful in the way we present/promote these tools. For example, the global (and influential) NGO Platform BetterAid has criticised donors for exerting significant influence on shaping public procurement systems, through conditionalities, technical assistance and the application of diagnostic tools. By doing so, BetterAid states “they are promoting the liberalization of public procurement, and are intervening in a core area of national sovereignty: public procurement accounts for the majority of public spending besides wages. (...) In spite of pledges to support nationally-owned ways to build institutions and choose policies, donors impose a one-size-fits-all internationally agreed best practice model for public procurement on developing countries.” (see “Development Effectiveness in Development Cooperation: a rights based approach”, BetterAid, 2010). I think it is important for UNDP, when addressing these issues, to be aware of the controversy.

-         Similarly, the NGO federation Eurodad estimates that 50% of all Official Development Aid is spent on procurement of goods and services. According to their research the majority of formally untied aid contracts from bilateral agencies still go to donor country firms. The conclusion is that aid untying in the official sense has obviously been necessary but not a sufficient condition to untying aid in reality. In order to unleash the full potential of aid to create local capacities, jobs and income, aid must be untied not only on paper but in practice. Donors’ “open” procurement practices still favour northern firms and make it virtually impossible for firms from Least Developed Countries to compete. (See “How to Spend It – Smart Procurement for more Effective Aid”, EURODAD, 2011) Therefore, NGO federations such as Alliance2015 and BetterAid plead to grant developing countries the right to maintain preferences for procurement of local goods and services, in order to have a development impact on the national productive sector. (see “Development Cooperation: Not Just Aid”, BetterAid, 2010 and Pereira, J. “Democratic Ownership beyond Busan: Building Inclusive Partnerships for Development”, Alliance2015, 2011) The question of “preferences versus open competition” is briefly addressed in your paper, but considering the major debate lying behind this, I would suggest addressing the pro’s and con’s in more detail.

-          The report “Aid Effectiveness 2005-10: Progress in Implementing the Paris Declaration” shows that, in countries were governments have been making considerable progress in strengthening their national procurement systems, donors have not responded systematically by using the systems more. Such donor behaviour discourages further reforms. This is surely  a problem worth addressing in our work.

-          Under the “Do No Harm” principle, I think it would be good to consider the question of distortion of local markets. My concerns in that regard would be the same as the ones outlined above (preferences vs open competition)

-          Under “coordination mechanisms” we might want to insist more on the fact that wherever possible, international actors should work jointly with national reformers in government and civil society to develop a shared analysis of challenges and priorities, as it is stated in the OECD’s fragile state principles.

-          The governments of Burundi and Belgium have developed a practice allowing for the donor to use country procurement systems in a fragile state like Burundi, which you might find interesting. Basically, the national systems are used, but both the national government and the donors sign off on the procurement. You can read more about it in the OECD DAC peer review of the Belgian Development Cooperation (page 73 box 4 para 2 as well as Annex D p 110) http://www.oecd.org/dataoecd/62/14/45738991.pdf

That is it for my comments. Keep up the good work!